Utah Administrative Code
The Utah Administrative Code is the body of all effective administrative rules as compiled and organized by the Division of Administrative Rules (see Subsection 63G-3-102(5); see also Sections 63G-3-701 and 702).
NOTE: For a list of rules that have been made effective since October 1, 2019, please see the codification segue page.
NOTE TO RULEFILING AGENCIES: Use the RTF version for submitting rule changes.
R994. Workforce Services, Unemployment Insurance.
Rule R994-204. Covered Employment.
As in effect on October 1, 2019
Table of Contents
- R994-204-201. Localization of Services.
- R994-204-202. Outside Commissioned Salespersons in Covered Employment.
- R994-204-203. Domestic Service Included in Covered Employment.
- R994-204-301. Independent Contractor Services.
- R994-204-302. Independent Contractor Determination.
- R994-204-303. Factors for Determining Independent Contractor Status.
- R994-204-401. Safe Haven Created by Independent Contractor Determinations.
- R994-204-402. Procedure for Issuing a Safe Haven Determination.
- R994-204-403. Employer Reliance on Official Determination.
- R994-204-404. Effect of New Determination on Employer.
- Date of Enactment or Last Substantive Amendment
- Notice of Continuation
- Authorizing, Implemented, or Interpreted Law
Employment is covered under the Act if all of a worker's service is performed within Utah. Workers who perform services for one employer in more than one state are covered in Utah under certain circumstances.
(1) Service Localized in this State.
The service is considered to be localized in Utah if it is performed entirely within Utah. The service is also considered to be localized in Utah if performed both inside and outside of Utah, but the service outside of Utah consists of isolated transactions or is otherwise incidental or transitory to the service in Utah. Some of the factors which might indicate that the service is incidental or transitory are:
(a) the employer and the worker intend the service outside of Utah to be an isolated transaction, and not a regular part of the worker's duties;
(b) the worker intends to return to Utah upon completion of the work assignment, rather than move to the other state;
(c) the service performed outside the state is different in nature from the service performed within Utah;
(d) it is anticipated that the worker will be performing services outside the state for 12 months or less however this length of time is intended only as a yardstick and other variables, such as the terms of the contract of hire, whether written or oral, will be considered.
(2) Service Is Not Localized in Any State But Some Service is Performed in Utah.
If the service is not localized in any state but some of the service is performed by the worker in Utah, the entire service is covered in Utah if one of the following conditions apply:
(a) The Base of Operations is in Utah.
The worker's base of operations is in Utah. The "base of operations" is the place from which the worker starts work and to which he or she customarily returns for instructions from the employer, communications from customers, to replenish stocks or materials, to repair equipment or to perform any other function necessary in the trade or profession. The base of operations may be the worker's business office, which may be located at his or her residence, or the contract of employment may specify a particular place at which the worker is to receive direction and instructions.
(b) The Place from Where Service is Controlled or Directed is in Utah.
If the worker has no base of operations or does not perform any service in the state in which the base of operations is located, it is necessary to determine if any service is performed in the state from which the service is controlled or directed. The place from which the service is controlled or directed is the place at which the basic authority exists rather than the place at which a manager or foreman supervises the service.
(c) The Place of Residence is in Utah.
If the conditions in paragraphs (a) or (b) of this subsection do not apply, it is necessary to apply the test of residence. Under this test, the service is covered in Utah if the worker lives in Utah and performs some of his or her services in Utah.
(3) Service Is Not Localized in Any State and No Service is Performed in Utah.
If the service is not localized in any state and none of the service is performed by the worker in Utah, the entire service is covered in Utah if one of the following conditions apply:
(a) The Base of Operations is in Utah.
The worker's base of operations is in Utah. The "base of operations" is the place from which the worker starts work and customarily returns for instructions from the employer, to replenish stocks or materials, to repair equipment or to perform any other function necessary in the worker's trade or profession. The base of operations may be the worker's business office, which may be located at his or her residence, or the contract of employment may specify a particular place at which the worker is to receive his or her direction and instructions.
(b) The Place from Where the Service is Controlled or Directed is in Utah.
If the worker has no base of operations or does not perform any service in the state in which the base of operations is located, it is necessary to determine if the worker is controlled and directed from Utah. The place from which the service is controlled or directed is the place at which the basic authority exists rather than the place at which a manager or foreman supervises the service.
