---
kind: "range"
citation: "20 C.F.R. §§ 404.1003–404.1010"
title: "20"
from: "404.1003"
to: "404.1010"
count: 8
url: "https://uscodex.org/cfr/20/404.1003..404.1010"
---

# §404.1003. Employment.


Employment means, generally, any service covered by social security performed by an employee for his or her employer. The rules on who is an employee and who is an employer are contained in [§§ 404.1005 through 404.1010](/cfr/20/404.1005..404.1010.md). [Section 404.1004](/cfr/20/404.1004.md) states the general rule on the kinds of work covered as employment. Exceptions to the general rule are contained in [§§ 404.1012 through 404.1038](/cfr/20/404.1012..404.1038.md) which explain the kinds of work excluded from employment. All of these rules apply to current work unless otherwise indicated.


# §404.1004. What work is covered as employment?

- (a) **General requirements of employment.** Unless otherwise excluded from coverage under [§§ 404.1012 through 404.1038](/cfr/20/404.1012..404.1038.md), the work you perform as an employee for your employer is covered as employment under social security if one of the following situations applies:
  - (1) You perform the work within the United States (whether or not you or your employer are a citizen or resident of the United States).
  - (2) You perform the work outside the United States and you are a citizen or resident of the United States working for—
    - (i) An American employer; or
    - (ii) A foreign affiliate of an American employer that has in effect an agreement covering your work under [section 3121(l)](/cfr/20/3121.md?p=l) of the Code.
  - (3) You perform the work on or in connection with an American vessel or American aircraft and the conditions in [paragraphs (a)(3)](#a-3) (i) and (ii) are met. Your citizenship or residence does not matter. The citizenship or residence of your employer matters only if it affects whether the vessel is an American vessel.
    - (i) You enter into the contract of employment within the United States or the vessel or aircraft touches at a port or airport within the United States during the performance of your contract of employment on the vessel or aircraft.
    - (ii) **You are employed on and in connection with the vessel or aircraft when outside the United States.**
  - (4) Your work is designated as employment or recognized as equivalent to employment under a totalization agreement. (See [§ 404.1913](/cfr/20/404.1913.md). An agreement may exempt work from coverage as well as extend coverage to work.)
  - (5) Your work performed after December 31, 1994, is in the employ of an international organization pursuant to a transfer from a Federal agency under section 3582 of [title 5](/cfr/5.md) of the United States Code and both the following are met:
    - (i) Immediately before the transfer, your work for the Federal agency was covered employment; and
    - (ii) You would be entitled, upon separation from the international organization and proper application, to reemployment with the Federal agency under [section 3582](/cfr/20/3582.md).
- (b) **Explanation of terms used in this section—**
  - (1) **American employer—** means—
    - (i) The United States or any of its instrumentalities;
    - (ii) A State, a political subdivision of a State, or an instrumentality of any one or more States or political subdivisions of a State;
    - (iii) An individual who is a resident of the United States;
    - (iv) A partnership, if at least two-thirds of the partners are residents of the United States;
    - (v) A trust, if all of the trustees are residents of the United States; or
    - (vi) **A corporation organized under the laws of the United States or of any State.**
  - (2) American aircraft means an aircraft registered under the laws of the United States.
  - (3) American vessel means a vessel documented or numbered under the laws of the United States. It also includes a vessel neither documented nor numbered under the laws of the United States, nor documented under the laws of any foreign country, if its crew is employed solely by one or more citizens or residents of the United States, or corporations organized under the laws of the United States or of any State.
  - (4) **Citizen of the United States—** includes a citizen of the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa or the Commonwealth of the Northern Mariana Islands.
  - (5) **Foreign affiliate—** refers to a foreign affiliate as defined in [section 3121(l)(6)](/cfr/20/3121.md?p=l-6) of the Code.
  - (6) **On and in connection with—** refers to the performance of work on a vessel or aircraft which concerns the vessel or aircraft. Examples of this kind of work are the services performed on a vessel by employees as officers or crew members, or as employees of concessionaires, of the vessel.
  - (7) **On or in connection with—** refers to work performed on the vessel or aircraft and to work which concerns the vessel or aircraft but not actually performed on it. For example, shore services in connection with repairing, loading, unloading, or provisioning a vessel performed by employees as officers or crew members, or as employees of concessionaires, of the vessel are included, since this work concerns the vessel though not performed on it.
  - (8) **State—** refers to the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.
  - (9) **United States—** when used in a geographical sense means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.

# §404.1005. Who is an employee.


You must be an employee for your work to be covered as employment for social security purposes. You are an employee if you are—

- (a) A corporation officer as described in [§ 404.1006](/cfr/20/404.1006.md);
- (b) A common-law employee as described in [§ 404.1007](/cfr/20/404.1007.md) (unless you are, after December 31, 1982, a qualified real estate agent or direct seller as described in [§ 404.1069](/cfr/20/404.1069.md)); or
- (c) An agent-driver or commission-driver, a full-time life insurance salesman, a home worker, or a traveling or city salesman as described in [§ 404.1008](/cfr/20/404.1008.md).

# §404.1006. Corporation officer.


If you are an officer of a corporation, you are an employee of the corporation if you are paid or you are entitled to be paid for holding office or performing services. However, if you are a director of a corporation, we consider you to be self-employed when you work as a director.


