20 CFR 404.1270-404.1274
Pursuant to the State's request for review under section 218(s) of the Social Security Act, the Commissioner affirmed assessments made on the basis that services performed subsequent to March 1962 by ferry operators for Chouteau County were performed as employees of the county and were covered under section 218 of the Social Security Act and the Montana agreement for coverage of State and local employees.
The State of Montana timely requested a review pursuant to section 218(s) of the Administration's assessments of contributions due. The Secretary has delegated to the Commissioner of Social Security authority to make reviews and findings and to give notice of his findings as required by section 218(s). The assessments made were based on the Administration's determination that services of ferry boat operators for Chouteau County for periods after March 1962 were performed in an employment relationship and covered under the State's coverage agreement. The State is of the view that these individuals performed their services subsequent to March 1962 as independent contractors.
The facts in this matter are that services of employees of Chouteau County in positions under the Public Employees' Retirmeent System of Montana were covered effective July 1, 1955, by Modification 17 to the Montana Federal-State agreement. The county has provided for the operation of four cable ferries across the Missouri River. Prior to April 1962, the individuals engaged to operate these ferries were paid $300 a month. The county furnished gasoline and oil and made all major repairs to the ferry and motor. IN addition, the county furnished a dwelling for the operator at the ferry site and furnished all utilities except telephone. The operators were required to provide ferry service to the public free of charge from 7:00 a.m. to 7:00 p.m. daily. For crossings after these hours, they were authorized to charge and retain a toll of $1.00. During this period the operators were considered to be county employees. They were members of the Public Employee's Retirement System and their wages were reported for social security purposes.
Since April 1962, however, the services of these ferry operators have been engaged pursuant to a written contract. Basically, the contract provides that the county will pay the operator $350 a month to provide ferry services from 7:00 a.m. to 7:00 p.m. daily free of charge to all passengers. The county is to finish the operator with a dwelling and all utilities except personal telephone. Major repairs to the ferry and motor (which at all times were owned by the country) are to be made by the county. The operator is required to finish all gasoline and oil.
Information obtained from several of the operators shows that the county had first call on the operators' services to the extent that ferry had to be operated from 7:00 a.m. to 7:00 p.m. daily, but the operators could work for others if such work did not interfere with the operation of the ferry; that the operators were given brief initial instructions in the operation and maintenance of the ferry; that the only schedule they were required to follow related to the hours of operation; that the operators were required to make minor repairs and do all necessary maintenance work on the ferries; and that the operators could neither quit nor be discharged before the end of the contract term without liability. With respect to this last point, it should be noted that under the contract the county retained the right to suspend the operations of a ferry at any time during which period the operators receive no compensation.
Information obtained from the county indicates that the ferry operators ceased to be covered by the Public Employees' Retirement System of Montana in April 1962. (With respect to this point, removal of a position covered by social security as part of a retirement system does not terminate the social security coverage.) Additionally, information was obtained from the county to the effect that the county ceased to carry workmen's compensation or public liability insurance effective with the month of April 1962; prior to April 1962 the operators were directly supervised by the county commissioners, whereas only "checks" were made thereafter to see whether the terms of the contract were being observed; personal services were required prior to April 1962, but not thereafter; and reports were not operator might charge for after hours crossings was fixed by each operator at his discretion. The contract provides for submittal of disputes between passengers and operators to the county commissioners for disposition; the county alleged, however, that such disputes were to be settled by the operators.
The operators, on the other hand, indicated that the only significant changes beginning April 1962 were that the county ceased to furnish gasoline and oil for the ferry and that the operator's monetary compensation was increased from $300 a month to $350 to cover the cost of these items. They stated that before and after April 1962 they were required to submit periodic reports of the number of crossings to the county commissioners (one operator disagreed on this point, indicating he was not required to file reports); and that a county commissioner or other county employee regularly checked on the operation of the ferries. It also appears from information obtained from the operators that disputes with passengers were rare and were not, in practice, referred to the county commissioners for settlement. The operators are of the view that the county entered into the contractual arrangement to avoid paying overtime and to overcome the practice of some operators of converting county-supplied gasoline and oil to personal use.
The Commissioner found on review pursuant to the State's request that the preponderance of evidence in file established that the only significant change in the relationship after March 1962 was that the county ceased to furnish gasoline and oil and instead increased the operator's remuneration to cover the cost of those items. The Commissioner further found that although the county may have intended to establish an independent contractual relationship with the ferry operators, the actual changes in the extent of control exercised over the activities of the operators did not suffice to bring them within the concept of self- employment; and that the terms of the contract itself, which specified the hours of work, the days on which services were to be provided, as well as the duties of the operators and the place where services were to be performed, established an employment relationship. On the basis of these findings, the Commissioner affirmed the assessments.
Back to Table of Contents