*SB0231.1*

February 1, 2019

SENATE BILL No. 231_____

DIGEST OF SB 231 (Updated January 30, 2019 4:11 pm - DI 132)

Citations Affected: IC 22-2; IC 22-4.

Synopsis: Direct sales. Excludes a direct seller from the definition of"employee" for purposes of the minimum wage law. Excepts, undercertain conditions, an individual engaged as a direct seller fromreceiving unemployment benefits. Excludes services by direct sellersfrom the definition of "employment" under the unemploymentcompensation system.

Effective: July 1, 2019.

Messmer

January 3, 2019, read first time and referred to Committee on Pensions and Labor.January 31, 2019, amended, reported favorably — Do Pass.

SB 231—LS 6653/DI 128

February 1, 2019

First Regular Session of the 121st General Assembly (2019)

PRINTING CODE. Amendments: Whenever an existing statute (or a section of the IndianaConstitution) is being amended, the text of the existing provision will appear in this style type,additions will appear in this style type, and deletions will appear in this style type. Additions: Whenever a new statutory provision is being enacted (or a new constitutionalprovision adopted), the text of the new provision will appear in this style type. Also, theword NEW will appear in that style type in the introductory clause of each SECTION that addsa new provision to the Indiana Code or the Indiana Constitution. Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflictsbetween statutes enacted by the 2018 Regular and Special Session of the General Assembly.

SENATE BILL No. 231

A BILL FOR AN ACT to amend the Indiana Code concerning laborand safety.

Be it enacted by the General Assembly of the State of Indiana:

1 SECTION 1. IC 22-2-2-3 IS AMENDED TO READ AS FOLLOWS2 [EFFECTIVE JULY 1, 2019]: Sec. 3. As used in this chapter:3 "Commissioner" means the commissioner of labor or the4 commissioner's authorized representative.5 "Department" means the department of labor.6 "Occupation" means an industry, trade, business, or class of work7 in which employees are gainfully employed.8 "Employer" means any individual, partnership, association, limited9 liability company, corporation, business trust, the state, or other

10 governmental agency or political subdivision during any work week in11 which they have two (2) or more employees. However, it shall not12 include any employer who is subject to the minimum wage provisions13 of the federal Fair Labor Standards Act of 1938, as amended (29 U.S.C.14 201-209).15 "Employee" means any person employed or permitted to work or16 perform any service for remuneration or under any contract of hire,17 written or oral, express or implied by an employer in any occupation,

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1 but shall not include any of the following:2 (a) Persons less than sixteen (16) years of age.3 (b) Persons engaged in an independently established trade,4 occupation, profession, or business who, in performing the5 services in question, are free from control or direction both under6 a contract of service and in fact.7 (c) Persons performing services not in the course of the8 employing unit's trade or business.9 (d) Persons employed on a commission basis.

10 (e) Persons employed by their own parent, spouse, or child.11 (f) Members of any religious order performing any service for that12 order, any ordained, commissioned, or licensed minister, priest,13 rabbi, sexton, or Christian Science reader, and volunteers14 performing services for any religious or charitable organization.15 (g) Persons performing services as student nurses in the employ16 of a hospital or nurses training school while enrolled and17 regularly attending classes in a nurses training school chartered18 or approved under law, or students performing services in the19 employ of persons licensed as both funeral directors and20 embalmers as a part of their requirements for apprenticeship to21 secure an embalmer's license or a funeral director's license from22 the state, or during their attendance at any schools required by law23 for securing an embalmer's or funeral director's license.24 (h) Persons who have completed a four (4) year course in a25 medical school approved by law when employed as interns or26 resident physicians by any accredited hospital.27 (i) Students performing services for any school, college, or28 university in which they are enrolled and are regularly attending29 classes.30 (j) Persons with physical or mental disabilities performing31 services for nonprofit organizations organized primarily for the32 purpose of providing employment for persons with disabilities or33 for assisting in their therapy and rehabilitation.34 (k) Persons employed as insurance producers, insurance35 solicitors, and outside salesmen, if all their services are performed36 for remuneration solely by commission.37 (l) Persons performing services for any camping, recreational, or38 guidance facilities operated by a charitable, religious, or39 educational nonprofit organization.40 (m) Persons engaged in agricultural labor. The term shall include41 only services performed:42 (1) on a farm, in connection with cultivating the soil, or in

