DIRECTIVE	:	UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 22-80
TO	:	ALL STATE EMPLOYMENT SECURITY AGENCIES
FROM	:	OFFICE OF THE DEPUTY ASSISTANT SECRETARY ROBERTS T. JONES LEWIS Administrator Office of Management Assistance
SUBJECT	:	Coverage of Agricultural or Domestic Service Performed for State or Local Government Entities or Nonprofit Organizations

1. Purpose. To advise State agencies of the applicability of the size-of-firm limitations on required coverage of service performed in agricultural labor or domestic work to such service when performed for State or local government entities or nonprofit organizations.

2. Reference. Sections 3304(a)(6)(A), 3306(c), 3309(a)(1), FUTA; P.L.94-566 and P.L. 96-84.

3. Background. Prior to January 1, 1978, the Federal Unemployment Tax Act did not provide coverage of agricultural labor. Section 3306(c)(1)(A), FUTA, was amended by P.L. 94-566 and P.L. 96-84 to include as "employment" agricultural labor if such service is performed for a person who-

   "(i)  during any calendar quarter in the calendar year or preceding calendar year paid remuneration in cash of $20,000 or more to individuals employed in agricultural labor (including labor performed by an alien referred to in subparagraph (B)), or

   "(ii)  on each of some 20 days during the calendar year or the preceding calendar year, each day being in a different calendar week, employed in agricultural labor (including labor performed by an alien referred to in subparagraph (B)) for some portion of the day (whether or not at the same moment of time) 10 or more individuals . . ."

   (Note: Prior to the amendments made by P.L. 96-84, effective January 1, 1980, service performed by an alien referred to in section 3306(c)(1)(B), FUTA, was not required to be covered and was not required to be taken into account in determining whether the size of firm provisions of section 3306(c)(1)(A)(i) and (ii) were met. P.L. 96-84 extended the exemption from coverage of alien agricultural labor until January 1, 1982, but required consideration of such service in determining size of firm beginning January 1, 1980.)

   Prior to January 1, 1978, the Federal Unemployment Tax Act did not provide coverage of domestic service in a private home, local college club, or local chapter of a college fraternity or sorority. Section 3306(c)(2), FUTA, was amended by P.L. 94-566 to include as "employment" such service performed after December 31, 1977, if the person for whom the service was performed--

   ". . . paid cash remuneration of $1,000 or more to individuals employed in such domestic service in any calendar quarter in the calendar year or the preceding calendar year . . ."

   P.L. 94-566 also amended sections of the FUTA to require that State laws provide, as a condition for certification of the States, for coverage of services performed for State and local government entities and certain nonprofit organizations. Specific exceptions from the requirement for such coverage of such services are listed in section 3306(c), paragraphs (1) through (6) and (9) through (17), FUTA, and section 3309(b), FUTA. In addition, section 3309(c), FUTA, limits the requirement for coverage of services performed for a nonprofit organization to service in the employ of an organization which had 4 or more employees in employment on each of 20 days during the calendar year or the preceding calendar year, each day being in a different week.

4. Interpretation. The question has been raised as to whether, in determining the liability for coverage of a government entity or nonprofit organization, the size-of-firm limitations on agricultural labor and domestic service in section 3306(c)(1) and (2), FUTA, may be taken into account. The answer is yes. The following examples are offered:

   (1)  A State government entity functions as the State farm. The entity employs three office workers and nine individuals performing agricultural labor. Wages paid for agricultural labor have been less than $20,000 in each quarter, of the current and preceding calendar year. Because the minimum size-of-firm requirements for coverage of agricultural labor (3306(c)(1), FUTA) have not been met, the service performed by the agricultural workers is not in "employment" as defined in the FUTA. The State law is, therefore, not required to cover those nine agricultural workers. The three office workers must be covered under the State law.

   (2)  A local chapter of a college fraternity, which is a nonprofit organization, regularly employs four workers--one in agricultural labor, one in domestic work, and two in other jobs. Wages paid for agricultural labor have been less than $20,000 in each quarter of the current year and the preceding calendar year, and wages of domestic service have been less than $1,000 in each of these quarters. Thus, the minimum size-of-firm criteria for agricultural labor and domestic service (3306(c)(1) and (2), respectively) have not been met, and the service performed by the agricultural laborer and domestic worker are not in "employment." This leaves only two individuals in employment for the nonprofit organization. Since section 3309(c), FUTA, provides that coverage is required for a nonprofit organization only if it employs at least four workers in at least 20 different weeks, and since this coverage criterion is not met in the examples given, the nonprofit employer would not be required by the FUTA to be covered under the State law.

5. Action Required. State Administrators are requested to provide the above information to the appropriate staff. SESAs may wish to review the coverage provisions in their unemployment insurance laws in light of the explanation provided above.

6. Inquiries. Questions should be directed to the appropriate regional office.