(4) Reciprocal Coverage.
If after applying all of the above tests to a given set of circumstances, the worker's service is found not to be subject to any one state, the employer may elect to cover all of the worker's service in one state. This election must be made under the provisions for reciprocal coverage arrangements found in Section 35A-4-106. The Department will approve reciprocal coverage and allow an employer to cover a worker's entire service in Utah if:
(a) the employer petitions for coverage;
(b) part of the worker's service is in Utah, the worker lives in Utah, or the worker maintains a place of business in Utah; and
(c) the other state or states approve the election
Outside commissioned salespersons are excluded from the Act under the outside commissioned salesperson exclusion contained in Section 35A-4-205(1)(p) unless all of the following "traveling or city salesperson" conditions apply:
(1) The Salesperson is Engaged on a Full-Time Basis.
Full-time under this section means the salesperson devotes at least 80% of his or her working time in any quarter to the solicitation of orders for one employer. This is true even if the salesperson works for the employer less than 40 hours per week. For example, a salesperson who works only 20 hours a week and spends 80 percent or more of that time working for one principal is engaged on a full-time basis.
(2) The Salesperson Solicits Orders From Wholesalers, Retailers, Contractors or Operators of Hotels and Restaurants.
The salesperson must solicit orders from certain types of customers. Generally, the following types of customers are not included: manufacturers, schools, hospitals, churches, institutions, municipalities and state and federal governments. However, a clearly identifiable and separate business carried on through such a customer, such as a bookstore or gift shop would be included as a "retailer." The salesperson must solicit orders from the following types of customers:
(a) Wholesalers who buy merchandise in comparatively large quantities and sell such merchandise in smaller quantities to jobbers and retailers for the purpose of resale.
(b) Retailers who sell merchandise to the ultimate consumers.
(c) Contractors who, for a fixed price, undertake the performance of work on an independent basis, such as construction contractors and certain service organizations. These include, among others, electrical, plumbing, painting, building, window washing and delivery service contractors.
(d) Operators of hotels, restaurants or other similar establishments. The phrase "other similar establishments" refers solely to establishments similar to hotels and restaurants and usually is limited to establishments whose primary function is the furnishing of food, lodging, or both food and lodging.
(3) The Salesperson Takes Orders for Merchandise for Resale or Supplies Used in Business.
(a) Merchandise for resale includes goods, wares and commodities that ordinarily are the objects of trade and commerce and that are purchased for resale. This term refers specifically to tangible materials that do not lose their identities between the time of purchase and the time of resale.
(b) Supplies for use in the customer's business operations means articles consumed in conducting or promoting the customers' businesses. Generally the term "supplies" includes all tangible items that are not "merchandise for resale" or capital items. Services such as radio time and advertising space, are intangible items and not within the definition. However, calendars, advertising novelties, etc., used by the advertiser in his business constitute "supplies."
(4) The contract of service contemplates that substantially all of the services are to be performed personally by the worker. This means that the services to which the contract relates will not be delegated to any other person by the worker who undertakes under the contract to perform such services; and
(5) The worker does not have a substantial investment in facilities used in connection with the performance of his or her services. The facilities include equipment and premises available for the work but does not include such tools and equipment or clothing as are commonly provided by employees; and
(6) The services are part of a continuing relationship with the person for whom the services are performed.
Subsection 35A-4-204(2)(k) defines when domestic services, that are exempt under Subsection 35A-4-205(1)(d), become covered employment.
(1) $1000 in a Calendar Quarter.
Domestic services performed in a private home, local college club or local chapter of a college fraternity or sorority are exempt unless the employer pays cash remuneration of $1000 or more in one or more calendar quarter in the current calendar year or the preceding calendar year. Cash wages include wages paid by cash, check, or money order. Cash wages do not include the value of food, lodging, clothing, and other non-cash items. However, cash given to an employee in lieu of these items is considered to be cash wages.
(2) Services That Are Domestic Services.
Domestic services include services of a household nature in or about any of the places listed in subsection (1) of this section. Domestic services include work done by:
(b) cleaning people
(f) health aids
(i) yard workers
(3) Services That are Not Domestic Services.