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1 connection with raising or harvesting any agricultural or2 horticultural commodity, including the raising, shearing,3 feeding, caring for, training, and management of livestock,4 bees, poultry, and furbearing animals and wildlife;5 (2) in the employ of the owner or tenant or other operator of a6 farm, in connection with the operation, management,7 conservation, improvement, or maintenance of the farm and its8 tools and equipment if the major part of the service is9 performed on a farm;

10 (3) in connection with:11 (A) the production or harvesting of maple sugar or maple12 syrup or any commodity defined as an agricultural13 commodity in the Agricultural Marketing Act, as amended14 (12 U.S.C. 1141j);15 (B) the raising or harvesting of mushrooms;16 (C) the hatching of poultry; or17 (D) the operation or maintenance of ditches, canals,18 reservoirs, or waterways used exclusively for supplying and19 storing water for farming purposes; and20 (4) in handling, planting, drying, packing, packaging,21 processing, freezing, grading, storing, or delivering to storage,22 to market, or to a carrier for transportation to market, any23 agricultural or horticultural commodity, but only if service is24 performed as an incident to ordinary farming operation or, in25 the case of fruits and vegetables, as an incident to the26 preparation of fruits and vegetables for market. However, this27 exception shall not apply to services performed in connection28 with any agricultural or horticultural commodity after its29 delivery to a terminal market or processor for preparation or30 distribution for consumption.31 As used in this subdivision, "farm" includes stock, dairy, poultry,32 fruit, furbearing animals, and truck farms, nurseries, orchards, or33 greenhouses or other similar structures used primarily for the34 raising of agricultural or horticultural commodities.35 (n) Those persons employed in executive, administrative, or36 professional occupations who have the authority to employ or37 discharge and who earn one hundred fifty dollars ($150) or more38 a week, and outside salesmen.39 (o) Any person not employed for more than four (4) weeks in any40 four (4) consecutive three (3) month periods.41 (p) Any employee with respect to whom the Interstate Commerce42 Commission has power to establish qualifications and maximum

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1 hours of service under the federal Motor Carrier Act of 1935 (492 U.S.C. 304(3)) or any employee of a carrier subject to IC 8-2.1.3 (q) A person engaged in services as a direct seller. The term4 shall include only services performed:5 (1) by a person that is in the trade or business of:6 (A) selling, or soliciting the sale of, consumer products or7 services to any buyer on a buy-sell basis,8 deposit-commission basis, or similar basis, in any place9 other than in a permanent retail establishment;

10 (B) selling, or soliciting the sale of, consumer products or11 services in any place other than in a permanent retail12 establishment; or13 (C) delivering or distributing newspapers or shopping14 news, including any services directly related to such15 trade or business;16 (2) when substantially all the remuneration, whether or not17 paid in cash, for the performance of the services is directly18 related to sales or other output, including the performance19 of services, rather than the number of hours worked; and20 (3) when the services performed by the person are21 performed pursuant to a written contract and the contract22 provides that the person who performs the services will not23 be treated as an employee for tax purposes under the24 contract.25 SECTION 2. IC 22-4-3-6 IS ADDED TO THE INDIANA CODE26 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY27 1, 2019]: Sec. 6. An individual is not totally unemployed,28 part-totally unemployed, or partially unemployed for any week in29 which the department finds that the individual is engaged in30 services as a direct seller, provided the following conditions are31 met:32 (1) The services are performed in the trade or business of:33 (A) selling, or soliciting the sale of, consumer products or34 services to any buyer on a buy-sell basis,35 deposit-commission basis, or similar basis, in any place36 other than in a permanent retail establishment;37 (B) selling, or soliciting the sale of, consumer products or38 services in any place other than in a permanent retail39 establishment; or40 (C) delivering or distributing newspapers or shopping41 news, including any services directly related to such trade42 or business.

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1 (2) Substantially all the remuneration, whether or not paid in2 cash, for the performance of the services is directly related to3 sales or other output, including the performance of services,4 rather than the number of hours worked.5 (3) The services performed by the person are performed6 pursuant to a written contract and the contract provides that7 the person who performs the services will not be treated as an8 employee for tax purposes under the contract.9 SECTION 3. IC 22-4-8-3, AS AMENDED BY P.L.171-2016,

