[Federal Register Volume 62, Number 9 (Tuesday, January 14, 1997)]
[Notices]
[Pages 1911-1913]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-839]
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DEPARTMENT OF LABOR
Employment and Training Administration
[Unemployment Insurance Program Letter (UIPL) No. 9-97]
Unemployment Compensation for Federal Employees (UCFE)--Coverage
Ruling for Human Subjects for Research Studies Conducted by U.S.
Department of Agriculture, Agricultural Research Service
Pursuant to Employment and Training Order No. 2-92, the Director,
Unemployment Insurance Service, has determined that human subjects who
participate in nutritional research studies conducted by the U.S.
Department of Agriculture, Agricultural Research Service, do not
perform ``Federal Service'' within the meaning of 5 U.S.C. 8501(1) for
UCFE program purposes. The UCFE Coverage Ruling No. 97-1 is published
below.
Dated: January 6, 1997.
Timothy M. Barnicle,
Assistant Secretary of Labor.
Directive: Unemployment Insurance Program Letter No. 09-97.
To: All State Employment Security Agencies.
From: Mary Ann Wyrsch, Director, Unemployment Insurance Service.
Subject: Unemployment Compensation for Federal Employees (UCFE)
Program Coverage Ruling No. 97-1, Human Subjects for Research
Studies Conducted by the U.S. Department of Agriculture,
Agricultural Research Service (ARS).
1. Purpose. To provide State Employment Security Agencies
(SESAs) with a copy of the above UCFE program coverage ruling.
2. Background. For a complete discussion of the background of
the UCFE Program Coverage Ruling No. 97-1, please refer to the
Discussion/Analysis section of the attachment to this directive.
[[Page 1912]]
On August 15, 1996, the Administrator of the ARS requested that
the Secretary of Labor issue a UCFE program coverage ruling on
whether human subjects participating in nutritional research studies
conducted by the ARS perform ``Federal Service'' within the meaning
of 5 U.S.C. 8501(1) for UCFE program coverage purposes. The attached
Coverage Ruling held that these subjects did not perform Federal
service.
3. Action Required. SESAs should:
a. Provide copies of this directive, plus attachment, to all
appropriate staff, including the Unemployment Insurance Tax and
Appeals Units.
b. Follow the guidance contained in the attachment when
determining the UCFE program eligibility of individuals who
participated as human subjects in ARS nutritional research studies.
4. Inquiries. Direct inquiries to the appropriate Regional
Office.
5. Attachment. UCFE Program Coverage Ruling No. 97-1.
UCFE Program Coverage Ruling No. 97-1
Human Subjects for Research Studies Conducted by U.S. Department of
Agriculture, Agricultural Research Service
Ruling: Human subjects who participate in nutritional research
studies conducted by U.S. Department of Agriculture (USDA),
Agricultural Research Service (ARS), do not perform ``Federal
Service'' within the meaning of 5 U.S.C. 8501(1).
Statement of Facts: In holding that human subjects participating
in ARS nutritional studies do not perform ``Federal service,'' I
have considered the following factors:
1. Title XIV of the Food and Agriculture Act of 1977 (Public Law
95-113) provides that USDA is the lead Federal agency for
agricultural research in the field of human nutrition and on the
nutritive value of foods. Since 1953, the ARS is the USDA agency in
charge of conducting nutritional studies.
2. Individuals who participate as ``human subjects'' in these
nutritional studies are covered by the Common Rule for the
Protection of Human Subjects (45 CFR Part 46, 7 CFR Part 1c, and ARS
Directive 605.1).
3. Human subjects do not earn annual leave, sick leave, nor are
they covered under any Federal employee retirement system.
4. On August 2, 1990, the Internal Revenue Service (IRS) ruled
in a non-precedential decision that human test subjects in medical
tests conducted by the Food and Drug Administration are not
employees and do not receive ``wages'' for income tax withholding or
Federal employment tax purposes. Priv. Ltr. Rul. 91-06-004 (Aug. 2,
1990).
5. On January 24, 1994, in a Federal Employment Tax
Determination letter mailed to the Bionetics Corporation, the IRS
ruled that an individual's participation as a human test subject in
USDA-sponsored research was as an independent contractor and not an
employee of the firm conducting the research. This letter was
obtained from the ARS on August 16, 1996.
Discussion/Analysis: The purpose of the ARS nutritional research
is to carry out the policy of the United States as stated in Section
1421(b) of the Food and Agricultural Act of 1977: ``It is hereby
declared to be the policy of the United States that the Department
of Agriculture conduct research in the fields of human nutrition and
on nutritive value of foods and conduct human nutrition education
activities. . . .''
The individuals who agree to be human subjects for this research
are treated according to the principles contained in the Common Rule
for the Protection of Human Subjects, and in accord with the
Nuremburg Code, the Declaration of Helsinki, and the Public Health
Service Guidelines. These guiding principles are designed to ensure
that human subjects are fully informed of the purpose and planned
procedures to be utilized in the research, and that the individual's
decision to participate is voluntary without coercion or undue
influence. The human subjects receive a $35 per day stipend for as
long as they participate in the study. The ARS considers the $35 per
day stipend to be too small to influence or coerce an individual's
decision to volunteer to be a human subject in its nutritional
research studies.
The human subjects participating in these ARS nutritional
studies enter into a consent agreement with the ARS nutritional
studies enter into a consent agreement with the ARS. The consent
agreement stipulates that the human subjects participating in the
study must observe the regimen prescribed by the ARS. The human
subjects agree to provide blood and other bodily samples for
analyses by the research study staff. The human subjects may elect
to end their participation in the study at any time prior to its
completion, and failure of the human subject to comply with the
experimental protocol and/or established rules will result in the
human subject being asked by the ARS to leave the study.
