Who's the Employer?

Answer: In responding to your question, I will refer to my book, Who's the Employer?. (Subscribers can click to view online the text of references to sections in the book.)

Let's start with the shared employee issue. Shared employees work simultaneously for 2 or more separate businesses. (See WTE 5:01.) In the situation you describe, each employee works for only 1 business at a time and based on physical location, it is very easy to determine for whom he or she is working. Thus the shared employee rules do not apply. (Incidentally, there is no shared employee regulation. All we have are withdrawn proposed regulations and ancient Revenue Rulings.)

"Family aggregation" describes a confusing provision in the highly compensated employee rules that were repealed by the Small Business Job Protection Act in 1996. (See WTE 7:22.)

So that's 2 strikes. Are we out? No. We still need to determine whether the businesses are in a "controlled group." Assuming the doctors are happily married, there are several ways their 2 businesses could be in a controlled group, including:

1. They have a child under age 21. That child would be deemed to own both businesses because of attribution (as opposed to aggregation) from the doctors to the child.

2. Both businesses are community property. In that case, ownership of the businesses is identical and the businesses are in a controlled group without regard to attribution.

3. Either business is community property. In that case, one spouse woud have an actual interest in the other's business and then be deemed to own the balance of that business by attribution from the spouse.

4. One spouse is involved in the other's business as a director or employee, or is involved in management. If so, that spouse would be deemed to own the business. You should check this factor very carefully, because the employees work at both offices. (See WTE 7:21.)

If the businesses are in a controlled group, that all members of that group must count all hours with all group members. Under the facts you have outlined, that would give the employees more than 1,000 hours of service with each doctor.

Shared employees. Leased employees. Aggregation rules of all types. We'll be covering them all in SunGard Corbel's half day seminar on Who's the Employer. In the past, I've been able to give a couple of 2 hour presentations on Who's the Employer, but I've never before had a full 3-1/2 hours to play in my favorite sandbox! The extra time lets us bring in many case studies to let attendees see exactly how the rules work, and how to analyze situations that arise. My hope is that we will make the rules clear and understandable to help practitioners eliminate guesswork.

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