[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]


=======================================================================
-----------------------------------------------------------------------

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