SSR 69-61: SECTION 218(s). -- STATE AND LOCAL COVERAGE -- COMMISSIONER'S RULING ON STATE'S REQUEST FOR REFUND -- MONTANA -- STATUS OF MISCELLANEOUS FEES RECEIVED BY JUSTICES OF THE PEACE
SSR 69-61
- Where a justice of the peace in Montana whose services are covered under the State's section 218 coverage agreement receives and retains, in addition to his regular salary, certain fees designated under State law as "miscellaneous fees," primarily for performing marriage ceremonies, the Commissioner, on the basis of his finding that the primary source of income is salary and hence the justice of the peace does not occupy an excluded fee-basis position, and that the fees constitute compensation for employment and are wages for services covered under the State's section 218 coverage agreement, affirmed a denial of the State's claim for refund of contributions.
The State of Montana timely requested a review pursuant to section 218(s) of a disallowance of a claim for refund of contributions with respect to certain fees received by a justice of the peace. 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 State is of the view that the fees received from third parties by the justice of the peace for the performance of marriage ceremonies do not constitute wages under the State's section 218 coverage agreement.
The facts in this matter are that the individual was elected in a township with a population in excess of 18,000 to the office of justice of the peace in Yellowstone County in the fall of 1956. He continued to serve as a justice of the peace through 1962, the period in question. As an officer of the county, he was an employee for social security purposes pursuant to section 218(b)(3) of the Act. He was in a position under the Public Employees Retirement System of Montana. Services of employees of Yellowstone County in positions under the retirement system were covered under the State's social security agreement effective January 1, 1955. He was paid a salary by the county as prescribed by statute. The salary was reported as wages. He also collected fees from third parties for the performance of certain services or acts; however, he was entitled to keep only those fees collected which were designated by statute as "miscellaneous fees." The "miscellaneous fees" he received consisted primarily of $5 fees for performing marriage ceremonies and returning the certificates to the district curt. These fees were not reported as wages.
The Social Security Act, as pertinent hereto, provides:
- Section 209
- For the purposes of this title, the term "wages" means . . . remuneration paid after 1950 for employment, . . .
- Section 218
- (a)(2) . . ., for the purposes of this title the term "employment" includes any service included under an agreement entered into under this section.
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(b) For the purposes of this section --
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- (c)(3) Such agreement shall, if the State requests it, exclude (in the case of any coverage group) any one or more of the following:
- (A) All services in any class or classes of . . . (iii) positions the compensation for which is on a fee basis;
Section 404.1026 of Subpart K of Social Security Regulations No. 4 provides:
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(a) General --
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- (2) The term "wages" means all remuneration for employment unless specifically excepted under section 209 of the Act (see § 404.1027).
- (3) The name by which the remuneration for employment is designated is immaterial. Thus, salaries, fees . . . are wages within the meaning of the Act if paid as compensation for employment.
Revised Codes of Montana, as pertinent hereto, provides:
- Section 25-304. Miscellaneous fees.
- The following miscellaneous fees shall also be collected by justices of the peace, to wit:
- For copies of papers on file or docket, per folio, twenty cents.
- For taking the acknowledgement of an instrument, for the first name, one dollar.
- For each additional name, fifty cents.
- For administering oath and jurat, fifty cents.
- For all services relating to lost or unclaimed property, as provided by sections 20-410 to 20-412, two dollars.
- For performing the marriage ceremony and returning certificate to clerk of the district court, five dollars.
- Section 25-305. Justices may retain fees, when.
- justices of the peace shall retain as their compensation the fees herein provided for, save and except in those townships where a stated salary is provided by law to be paid to justices of the peace; provided, however, that in all cases justices of the peace may retain the miscellaneous fees provided for in the preceding section.
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Section 25-306. Salaries of justices of the peace in certain townships --
hours -- quarters.
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- . . . justices of the peace in townships having a population of more than eighteen thousand (18,000) people, shall each receive a salary . . ., payable monthly from the county treasury; justices of the peace in such townships shall receive no other additional fees or compensation whatever, except that they may receive and keep those fees designated as "miscellaneous fees" by section 25-304; . . .