Services that are not of a household nature such as secretarial services performed in a private home or services related to remodeling or building a private home, local college club or local chapter of a college fraternity or sorority are not domestic services.
(4) Private Home.
A private home is a fixed place of abode of an individual or family. This may include a dwelling unit in an apartment building or hotel.
(5) Local College Club or Local Chapter of a College Fraternity or Sorority Does Not Include an Alumni Club or Chapter.
(6) All Remuneration is Reportable.
Once the $1000 cash threshold is met, all payments including cash and non-cash payments are reportable as wages.
(1) An independent contractor is a worker who is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as the services performed, and the individual providing the services must be free from the employer's control and direction while performing services for the employer. A worker must clearly establish his or her status as an independent contractor by taking steps that demonstrate independence indicating an informed business decision has been made.
(2) Payments to or through another entity for personal services performed by a worker is exempt from employment if the personal services meet the provisions of Subsection 35A-4-204(3).
(1) The Department will determine the status of a worker based upon information provided by the employer, the worker, and any other available source.
(2) If a worker files a claim for benefits and the Department, as the result of an audit, investigation, or declaratory ruling, has made a determination that the worker is an independent contractor and his or her services for an employer are exempt from coverage, any earnings from those services for that employer will be excluded from the claimant's monetary determination. The claimant may protest the monetary determination by filing an appeal as provided in Section R994-204-402.
Services will be excluded under Section 35A-4-204 if the service meets the requirements of this rule. Special scrutiny of the facts is required to assure that the form of a service relationship does not obscure its substance, that is, whether the worker is independently established in a like trade, occupation, profession or business and is free from control and direction. The factors listed in Subsections R994-204-303(1)(b) and R994-204-303(2)(b) of this section are intended only as aids in the analysis of the facts of each case. The degree of importance of each factor varies depending on the service and the factual context in which it is performed. Additionally, some factors do not apply to certain services and, therefore, should not be considered.
(1) Independently Established.
(a) An individual will be considered customarily engaged in an independently established trade, occupation, profession, or business if the individual is, at the time the service is performed, regularly engaged in a trade, occupation, profession, or business of the same nature as the service performed, and the trade, occupation, profession, or business is established independently of the alleged employer. In other words, an independently established trade, occupation, profession, or business is created and exists apart from a relationship with a particular employer and does not depend on a relationship with any one employer for its continued existence.
(b) The following factors, if applicable, will determine whether a worker is customarily engaged in an independently established trade or business:
(i) Separate Place of Business. The worker has a place of business separate from that of the employer.
(ii) Tools and Equipment. The worker has a substantial investment in the tools, equipment, or facilities customarily required to perform the services. However, "tools of the trade" used by certain trades or crafts do not necessarily demonstrate independence.
(iii) Other Clients. The worker regularly performs services of the same nature for other customers or clients and is not required to work exclusively for one employer.
(iv) Profit or Loss. The worker can realize a profit or risks a loss from expenses and debts incurred through an independently established business activity.
(v) Advertising. The worker advertises services in telephone directories, newspapers, magazines, the Internet, or by other methods clearly demonstrating an effort to generate business.
(vi) Licenses. The worker has obtained any required and customary business, trade, or professional licenses.
(vii) Business Records and Tax Forms. The worker maintains records or documents that validate expenses, business asset valuation or income earned so he or she may file self-employment and other business tax forms with the Internal Revenue Service and other agencies.
(c) If an employer proves to the satisfaction of the Department that the worker is customarily engaged in an independently established trade, occupation, profession or business of the same nature as the service in question, there will be a rebuttable presumption that the employer did not have the right of or exercise direction or control over the service.
(2) Control and Direction.
(a) When an employer retains the right to control and direct the performance of a service, or actually exercises control and direction over the worker 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 that result is to be accomplished, the worker is an employee of the employer for the purposes of the Act.
(b) The following factors, if applicable, will be used as aids in determining whether an employer has the right of or exercises control and direction over the service of a worker:
(i) Instructions. A worker who is required to comply with other persons' instructions about how the service is to be performed is ordinarily an employee. This factor is present if the employer for whom the service is performed has the right to require compliance with the instructions.
