SSR 73-54: SECTIONS 210(j)(2) and 218(s) (42 U.S.C. 410(j)(2) and 418(s)). -- STATE AND LOCAL COVERAGE -- COMMISSIONER'S RULING ON STATE'S REQUEST FOR REVIEW -- PENNSYLVANIA -- SERVICES AS SCHOOL DENTIST
20 CFR 404.1004(c) and 404.1270
SSR 73-54
- The Commissioner affirmed an allowance of credit based on a finding by the U.S. District Court for Western District of Pennsylvania that services performed by an individual as a school dentist were not performed in an employment relationship with the school systems which engaged his services and thus were not covered under the Federal-State section 218 agreement under Social Security Act. While Pennsylvania statute authorizes all school districts to employ school dentists, such provision does not per se establish a common-law employment relationship between the respective school districts and the dentists who examine children's teeth in the local schools.
The State of Pennsylvania timely requested a review under Section 218(s) of the Social Security Act, as amended, of the Administration's allowance of credit based on a finding by the United States District Court for the Western District of Pennsylvania that the services performed by an individual as a school dentist were not performed in an employment relationship with the school systems who engaged his services and thus were not covered under the Federal-State section 218 agreement. The State is of the view that the individual was an employee of the school systems and that the services performed were covered under the Pennsylvania agreement for coverage of State and local employees.
The court decision resulted from an appeal, pursuant to Section 205(g) of the Social Security Act, by the individual after he had exhausted all administrative appeals of the Administration's determination that the services in question were performed in an employment relationship. The Administration did not appeal the court decision. However, the substantive facts of the case must again be reviewed since the State, which was not a party to the court action, has requested a review of the credit issued based on the corresponding determination that contributions were not due on the individual's earnings.
The facts in this matter establish that the individual initiated an earnings discrepancy investigation on February 10, 1962, when he requested that wages allegedly paid to him as an employee of the school districts of McCandless Township, Marshall Township, Franklin Township, and Bradford Woods Borough (North Allegheny Joint School System) be deleted from the Administration's records. Subsequent development also disclosed that his services were similarly engaged by the Bellevue Borough School District. While some of his services were performed prior to 1958, at the time he initiated the earnings discrepancy statutory limitations barred the correction of discrepant earnings for years prior to 1958.
On January 10, 1966, the Administration notified the individual of the determination that he was an employee of the school systems in question and that the remuneration he received was properly wages under the applicable provision of the Social Security Act. This determination was a combined initial and reconsideration decision since the individual had prematurely requested a hearing on the matter. He then timely requested a hearing before an Administrative Law Judge of the Bureau of Hearings and Appeals and the hearing decision, dated July 7, 1967, affirmed the initial and reconsideration determination. A request for review of the Administrative Law Judge's decision was denied by the Appeals Council of the Bureau of Hearings and Appeals. The individual then appealed the matter to a U.S. District Court and on February 19, 1969, the U.S. District Court for the Western District of Pennsylvania held that his relationship with the school districts was that of an independent contractor.
The District Court judge on review of the evidence based his decision on the following facts:
(1) The subject individual is a licensed dentist in Pennsylvania.
(2) He applied approximately 93 percent of his professional time to the general practice of dentistry. The remaining 7 percent of his time was spent as a school dentist examining children.
(3) The school districts have no control over the manner, type or method of his examinations, all of which are completely at his own discretion.
(4) He was not compelled to remain at the school district if there were no students to be examined and he was free to change his school schedule to conform to emergencies in his private practice.
(5) His services, as a school dentist, were performed under written contract with the Bellevue Borough School District but he had no written contract with the North Allegheny Joint School System.
(6) The individual was paid either a flat fee for each student examined or an established annual fee.
(7) He was advised by school nurses as to which school should be used for his student examinations.
(8) The individual controlled the manner and method of his school examinations and was not subject to supervision.