- Section 25-307. Collection and disposition of fees in townships of ten thousand and upwards -- itemized statement.
- Justices of the peace in townships having a population of ten thousand people and upwards shall collect the fees prescribed by law for justices of the peace . . ., and shall pay the same into the county treasury of the county . . ., and shall also file therewith an itemized statement showing all fees received during the preceding month in connection with his office; . . .
- This section, however, shall not apply to "miscellaneous fees" excepted by section 25-304, supra.
- Section 48-116. By whom marriages may be solemnized.
- Marriage may be solemnized by either a justice of the supreme court, judge of the district court, justice of the peace, priest, or minister of the gospel of any denomination, or the mayor of any city. Marriages may also be solemnized by religious societies according to the usage of such societies.
There is no disagreement as to the above facts.
It is the State's position that the income which the justice of the peace received as fees from third parties is not subject to the withholding of contributions by the county since (a) in the State's original agreement fee-basis officials were excluded from coverage, and that to the extent an individual serves in such a capacity he should be so considered and excluded; (b) the services were performed for individual members of the public and not for the county; and, (c) the justice of the peace was moonlighting in regard to the "miscellaneous fees" he received since he provided services outside of working hours which were not accountable to the county and the services involved were not official duties.
The information received from the State indicates that the compensation received by the justice of the peace was primarily salary, and hence, he was not in a fee-basis position within the meaning of section 218(c)(3)(A)(iii) of the Act. Performing a marriage ceremony is part of the function of the single position of a justice of the peace. The legislative intent behind the optional exclusion of fee-basis positions was to provide a State an opportunity to be relieved of the responsibility of reporting amounts received by employees for services in positions compensated solely or primarily by fees. It was not the intent of the Congress, however, to allow exclusion of services in such a position when the primary source of remuneration was salary and the fees received were only incidental thereto. In this case the justice of the peace was compensated by a salary which varied from $3,200 to $3,600 during the years in question while the fees received varied from $200 to $300 each year.
The name by which remuneration for employment is designated is immaterial. Thus fees are "wages" within the meaning of the Act if paid as compensation for employment. The Administration has consistently held that the controlling consideration in determining that an employee is paid "wages" is whether he receives remuneration for services in employment, not the source of payment of the remuneration. Therefore, legally authorized fees paid by third persons to public officials are "wages" and amounts so received by such officials should be included in the contribution returns and wage reports filed.
The highest court of the State, In Re Shun T. Takahashi's Estate, 129 P.2d 217, 113 Mont. 490 (1942), has declared the control and regulation of marriage to be a matter of concern to the State. The court in that matter stated:
- The control and regulation of marriage is a matter of domestic concern within each state. In the adoption of policies in respect thereto, which in its judgment is promotive of the welfare of its society and of the individual members thereof, the state is sovereign. . . .
Further, the power of the justice of the peace to perform marriage ceremonies arises from State statute. The fact that a marriage ceremony can be performed by one not an employee of the State is not significant in this regard. When a justice of the peace does so, he is exercising the sovereign authority of the State pursuant to, and in accordance with, the authority vested in him by the law of the State. To say that the justice in these circumstances is performing no service for his employer is to ignore completely the factual and legal context in which he performs such services. The degree to which official duties are performed in the interest of particular individuals or of the public at large varies with the duty performed. It does not follow that, because performed at the instance or for the benefit of individuals, such duties are not performed for the sovereign.
The Administration's position concerning the status of fees received by public officers or employees as compensation for employment is based on the factual situation involved. If the service for which a fee is paid is a mandatory function of the office of justice of the peace; if the fee is provided for by statute; or if the fee is required to be reported to the employer, the fee constitutes compensation for employment and therefor is "wages." It is clear that the fee received by the justice of the peace is set by statute and thus constitutes "wages," even though not paid by the employer.
The Commissioner found, on review pursuant to the State's request, that the services of the justice of the peace for Yellowstone County, were performed in a single position covered by the State's coverage agreement and that the fees he received and retained in addition to his salary were "wages" paid for such services. On the basis of this finding, the Commissioner affirmed the disallowance.