10 SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE11 JULY 1, 2019]: Sec. 3. "Employment" shall not include the following:12 (1) Except as provided in section 2(i) of this chapter, service13 performed prior to January 1, 1978, in the employ of this state,14 any other state, any town or city, or political subdivision, or any15 instrumentality of any of them, other than service performed in16 the employ of a municipally owned public utility as defined in this17 article; or service performed in the employ of the United States of18 America, or an instrumentality of the United States immune under19 the Constitution of the United States from the contributions20 imposed by this article, except that to the extent that the Congress21 of the United States shall permit states to require any22 instrumentalities of the United States to make payments into an23 unemployment fund under a state unemployment compensation24 statute, all of the provisions of this article shall be applicable to25 such instrumentalities, in the same manner, to the same extent,26 and on the same terms as to all other employers, employing units,27 individuals, and services. However, if this state shall not be28 certified for any year by the Secretary of Labor under Section29 3304 of the Internal Revenue Code the payments required of such30 instrumentalities with respect to such year shall be refunded by31 the commissioner from the fund in the same manner and within32 the same period as is provided in IC 22-4-32-19 with respect to33 contribution erroneously paid or wrongfully assessed.34 (2) Service with respect to which unemployment compensation is35 payable under an unemployment compensation system36 established by an Act of Congress; however, the department is37 authorized to enter into agreements with the proper agencies38 under such Act of Congress which agreements shall become39 effective ten (10) days after publication thereof, in accordance40 with rules adopted by the department under IC 4-22-2, to provide41 reciprocal treatment to individuals who have, after acquiring42 potential rights to benefits under this article, acquired rights to

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1 unemployment compensation under such Act of Congress, or who2 have, after having acquired potential rights to unemployment3 compensation under such Act of Congress, acquired rights to4 benefits under this article.5 (3) "Agricultural labor" as provided in section 2(l)(1) of this6 chapter shall include only services performed:7 (A) on a farm, in the employ of any person, in connection with8 cultivating the soil or in connection with raising or harvesting9 any agricultural or horticultural commodity, including the

10 raising, shearing, feeding, caring for, training, and11 management of livestock, bees, poultry, and furbearing12 animals and wildlife;13 (B) in the employ of the owner or tenant or other operator of14 a farm, in connection with the operation, management,15 conservation, improvement, or maintenance of such farm and16 its tools and equipment, or in salvaging timber or clearing land17 of brush and other debris left by a hurricane, if the major part18 of such service is performed on a farm;19 (C) in connection with the production or harvesting of any20 commodity defined as an agricultural commodity in Section21 15(g) of the Agricultural Marketing Act (12 U.S.C. 1141j(g))22 as amended, or in connection with the operation or23 maintenance of ditches, canals, reservoirs, or waterways, not24 owned or operated for profit, used exclusively for supplying25 and storing water for farming purposes;26 (D) in the employ of:27 (i) the operator of a farm in handling, planting, drying,28 packing, packaging, processing, freezing, grading, storing,29 or delivering to storage or to market or to a carrier for30 transportation to market, in its unmanufactured state, any31 agricultural or horticultural commodity; but only if such32 operator produced more than one-half (1/2) of the33 commodity with respect to which such service is performed;34 or35 (ii) a group of operators of farms (or a cooperative36 organization of which such operators are members) in the37 performance of service described in item (i), but only if such38 operators produce more than one-half (1/2) of the39 commodity with respect to which such service is performed;40 except the provisions of items (i) and (ii) shall not be deemed41 to be applicable with respect to service performed in42 connection with commercial canning or commercial freezing

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1 or in connection with any agricultural or horticultural2 commodity after its delivery to a terminal market for3 distribution for consumption; or4 (E) on a farm operated for profit if such service is not in the5 course of the employer's trade or business or is domestic6 service in a private home of the employer.7 (4) As used in subdivision (3), "farm" includes stock, dairy,8 poultry, fruit, furbearing animals, and truck farms, nurseries,9 orchards, greenhouses, or other similar structures used primarily

10 for the raising of agricultural or horticultural commodities.11 (5) Domestic service in a private home, local college club, or12 local chapter of a college fraternity or sorority, except as provided13 in section 2(m) of this chapter.14 (6) Service performed on or in connection with a vessel or aircraft15 not an American vessel or American aircraft, if the employee is16 employed on and in connection with such vessel or aircraft when17 outside the United States.18 (7) Service performed by an individual in the employ of child or19 spouse, and service performed by a child under the age of20 twenty-one (21) in the employ of a parent.21 (8) Service not in the course of the employing unit's trade or22 business performed in any calendar quarter by an individual,23 unless the cash remuneration paid for such service is fifty dollars24 ($50) or more and such service is performed by an individual who25 is regularly employed by such employing unit to perform such26 service. For the purposes of this subdivision, an individual shall27 be deemed to be regularly employed to perform service not in the28 course of an employing unit's trade or business during a calendar29 quarter only if:30 (A) on each of some of twenty-four (24) days during such31 quarter such individual performs such service for some portion32 of the day; or33 (B) such individual was regularly employed (as determined34 under clause (A)) by such employing unit in the performance35 of such service during the preceding calendar quarter.36 (9) Service performed by an individual in any calendar quarter in37 the employ of any organization exempt from income tax under38 Section 501 of the Internal Revenue Code (except those services39 included in sections 2(i) and 2(j) of this chapter if the40 remuneration for such service is less than fifty dollars ($50)).41 (10) Service performed in the employ of a hospital, if such service42 is performed by a patient of such hospital.

