!Creation Date: 09/16/22> <!Author: Arizona Legislative Council> <!Typist: dbupdate>
23-613.01. Employee; definition; exempt employment
A. "Employee" means any individual who performs services for an employing unit and who is subject to the direction, rule or control of the employing unit as to both the method of performing or executing the services and the result to be effected or accomplished. Indications of control by the employing unit include controlling the individual's hours of work, location of work, right to perform services for others, tools, equipment, materials, expenses and use of other workers and other indicia of employment, except employee does not include:
1. An individual who performs services as an independent contractor, business person, agent or consultant, or in a capacity characteristic of an independent profession, trade, skill or occupation.
2. An individual subject to the direction, rule or control or subject to the right of direction, rule or control of an employing unit solely because of a law regulating the organization, trade or business of the employing unit.
3. An individual or class of individuals that the federal government has decided not to and does not treat as an employee or employees for federal unemployment tax purposes, as established by the outcome of an audit or other affirmative treatment by the internal revenue service of any taxpayer whose tax returns include income from the independent contractor relationship.
4. An individual if the employing unit demonstrates the individual performs services in the same manner as a similarly situated class of individuals that the federal government has decided not to and does not treat as an employee or employees for federal unemployment tax purposes.
5. An individual to whom all of the following apply:
(a) Performs officiating services in recreational, interscholastic or intercollegiate sporting events or contests on a contest-by-contest basis.
(b) Has the ability to accept or reject assignments to officiate a sporting event or contest.
(c) Has the right to officiate contests for multiple organizations or entities.
(d) Is not otherwise employed by the sponsoring school, association of schools or the organization, this state, or a political subdivision of this state sponsoring the sporting event or contest.
6. A medical or health care professional who contracts with a medical practice group or hospital, whether directly or through an agent, and who is characterized by all of the following:
(a) Observes the practices commonly associated with operating as a medical or professional entity, such as a professional corporation, a limited liability company or a contractor, and uses the practices of those entities for compensation, billing for services and filing tax returns.
(b) Is not paid wages and does not have wage withholdings from the contracted medical practice group or hospital.
(c) Is not provided employee benefits by the contracted medical practice group or hospital.
7. A home care services provider that contracts with a person other than as an employee, whether directly or through an agent, to furnish nonmedical therapeutic and restorative health-related or life assistance services, except behavioral health services, such as general supervision, protective, preventative and personal care, activities and living skills training, meals, housekeeping, companionship and health monitoring at the location where the recipient resides.
B. For the purposes of subsection A, paragraph 5 of this section, "officiating services" means overseeing the play of a sporting event or contest, judging whether the rules are being followed and penalizing participants for infringing the rules.
C. Notwithstanding this section, an individual or class of individuals shall not be treated as an employee by the department for purposes of this chapter if, before the department's determination that the individual or class of individuals at issue is an employee:
1. The individual or class of individuals had been performing services for the employing unit.
2. The department had inspected work records of the employing unit for time periods that the individual or class of individuals had been performing these services.
3. The individual or class of individuals at issue was not included on the contribution and wage reports of the employing unit.
4. After its inspection the department concluded in writing provided to the employing unit that either:
(a) No change or changes in the inspected reports were necessary.
(b) The individual or class of individuals in question did not constitute an employee for purposes of this chapter.
5. At no time between the date of the written determination prescribed in paragraph 4 of this subsection, and the department's subsequent conclusion that the individual or class of individuals at issue constitutes an employee, did the department notify the employing unit in writing that the individual or class of individuals at issue now constitutes an employee for purposes of this chapter.
D. Subsection C of this section does not apply if either:
1. There has been a substantial and material change in the facts on which the writing required by subsection C, paragraph 4 of this section was based.
2. The conclusion reached by the department pursuant to subsection C, paragraph 4 of this section was the result of false statements, misrepresentation, fraud or intimidation on the part of the employing unit.
E. The following services are exempt employment under this chapter, unless there is evidence of direction, rule or control sufficient to satisfy the definition of an employee under subsection A of this section, which is distinct from any evidence of direction, rule or control related to or associated with establishing the nature or circumstances of the services considered pursuant to this subsection:
1. Services that are not a part or process of the organization, trade or business of an employing unit and that are performed by an individual who is not treated by the employing unit in a manner generally characteristic of the treatment of employees.
2. Services performed by an individual for an employing unit or its clients through isolated or occasional transactions, regardless of whether the services are a part or process of the organization, trade or business of the employing unit.
F. Notwithstanding this section, an individual or class of individuals determined to be an employee or employees for purposes of the federal unemployment tax act, as amended (26 United States Code sections 3301 through 3311), are employees under this chapter.
G. Notwithstanding any other provision of this chapter, this section applies to an employing unit to which the provisions of section 23-750 apply only to the extent not inconsistent with the requirements of 26 United States Code sections 3304 (a)(6) and 3309.
H. For the purposes of determining employee status, the department shall consider all of the employment-related facts and may not base a determination on the facts that:
1. The individual performs services as a sole proprietorship.
2. The individual has executed a restrictive covenant, trade secret agreement or other confidentiality agreement with the employing unit.
3. The services of the individual are subject to standards for quality, time or location required by a client or customer of the putative employing unit.