(ii) Training. Training a worker by requiring or expecting an experienced person to work with the worker, by corresponding with the worker, by requiring the worker to attend meetings, or by using other methods, indicates that the employer for whom the service is performed expects the service to be performed in a particular method or manner.
(iii) Pace or Sequence. A requirement that the service must be provided at a pace or ordered sequence of duties imposed by the employer indicates control or direction. The coordinating and scheduling of the services of more than one worker does not indicate control and direction.
(iv) Work on Employer's Premises. A requirement that the service be performed on the employer's premises indicates that the employer for whom the service is performed has retained a right to supervise and oversee the manner in which the service is performed, especially if the service could be performed elsewhere.
(v) Personal Service. A requirement that the service must be performed personally and may not be assigned to others indicates the right to control or direct the manner in which the work is performed.
(vi) Continuous Relationship. A continuous service relationship between the worker and the employer indicates that an employer-employee relationship exists. A continuous relationship may exist where work is performed regularly or at frequently recurring although irregular intervals. A continuous relationship does not exist where the worker is contracted to complete specifically identified projects, even though the service relationship may extend over a significant period of time.
(vii) Set Hours of Work. The establishment of set hours or a specific number of hours of work by the employer indicates control.
(viii) Method of Payment. Payment by the hour, week, or month points to an employer-employee relationship, provided that this method of payment is not just a convenient way of paying progress billings as part of a fixed price agreed upon as the cost of a job. Control may also exist when the employer determines the method of payment.
The "safe haven" provision of 35A-4-204(4) allows an employer to rely on a declaratory order, ruling, or final determination by the Department that determines the independent contractor status of a worker or class of workers. A determination can be made at the request of an employer or by the Department as the result of an audit or status investigation. The final determination will only determine whether the employer is liable to pay contributions on payments made to the workers in question and does not affect the worker's right to challenge the determination at a more appropriate time like when the work relationship has ended and a claim for benefits has been filed. The worker, or class of workers, are not bound by the determination in the event a worker later files a claim for unemployment benefits.
(1) If the issue of the status of a worker or class of workers arises out of an audit or request for declaratory order and there is no claim for benefits pending at the time, the Department will determine the status on the basis of the best information available at the time. A request for a declaratory order will be denied if there is a pending claim for benefits by a worker who would be affected by the order.
(2) A worker whose status is determined as a result of an audit or declaratory order is not required to file a written consent to the determination pursuant to Subsection 63G-4-503(3)(b). Any consent given by the worker is invalid and will be considered to be in violation of Subsection 35A-4-103(1)(c)(ii).
(3) If the issue of a worker's status arises out of a claim for benefits and there has been a prior audit determination or declaratory order determining the status of the worker or a class of workers to which the individual belonged, the Department will issue a notice as part of the monetary determination, denying use of the worker's independent contractor earnings as wage credits for the base period on the basis of the prior status determination. The worker may protest the determination by filing an appeal within 15 days of the date of the notice. Upon receipt of a protest the Department will review the status of the worker. On the basis of its review, the Department will issue a new determination which will either affirm, reverse, or revise the original determination. The new determination will be mailed to the parties and can be appealed by the employer or the worker as though it were an "initial Department determination" as provided in rule Sections R994-508-101 through R994-508-104.
If a declaratory order or final audit finding has been issued concluding that a worker or class of workers are independent contractors, the employer will have no liability to pay unemployment contributions on payments made to the worker or workers, except as provided in Section R994-204-404.
If a new determination by the Department, an administrative law judge, or the Workforce Appeals Board holds that the status of a worker or class of workers to which the individual belonged is that of employee for purposes of the Act, the employer is liable to pay unemployment contributions on all wages paid to workers in the class to which the individual belonged, from the beginning of the calendar quarter in which the new determination is made. In addition, the employer shall also be liable to pay contributions on any wages used by a claimant for purposes of establishing any claim for benefits affected by the new determination.
unemployment compensation, employment tests, independent contractor
July 1, 2007
March 25, 2015
For questions regarding the content or application of rules under Title R994, please contact the promulgating agency (Workforce Services, Unemployment Insurance). A list of agencies with links to their homepages is available at http://www.utah.gov/government/agencylist.html or from http://www.rules.utah.gov/contact/agencycontacts.htm.