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1 (11) Service performed in the employ of a school or eligible2 postsecondary educational institution if the service is performed:3 (A) by a student who is enrolled and is regularly attending4 classes at the school or eligible postsecondary educational5 institution; or6 (B) by the spouse of such a student, if such spouse is advised,7 at the time such spouse commences to perform such service,8 that:9 (i) the employment of such spouse to perform such service

10 is provided under a program to provide financial assistance11 to such student by the school or eligible postsecondary12 educational institution; and13 (ii) such employment will not be covered by any program of14 unemployment insurance.15 (12) Service performed by an individual who is enrolled at a16 nonprofit or public educational institution which normally17 maintains a regular faculty and curriculum and normally has a18 regularly organized body of students in attendance at the place19 where its educational activities are carried on as a student in a20 full-time program, taken for credit at such institution, which21 combines academic instruction with work experience, if such22 service is an integral part of such program, and such institution23 has so certified to the employer, except that this subdivision shall24 not apply to service performed in a program established for or on25 behalf of an employer or group of employers.26 (13) Service performed in the employ of a government foreign to27 the United States of America, including service as a consular or28 other officer or employee or a nondiplomatic representative.29 (14) Service performed in the employ of an instrumentality30 wholly owned by a government foreign to that of the United31 States of America, if the service is of a character similar to that32 performed in foreign countries by employees of the United States33 of America or of an instrumentality thereof, and if the department34 finds that the Secretary of State of the United States has certified35 to the Secretary of the Treasury of the United States that the36 government, foreign to the United States, with respect to whose37 instrumentality exemption is claimed, grants an equivalent38 exemption with respect to similar service performed in such39 country by employees of the United States and of40 instrumentalities thereof.41 (15) Service performed as a student nurse in the employ of a42 hospital or nurses' training school by an individual who is

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1 enrolled and is regularly attending classes in a nurses' training2 school chartered or approved pursuant to state law; and service3 performed as an intern in the employ of a hospital by an4 individual who has completed a four (4) year course in a medical5 school chartered or approved pursuant to state law.6 (16) Service performed by an individual as an insurance producer7 or as an insurance solicitor, if all such service performed by such8 individual is performed for remuneration solely by way of9 commission.

10 (17) Service performed by an individual:11 (A) under the age of eighteen (18) in the delivery or12 distribution of newspapers or shopping news, not including13 delivery or distribution to any point for subsequent delivery or14 distribution; or15 (B) in, and at the time of, the sale of newspapers or magazines16 to ultimate consumers, under an arrangement under which the17 newspapers or magazines are to be sold by the individual at a18 fixed price, the individual's compensation being based on the19 retention of the excess of such price over the amount at which20 the newspapers or magazines are charged to the individual,21 whether or not the individual is guaranteed a minimum amount22 of compensation for such service, or is entitled to be credited23 with the unsold newspapers or magazines turned back.24 (18) Service performed in the employ of an international25 organization.26 (19) Except as provided in IC 22-4-7-1, services covered by an27 election duly approved by the agency charged with the28 administration of any other state or federal unemployment29 compensation law in accordance with an arrangement pursuant to30 IC 22-4-22-1 through IC 22-4-22-5, during the effective period of31 such election.32 (20) If the service performed during one-half (1/2) or more of any33 pay period by an individual for an employing unit constitutes34 employment, all the services of such individual for such period35 shall be deemed to be employment; but if the services performed36 during more than one-half (1/2) of any pay period by such an37 individual do not constitute employment, then none of the38 services of such individual for such period shall be deemed to be39 employment. As used in this subsection, "pay period" means a40 period of not more than thirty-one (31) consecutive days for41 which a payment of remuneration is ordinarily made to the42 individual by the employing unit. This subsection shall not be