# §404.1007. Common-law employee.

- (a) **General.** The common-law rules on employer-employee status are the basic test for determining whether you and the person or firm you work for have the relationship of employee and employer. Even though you are considered self-employed under the common-law rules, you may still be an employee for social security purposes under [§ 404.1006](/cfr/20/404.1006.md) (relating to corporation officers) or [§ 404.1008](/cfr/20/404.1008.md) (relating to workers in four specific jobs). In general, you are a common-law employee if the person you work for may tell you what to do and how, when, and where to do it. The person or firm you work for does not have to give these orders, but needs only the right to do so. Whether or not you are a common-law employee is not always clear. Several aspects of your job arrangement are considered in determining whether you are an employee or are self-employed under the common-law rules.
- (b) **Factors that show employee status.** Some aspects of a job arrangement that may show you are an employee are as follows:
  - (1) The person you work for may fire you.
  - (2) **The person you work for furnishes you with tools or equipment and a place to work.**
  - (3) You receive training from the person you work for or are required to follow that person's instructions.
  - (4) You must do the work yourself.
  - (5) You do not hire, supervise, or pay assistants (unless you are employed as a foreman, manager, or supervisor).
  - (6) The person you work for sets your hours of work, requires you to work full-time, or restricts you from doing work for others.
  - (7) **The person you work for pays your business or traveling expenses.**
  - (8) **You are paid by the hour, week or month.**
- (c) **Factors that show self-employed status.** Some aspects of a job arrangement or business venture that may show you are self-employed are as follows:
  - (1) **You make a profit or suffer a loss.**
  - (2) You are hired to complete a certain job and if you quit before the job is completed you may be liable for damages.
  - (3) **You work for a number of persons or firms at the same time.**
  - (4) **You advertise to the general public that you are available to perform services.**
  - (5) **You pay your own expenses and have your own equipment and work place.**
- (d) **Questions about your status.** If there is a question about whether you are working as an employee or are self-employed, we or the Internal Revenue Service will make a determination after examining all of the facts of your case.

# §404.1008. Agent-driver or commission-driver, full-time life insurance salesman, home worker, or traveling or city salesman.

- (a) **General.** In addition to common-law employees and corporation officers, we consider workers in the four types of jobs described in [paragraphs (b) through (e)](#b..e) of this section to be employees if their services are performed under the following conditions:
  - (1) **Under the work arrangement the worker is expected to do substantially all of the work personally.**
  - (2) The worker must not have a substantial investment in the facilities used to do the work. Facilities include such things as a place to work, storage space, equipment, machinery and office furniture. However, facilities do not include tools, equipment or clothing of the kind usually provided by employees nor transportation such as a car or truck.
  - (3) The work must be performed as part of a continuing work relationship between the worker and the person for whom the work is done. The work performed must not be a single transaction. Part-time and regular seasonal work may be performed as part of a continuing work relationship.
- (b) **Agent-driver or commission-driver.** This is a driver hired by another person to distribute meat products, vegetable products, fruit products, bakery products, beverages (other than milk), or laundry or dry-cleaning services. We consider you an agent-driver or commission-driver if you are paid a commission based on your sales or the difference between the price you charge your customers and the amount you pay for the goods or services. It makes no difference whether you drive your own truck or the company's truck or whether you solicit the customers you serve.
- (c) **Full-time life insurance salesman.** A full-time life insurance salesman's main activity is selling life insurance or annuity contracts, or both, mostly for one life insurance company. If you are a full-time life insurance salesman, you are probably provided office space, stenographic help, telephone, forms, rate books and advertising materials by the company or general agent, without cost to you.
- (d) **Home worker.** A home worker is a person who works away from the place of business of the person he or she works for, usually at home. If you are a home worker and you work according to the instructions of the person you work for, on material or goods furnished by that person, and are required to return the finished product to that person (or another person whom he or she designates), you are an employee.
- (e) **Traveling or city salesman.** The main activity of a traveling or city salesman is taking orders for merchandise for another person or firm. The salesman gets orders from wholesalers, retailers, contractors, or operators of hotels, restaurants or other firms whose main business is furnishing food or lodging or both. The salesman sells merchandise to others for resale or for use in their own business. We consider you a traveling or city salesman if most of your work is done for a single person or firm even though you have incidental sideline sales activities. However, you are not an employee under this paragraph as to those sideline sales. If you take orders for a number of persons or firms as a multiple line salesman, you are not a traveling or city salesman.

# §404.1009. Who is an employer.


A person is an employer if he or she employs at least one employee. Sometimes it is not clear who a worker's employer is, since the employer does not always pay the worker's wages. When there is a question about who the employer is, we use the common-law rules to identify the employer (see [§ 404.1007](/cfr/20/404.1007.md)).


# §404.1010. Farm crew leader as employer.


A farm crew leader furnishes workers to do agricultural labor for another person, usually a farm operator. If the crew leader pays the workers (the money can be the crew leader's or the farm operator's), the crew leader is deemed to be the employer of the workers and is self-employed. However, the crew leader is not deemed the employer of the workers if there is a written agreement between the crew leader and the farm operator naming the crew leader as an employee. If the crew leader does not have this agreement and does not pay the workers, we use the common-law rules to determine the crew leader's status.