Prior to October 1995, the ARS utilized contractors (e.g., the
Bionetics Corporation) for assistance in conducting the metabolic
research studies including the payment of the human subjects'
stipends. In 1995, the California Employment Development Department
(CEDD) informed the contractor at the ARS' Western Human Nutrition
Research Center (WHNRC) that human subjects participating in
nutritional studies at the WHNRC were employees of the contractor.
Under California State law, the contractor became liable for State
unemployment taxes based on the payment of the $35 per day stipend.
In October 1995, the WHNRC assumed the responsibility for the
payment of the human subjects' stipends, and the issue arose whether
these subjects perform ``Federal Service.'' All stipends provided to
human subjects are now paid by the ARS.
The Unemployment Compensation for Federal Employees (UCFE)
program provides unemployment compensation coverage for Federal
civilian employees. In order to be eligible to receive unemployment
compensation under the UCFE program, an individual must perform
``Federal Service'' as defined at 5 U.S.C. 8501(1). The term
``Federal Service,'' in part, is defined to be ``service performed
after 1952 in the employ of the United States or an instrumentality
of the United States which is wholly or partially owned by the
United States. * * *'' (Emphasis added.) Therefore, for UCFE program
coverage purposes, an individual must be a civilian employee of the
United States Federal Government and not an independent contractor.
In reviewing this matter I have examined the relevant statutes,
regulations, and consent agreements in addition to the decisions and
determinations of the CEED and the IRS in determining whether human
subjects participating in nutritional research with the ARS perform
service as employees or are independent contractors.
The question of whether an individual is an independent
contractor or an employee is one of fact to be determined upon
consideration of the facts and the application of the law and
regulations in a particular case. Individuals are employees for
Federal employment tax purposes if they have the status of employees
under the usual common law rules applicable in determining the
relationship. Guidance for making the determination is found in
three substantially similar sections of the IRS Employment Tax
Regulations: 26 CFR 31.3121(d)-1; 31.3306(i)-1; and 31.3401(c)-1,
which relate to the Federal Insurance Contributions Act, the Federal
Unemployment Tax Act, and Federal Income Tax withholding
respectively, as well as IRS Revenue Ruling 87-41, 1987-1 C.B. 296.
Generally, the relationship of employer and employee exists when the
person for whom the services are performed has the right to control
and direct the individual who performs the services not only as to
the result to be accomplished but also as to the details and means
by which that result is obtained. In this connection, it is not
necessary that the firm actually direct or control the manner in
which the services are performed; it is sufficient that the right to
do so be present.
Other factors characteristic of employment are the right of the
employer to discharge and the furnishing of tools or a work place.
An individual who is not by statute an employee and is not an
employee under the common law rules is an independent contractor.
Independent contractors are subject to another's control and
direction only with respect to the result to be accomplished and not
the means and methods to be used.
Consideration must also be given to such factors as the
continuity of the relationship and whether the individual's services
are an integral part of the business of the employer as
distinguished from an independent trade or business of individual in
which the individual assumes the risk of realizing a profit or
suffering a loss.
The pertinent facts submitted for any consideration indicate:
1. The ARS nutritional research studies are conducted in accord
with the Common Rule for the Protection of Human Subjects (45 CFR
Part 46, 7 CFR Part 1c, and ARS Directive 605.1), and in accord with
the Nuremburg Code and the Declaration of Helsinki. These require
that human subjects' participation in research must be voluntary and
uncoerced. Since ARS nutritional research studies follow the above
regulations and international agreements, it suggests that the human
subjects are volunteers, not employees, who are subject to control
and direction. Further,
[[Page 1913]]
I agree with the ARS that the stipend paid to the human subjects for
each day they participate in the research ($35 per day) is an amount
so small that it does not have an undue influence on the decision of
the individual to participate in the research.
2. Human subjects who voluntarily participate in the ARS
nutritional research studies enter into a consent agreement under
which they agree to follow research protocols established by the ARS
during the duration of the research study. A continuing relationship
between the ARS and the human subjects is not established.
3. The human subjects do not produce a product or provide a
service to the ARS during these research studies. Providing samples
of blood and normal bodily functions is not an activity pursued as a
livelihood by the human subjects.
4. The human subjects control the means and methods used to
accomplish the task, i.e., the provision of samples of bodily
functions. While the ARS controls the research protocols to be
followed, including the schedule of sample collection, the human
subjects control their own bodily functions.
5. The ARS provides no tools, supplies, or equipment to the
human subjects. The ARS does use instruments during the nutritional
research to collect and analyze bodily samples provided by the human
subjects, however these instruments are not used by the human
subjects.
6. Human subjects are not entitled to sick leave or annual leave
and are not covered under any Federal Employee Retirement System.
The reasons stated above indicate that an employment
relationship does not exist and support the conclusion stated in the
first paragraph of this ruling that, for UCFE program purposes,
human subjects who participate in nutritional research studies
conducted by the USDA, ARS, do not perform ``Federal Service''
within the meaning of 5 U.S.C. 8501(1).
This coverage ruling is issued pursuant to redelegation of
authority from the Assistant Secretary, in Employment and Training
Order No. 2-92, dated April 10, 1992, (published at 57 Fed. Reg.
13760), which is authorized by Section 6 of Secretary's Order No. 4-
75 (40 Fed. Reg. 18515) (as amended by Secretary's Order No. 14-75).
Dated: November 26, 1996.
Mary Ann Wyrsch,
Director, Unemployment Insurance Service.
[FR Doc. 97-839 Filed 1-13-97; 8:45 am]
BILLING CODE 4510-30-M