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1 applicable with respect to services performed in a pay period by2 any such individual where any such service is excepted by3 subdivision (2).4 (21) Service performed by an inmate of a custodial or penal5 institution.6 (22) Service performed as a precinct election officer (as defined7 in IC 3-5-2-40.1).8 (23) Services performed by a direct seller:9 (A) in the trade or business of:

10 (i) selling, or soliciting the sale of, consumer products or11 services to any buyer on a buy-sell basis,12 deposit-commission basis, or similar basis, in any place13 other than in a permanent retail establishment;14 (ii) selling, or soliciting the sale of, consumer products or15 services in any place other than in a permanent retail16 establishment; or17 (iii) delivering or distributing newspapers or shopping18 news, including any services directly related to such19 trade or business;20 (B) when substantially all the remuneration, whether or21 not paid in cash, for the performance of the services is22 directly related to sales or other output, including23 performance of services, rather than the number of hours24 worked; and25 (C) when the services performed by the person are26 performed pursuant to a written contract and the contract27 provides that the person who performs the services will not28 be treated as an employee for tax purposes under the29 contract.

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COMMITTEE REPORT

Madam President: The Senate Committee on Pensions and Labor,to which was referred Senate Bill No. 231, has had the same underconsideration and begs leave to report the same back to the Senate withthe recommendation that said bill be AMENDED as follows:

Page 1, delete lines 1 through 17, begin a new paragraph and insert:"SECTION 1. IC 22-2-2-3 IS AMENDED TO READ AS

FOLLOWS [EFFECTIVE JULY 1, 2019]: Sec. 3. As used in thischapter:

"Commissioner" means the commissioner of labor or thecommissioner's authorized representative.

"Department" means the department of labor."Occupation" means an industry, trade, business, or class of work

in which employees are gainfully employed."Employer" means any individual, partnership, association, limited

liability company, corporation, business trust, the state, or othergovernmental agency or political subdivision during any work week inwhich they have two (2) or more employees. However, it shall notinclude any employer who is subject to the minimum wage provisionsof the federal Fair Labor Standards Act of 1938, as amended (29 U.S.C.201-209).

"Employee" means any person employed or permitted to work orperform any service for remuneration or under any contract of hire,written or oral, express or implied by an employer in any occupation,but shall not include any of the following:

(a) Persons less than sixteen (16) years of age.(b) Persons engaged in an independently established trade,occupation, profession, or business who, in performing theservices in question, are free from control or direction both undera contract of service and in fact.(c) Persons performing services not in the course of theemploying unit's trade or business.(d) Persons employed on a commission basis.(e) Persons employed by their own parent, spouse, or child.(f) Members of any religious order performing any service for thatorder, any ordained, commissioned, or licensed minister, priest,rabbi, sexton, or Christian Science reader, and volunteersperforming services for any religious or charitable organization.(g) Persons performing services as student nurses in the employof a hospital or nurses training school while enrolled andregularly attending classes in a nurses training school chartered

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or approved under law, or students performing services in theemploy of persons licensed as both funeral directors andembalmers as a part of their requirements for apprenticeship tosecure an embalmer's license or a funeral director's license fromthe state, or during their attendance at any schools required by lawfor securing an embalmer's or funeral director's license.(h) Persons who have completed a four (4) year course in amedical school approved by law when employed as interns orresident physicians by any accredited hospital.(i) Students performing services for any school, college, oruniversity in which they are enrolled and are regularly attendingclasses.(j) Persons with physical or mental disabilities performingservices for nonprofit organizations organized primarily for thepurpose of providing employment for persons with disabilities orfor assisting in their therapy and rehabilitation.(k) Persons employed as insurance producers, insurancesolicitors, and outside salesmen, if all their services are performedfor remuneration solely by commission.(l) Persons performing services for any camping, recreational, orguidance facilities operated by a charitable, religious, oreducational nonprofit organization.(m) Persons engaged in agricultural labor. The term shall includeonly services performed:

(1) on a farm, in connection with cultivating the soil, or inconnection with raising or harvesting any agricultural orhorticultural commodity, including the raising, shearing,feeding, caring for, training, and management of livestock,bees, poultry, and furbearing animals and wildlife;(2) in the employ of the owner or tenant or other operator of afarm, in connection with the operation, management,conservation, improvement, or maintenance of the farm and itstools and equipment if the major part of the service isperformed on a farm;(3) in connection with:

(A) the production or harvesting of maple sugar or maplesyrup or any commodity defined as an agriculturalcommodity in the Agricultural Marketing Act, as amended(12 U.S.C. 1141j);(B) the raising or harvesting of mushrooms;(C) the hatching of poultry; or(D) the operation or maintenance of ditches, canals,

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reservoirs, or waterways used exclusively for supplying andstoring water for farming purposes; and

(4) in handling, planting, drying, packing, packaging,processing, freezing, grading, storing, or delivering to storage,to market, or to a carrier for transportation to market, anyagricultural or horticultural commodity, but only if service isperformed as an incident to ordinary farming operation or, inthe case of fruits and vegetables, as an incident to thepreparation of fruits and vegetables for market. However, thisexception shall not apply to services performed in connectionwith any agricultural or horticultural commodity after itsdelivery to a terminal market or processor for preparation ordistribution for consumption.

As used in this subdivision, "farm" includes stock, dairy, poultry,fruit, furbearing animals, and truck farms, nurseries, orchards, orgreenhouses or other similar structures used primarily for theraising of agricultural or horticultural commodities.(n) Those persons employed in executive, administrative, orprofessional occupations who have the authority to employ ordischarge and who earn one hundred fifty dollars ($150) or morea week, and outside salesmen.(o) Any person not employed for more than four (4) weeks in anyfour (4) consecutive three (3) month periods.(p) Any employee with respect to whom the Interstate CommerceCommission has power to establish qualifications and maximumhours of service under the federal Motor Carrier Act of 1935 (49U.S.C. 304(3)) or any employee of a carrier subject to IC 8-2.1.(q) A person engaged in services as a direct seller. The termshall include only services performed:

(1) by a person that is in the trade or business of:(A) selling, or soliciting the sale of, consumer products orservices to any buyer on a buy-sell basis,deposit-commission basis, or similar basis, in any placeother than in a permanent retail establishment;(B) selling, or soliciting the sale of, consumer products orservices in any place other than in a permanent retailestablishment; or(C) delivering or distributing newspapers or shoppingnews, including any services directly related to suchtrade or business;

(2) when substantially all the remuneration, whether or notpaid in cash, for the performance of the services is directly

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related to sales or other output, including the performanceof services, rather than the number of hours worked; and(3) when the services performed by the person areperformed pursuant to a written contract and the contractprovides that the person who performs the services will notbe treated as an employee for tax purposes under thecontract.

SECTION 2. IC 22-4-3-6 IS ADDED TO THE INDIANA CODEAS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY1, 2019]: Sec. 6. An individual is not totally unemployed,part-totally unemployed, or partially unemployed for any week inwhich the department finds that the individual is engaged inservices as a direct seller, provided the following conditions aremet:

(1) The services are performed in the trade or business of:(A) selling, or soliciting the sale of, consumer products orservices to any buyer on a buy-sell basis,deposit-commission basis, or similar basis, in any placeother than in a permanent retail establishment;(B) selling, or soliciting the sale of, consumer products orservices in any place other than in a permanent retailestablishment; or(C) delivering or distributing newspapers or shoppingnews, including any services directly related to such tradeor business.

(2) Substantially all the remuneration, whether or not paid incash, for the performance of the services is directly related tosales or other output, including the performance of services,rather than the number of hours worked.(3) The services performed by the person are performedpursuant to a written contract and the contract provides thatthe person who performs the services will not be treated as anemployee for tax purposes under the contract.

SECTION 3. IC 22-4-8-3, AS AMENDED BY P.L.171-2016,SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVEJULY 1, 2019]: Sec. 3. "Employment" shall not include the following:

(1) Except as provided in section 2(i) of this chapter, serviceperformed prior to January 1, 1978, in the employ of this state,any other state, any town or city, or political subdivision, or anyinstrumentality of any of them, other than service performed inthe employ of a municipally owned public utility as defined in thisarticle; or service performed in the employ of the United States of