Based upon the U.S. District Court decision, the Administration deleted the earnings in question from its records relative to the individual and issued the State credit for the contributions paid with respect to his services as a school dentist. The State timely requested a review, pursuant to Section 218(s) of the Social Security Act, of the determination allowing the issuance of the credit.
Section 210 of the Social Security Act, as amended, reads in pertinent part as follows:
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For the purpose of this title --
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(j) The term 'employee' means --
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- (2) any individual who under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee . . .
Subpart K of Social Security Regulations No. 4, in pertinent part, provides as follows:
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404.1004 Who Are Employees. --
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- (c) Common-Law Employees. --
- (1) Every individual is an employee if under the usual common-law rules the relationship between him and the person for whom he performs services is the legal relationship of employer and employee.
- (2) Generally, such relationship exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished; that is, an employee is subject to the will and control of the employer not only as to what shall be done but how it shall be done. In this connection, it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he has the right to do so. The right to discharge is also an important factor indicating that the person possessing that right is an employer. Other factors characteristic of an employer, but not necessarily present in every case, are the furnishing of tools and the furnishing of a place to work to the individual who performs the services. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result, he is an independent contractor. An individual performing services as an independent contractor is not as to such services an employee under the usual common-law rules. Individuals such as . . . dentists . . . engaged in the pursuit of an independent trade, business, or profession, in which they offer their services to the public, are independent contractors and not employees . . .
Statutory authority for the conduct of school health services is found in Article XIV of the Pennsylvania School Code. This code reads in pertinent part as follows:
- Section 1401. Definitions
- (5) 'School dentist' means a doctor of dental surgery or dental medicine legally qualified to practice dentistry in the Commonwealth, who has been appointed or approved by the Secretary of Health.
- Section 1403. Dental examinations
- All children of school age in the Commonwealth, (i) upon original entry into school, (ii) while in the third grade, and (iii) while in the seventh grade, shall be given a dental examination by a school dentist.
- Section 1404. Place of examination . . . .
- The . . . school dentist shall conduct . . . dental . . . examinations in rooms set aside for this special purpose . . . .
- Section 1410. Employment of school health personnel
- Except as otherwise provided in this article, all school districts alone or jointly with other districts or joint school boards shall employ . . . school dentists but only with the approval of the Secretary of Health, and shall compensate them on a basis agreed upon by the school physician or school dentist and the employing district or joint school board . . . .
The State is of the opinion that an employment relationship existed between the dentist and the school systems that engaged his services. The State also stresses that the request for review under Section 218(s) of the Social Security Act, as amended, constitutes a separate action, apart from the court decision and does not constitute a request for appeal or review of the court's decision.
It is the position of the Social Security Administration that no employer-employee relationship existed between the dentist and the North Allegheny Joint School System and the Bellevue Borough School District. This position is based on the decision issued February 19, 1969, by the United States District Court for the Western District of Pennsylvania. Further consideration of the factual situation leads to the conclusion that the court's decision was the proper conclusion to be drawn in this case.
A provision in the State statute authorizing all school districts to employ school dentists does not per se establish a common-law employment relationship between the respective school districts and the dentists who examine the children's teeth in the local schools. Generally, an employment relationship exists only when the person for whom the services are performed has the right to control and direct the individual who performs the service, not only as to the result to be accomplished by the work but also as to the manner and means by which the result is accomplished. The evidence in this case negates a finding that the school district had authority to direct and control the individual's activities as a school dentist to a degree sufficient to establish an employment relationship.
While the State has the right to request a review of the credit pursuant to section 218(s) of the Act, the court decision concerning the individual's employment status and earnings is binding on the Administration insofar as the issues have been decided vis-a-vis the individual but is not binding on the Administration vis-a-vis the State of Pennsylvania.
The Commissioner found on review pursuant to the State's request, that an employment relationship did not exist between the individual and the school systems who engaged his services during the periods in question. On the basis of this finding the Commissioner affirmed the allowance of credit.