§ 41-27-265 — Corporate officers not exempt from unemployment benefits absent corporate election; notice; procedure; exceptions; new business registration.

South Carolina § 41-27-265

• Jurisdiction: South Carolina
• Title 41: LABOR AND EMPLOYMENT
• Ch. 27: EMPLOYMENT AND WORKFORCE—GENERAL PROVISIONS

Text

(A)(1) Solely for purposes of this section, "corporate officer" shall mean a person appointed or otherwise serving as an officer for a corporation pursuant to Article 4, Chapter 8, Title 33, a person who owns twenty-five percent or more of the shares of a corporation, or a person who otherwise exercises an ownership interest in a corporation. Solely for the purposes of this title, services performed by a corporate officer shall be considered services in employment unless a corporation elects not to cover all of its corporate officers under item (2). If an employer elects not to cover its corporate officers under item (2), the employer must notify its corporate officers in writing that they are ineligible for unemployment benefits. However, if the employer fails to provide notice, the individual's status as a corporate officer is unchanged and the person remains ineligible for unemployment benefits. (2) An employer may elect not to cover its corporate officers by providing the department with a written election that all services performed by its corporate officers shall not be deemed to constitute employment for all purposes related to Chapters 27 through 41 of this title for at least two calendar years. To make the election, a corporation with qualifying corporate officers pursuant to item (1) must register with the department all qualifying corporate officers exempt from coverage. The registration must be in a format prescribed by the department. Registration forms received and approved by the department on or before January fifteenth must become effective the first day of the calendar year and must remain in effect for at least two consecutive calendar years. Registration forms received and approved by the department after January fifteenth, must become effective January first of the following year, and must remain in effect for at least two consecutive calendar years. Exemptions from coverage shall not be eligible for a refund or credit for contributions paid for corporate officers before the effective date of the exemption. (B)(1) Solely for the purposes of this title, services performed by a person who has at least a twenty-five percent ownership interest in a business entity formed pursuant to the laws of this State, other than a corporation, shall be considered services in employment unless the entity elects not to cover a person with at least a twenty-five percent ownership interest in the entity. (2) A person who has an ownership interest of at least twenty-five percent in a business entity formed pursuant to the laws of this State, other than a corporation, may elect not to cover himself by providing the department with a written election that all services performed by the person shall not be deemed to constitute employment for all purposes related to Chapters 27 through 41 of this title for at least two calendar years. The election must be in a format prescribed by the department. Election forms received and approved by the department on or before January fifteenth must become effective the first day of the calendar year and must remain in effect for at least two consecutive calendar years. Registration forms received and approved by the department after January 15, 2015, must become effective January 1, 2016, and must remain in effect for at least two consecutive calendar years. Exemptions from coverage must not be retroactive and the business entity requesting the exemption shall not be eligible for a refund or credit for contributions paid for persons before the effective date of the exemption. (3) A newly formed business entity with qualifying persons pursuant to items (1) and (2) must register with the department each person it elects to exempt within thirty calendar days after becoming an employer under Chapters 27 through 41 of this title. Registration forms received and approved by the department must become effective on and after the date of approval and must remain in effect for at least two consecutive calendar years. (C)(1) Services performed by an individual employed by a religious, charitable, educational, or other organization which is excluded from the term "employment" as defined in the federal Unemployment Tax Act solely by reason of 26 U.S.C. Section 3306(c)(8) of that act are not subject to the provisions of this section. (2) Services performed by an individual employed by an Indian tribe, as defined in 26 U.S.C. Section 3306(u) of the federal Unemployment Tax Act, provided that the service is excluded from the term "employment" as defined in the federal Unemployment Tax Act solely by reason of 26 U.S.C. Section 3306(c)(7) of that act are not subject to the provisions of this section.

Legislative History

HISTORY: 2014 Act No. 266 (S.1100), SECTION 1, eff January 1, 2015; 2015 Act No. 77 (S.407), SECTION 1, eff June 8, 2015. Editor's Note 2015 Act No. 77, SECTION 3, provides as follows: "SECTION 3. This act takes effect upon approval by the Governor. The provisions contained in SECTION 1 shall retroactively apply to contribution rates calculated and imposed on or after January 1, 2015. Where the application of SECTION 1 would result in the reduction of contribution rates on an employer, the department shall credit that amount against future contributions from that employer until the credit is exhausted." Effect of Amendment 2015 Act No. 77, SECTION 1, rewrote (A) and (B).