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America, or an instrumentality of the United States immune underthe Constitution of the United States from the contributionsimposed by this article, except that to the extent that the Congressof the United States shall permit states to require anyinstrumentalities of the United States to make payments into anunemployment fund under a state unemployment compensationstatute, all of the provisions of this article shall be applicable tosuch instrumentalities, in the same manner, to the same extent,and on the same terms as to all other employers, employing units,individuals, and services. However, if this state shall not becertified for any year by the Secretary of Labor under Section3304 of the Internal Revenue Code the payments required of suchinstrumentalities with respect to such year shall be refunded bythe commissioner from the fund in the same manner and withinthe same period as is provided in IC 22-4-32-19 with respect tocontribution erroneously paid or wrongfully assessed.(2) Service with respect to which unemployment compensation ispayable under an unemployment compensation systemestablished by an Act of Congress; however, the department isauthorized to enter into agreements with the proper agenciesunder such Act of Congress which agreements shall becomeeffective ten (10) days after publication thereof, in accordancewith rules adopted by the department under IC 4-22-2, to providereciprocal treatment to individuals who have, after acquiringpotential rights to benefits under this article, acquired rights tounemployment compensation under such Act of Congress, or whohave, after having acquired potential rights to unemploymentcompensation under such Act of Congress, acquired rights tobenefits under this article.(3) "Agricultural labor" as provided in section 2(l)(1) of thischapter shall include only services performed:

(A) on a farm, in the employ of any person, in connection withcultivating the soil or in connection with raising or harvestingany agricultural or horticultural commodity, including theraising, shearing, feeding, caring for, training, andmanagement of livestock, bees, poultry, and furbearinganimals and wildlife;(B) in the employ of the owner or tenant or other operator ofa farm, in connection with the operation, management,conservation, improvement, or maintenance of such farm andits tools and equipment, or in salvaging timber or clearing landof brush and other debris left by a hurricane, if the major part

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of such service is performed on a farm;(C) in connection with the production or harvesting of anycommodity defined as an agricultural commodity in Section15(g) of the Agricultural Marketing Act (12 U.S.C. 1141j(g))as amended, or in connection with the operation ormaintenance of ditches, canals, reservoirs, or waterways, notowned or operated for profit, used exclusively for supplyingand storing water for farming purposes;(D) in the employ of:

(i) the operator of a farm in handling, planting, drying,packing, packaging, processing, freezing, grading, storing,or delivering to storage or to market or to a carrier fortransportation to market, in its unmanufactured state, anyagricultural or horticultural commodity; but only if suchoperator produced more than one-half (1/2) of thecommodity with respect to which such service is performed;or(ii) a group of operators of farms (or a cooperativeorganization of which such operators are members) in theperformance of service described in item (i), but only if suchoperators produce more than one-half (1/2) of thecommodity with respect to which such service is performed;

except the provisions of items (i) and (ii) shall not be deemedto be applicable with respect to service performed inconnection with commercial canning or commercial freezingor in connection with any agricultural or horticulturalcommodity after its delivery to a terminal market fordistribution for consumption; or(E) on a farm operated for profit if such service is not in thecourse of the employer's trade or business or is domesticservice in a private home of the employer.

(4) As used in subdivision (3), "farm" includes stock, dairy,poultry, fruit, furbearing animals, and truck farms, nurseries,orchards, greenhouses, or other similar structures used primarilyfor the raising of agricultural or horticultural commodities.(5) Domestic service in a private home, local college club, orlocal chapter of a college fraternity or sorority, except as providedin section 2(m) of this chapter.(6) Service performed on or in connection with a vessel or aircraftnot an American vessel or American aircraft, if the employee isemployed on and in connection with such vessel or aircraft whenoutside the United States.

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(7) Service performed by an individual in the employ of child orspouse, and service performed by a child under the age oftwenty-one (21) in the employ of a parent.(8) Service not in the course of the employing unit's trade orbusiness performed in any calendar quarter by an individual,unless the cash remuneration paid for such service is fifty dollars($50) or more and such service is performed by an individual whois regularly employed by such employing unit to perform suchservice. For the purposes of this subdivision, an individual shallbe deemed to be regularly employed to perform service not in thecourse of an employing unit's trade or business during a calendarquarter only if:

(A) on each of some of twenty-four (24) days during suchquarter such individual performs such service for some portionof the day; or(B) such individual was regularly employed (as determinedunder clause (A)) by such employing unit in the performanceof such service during the preceding calendar quarter.

(9) Service performed by an individual in any calendar quarter inthe employ of any organization exempt from income tax underSection 501 of the Internal Revenue Code (except those servicesincluded in sections 2(i) and 2(j) of this chapter if theremuneration for such service is less than fifty dollars ($50)).(10) Service performed in the employ of a hospital, if such serviceis performed by a patient of such hospital.(11) Service performed in the employ of a school or eligiblepostsecondary educational institution if the service is performed:

(A) by a student who is enrolled and is regularly attendingclasses at the school or eligible postsecondary educationalinstitution; or(B) by the spouse of such a student, if such spouse is advised,at the time such spouse commences to perform such service,that:

(i) the employment of such spouse to perform such serviceis provided under a program to provide financial assistanceto such student by the school or eligible postsecondaryeducational institution; and(ii) such employment will not be covered by any program ofunemployment insurance.

(12) Service performed by an individual who is enrolled at anonprofit or public educational institution which normallymaintains a regular faculty and curriculum and normally has a

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regularly organized body of students in attendance at the placewhere its educational activities are carried on as a student in afull-time program, taken for credit at such institution, whichcombines academic instruction with work experience, if suchservice is an integral part of such program, and such institutionhas so certified to the employer, except that this subdivision shallnot apply to service performed in a program established for or onbehalf of an employer or group of employers.(13) Service performed in the employ of a government foreign tothe United States of America, including service as a consular orother officer or employee or a nondiplomatic representative.(14) Service performed in the employ of an instrumentalitywholly owned by a government foreign to that of the UnitedStates of America, if the service is of a character similar to thatperformed in foreign countries by employees of the United Statesof America or of an instrumentality thereof, and if the departmentfinds that the Secretary of State of the United States has certifiedto the Secretary of the Treasury of the United States that thegovernment, foreign to the United States, with respect to whoseinstrumentality exemption is claimed, grants an equivalentexemption with respect to similar service performed in suchcountry by employees of the United States and ofinstrumentalities thereof.(15) Service performed as a student nurse in the employ of ahospital or nurses' training school by an individual who isenrolled and is regularly attending classes in a nurses' trainingschool chartered or approved pursuant to state law; and serviceperformed as an intern in the employ of a hospital by anindividual who has completed a four (4) year course in a medicalschool chartered or approved pursuant to state law.(16) Service performed by an individual as an insurance produceror as an insurance solicitor, if all such service performed by suchindividual is performed for remuneration solely by way ofcommission.(17) Service performed by an individual:

(A) under the age of eighteen (18) in the delivery ordistribution of newspapers or shopping news, not includingdelivery or distribution to any point for subsequent delivery ordistribution; or(B) in, and at the time of, the sale of newspapers or magazinesto ultimate consumers, under an arrangement under which thenewspapers or magazines are to be sold by the individual at a

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fixed price, the individual's compensation being based on theretention of the excess of such price over the amount at whichthe newspapers or magazines are charged to the individual,whether or not the individual is guaranteed a minimum amountof compensation for such service, or is entitled to be creditedwith the unsold newspapers or magazines turned back.

(18) Service performed in the employ of an internationalorganization.(19) Except as provided in IC 22-4-7-1, services covered by anelection duly approved by the agency charged with theadministration of any other state or federal unemploymentcompensation law in accordance with an arrangement pursuant toIC 22-4-22-1 through IC 22-4-22-5, during the effective period ofsuch election.(20) If the service performed during one-half (1/2) or more of anypay period by an individual for an employing unit constitutesemployment, all the services of such individual for such periodshall be deemed to be employment; but if the services performedduring more than one-half (1/2) of any pay period by such anindividual do not constitute employment, then none of theservices of such individual for such period shall be deemed to beemployment. As used in this subsection, "pay period" means aperiod of not more than thirty-one (31) consecutive days forwhich a payment of remuneration is ordinarily made to theindividual by the employing unit. This subsection shall not beapplicable with respect to services performed in a pay period byany such individual where any such service is excepted bysubdivision (2).(21) Service performed by an inmate of a custodial or penalinstitution.(22) Service performed as a precinct election officer (as definedin IC 3-5-2-40.1).(23) Services performed by a direct seller:

(A) in the trade or business of:(i) selling, or soliciting the sale of, consumer products orservices to any buyer on a buy-sell basis,deposit-commission basis, or similar basis, in any placeother than in a permanent retail establishment;(ii) selling, or soliciting the sale of, consumer products orservices in any place other than in a permanent retailestablishment; or(iii) delivering or distributing newspapers or shopping

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news, including any services directly related to suchtrade or business;

(B) when substantially all the remuneration, whether ornot paid in cash, for the performance of the services isdirectly related to sales or other output, includingperformance of services, rather than the number of hoursworked; and(C) when the services performed by the person areperformed pursuant to a written contract and the contractprovides that the person who performs the services will notbe treated as an employee for tax purposes under thecontract.".

Delete pages 2 through 10.Renumber all SECTIONS consecutively.

and when so amended that said bill do pass.

(Reference is to SB 231 as introduced.)

BOOTS, Chairperson

Committee Vote: Yeas 10, Nays 1.

SB 231—LS 6653/DI 128