Section 815.117 - Employing Units(a) Scope. This section shall govern the Texas Workforce Commission in its administration of the Common Paymaster provisions authorized under §201.011(11) of the Act.(b) Definitions. The following definitions shall apply to §201.011(11) of the Act: (1) Common Paymaster--A Common Paymaster of a group of related corporations is any member thereof that disburses remuneration to employees of two or more of those corporations on their behalf and that is responsible for keeping books and records for the payroll with respect to those employees. The following are also incorporated into this definition: (A) The Common Paymaster is not required to disburse remuneration to all the employees of those two or more related corporations, but the provisions of this section do not apply to any remuneration to an employee that is not disbursed through a Common Paymaster;(B) A group of related corporations may only have one Common Paymaster for the group. A group of related corporations may not be subdivided to facilitate multiple Common Paymasters; and(C) When two or more related corporations concurrently employ the same individual and compensate that individual through a Common Paymaster, which is one of the related corporations for which the individual performs services, each of the corporations is considered to have paid only the remuneration it actually disburses to that individual, unless the disbursing corporation fails to remit the taxes due.(2) Related Corporations--Two or more corporations shall be considered related corporations for an entire calendar quarter if they satisfy any of the following tests at any time during that calendar quarter: (A) Parent-subsidiary controlled group. The common parent corporation owns stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote or more than 50 percent of the total value of shares of all classes of stock of at least one of its subsidiaries, AND one or more of the corporations, common parent included, owns stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote or more than 50 percent of the total value of shares of all classes of stock of each of the subsidiaries;(B) Brother-sister controlled group. Five or fewer persons who are individuals, estates, or trusts own more than 50 percent of the total combined voting power of all classes of stock entitled to vote or more than 50 percent of the total value of all classes of stock of each corporation, taking into account the stock ownership of each person only to the extent such stock ownership is identical with respect to each such corporation;(C) Combined group. A group of three or more corporations if:(i) Each such corporation is a member of either a parent-subsidiary controlled group of corporations or a brother-sister controlled group of corporations; and(ii) At least one of such corporations is the common parent of a parent-subsidiary controlled group and also is a member of a brother-sister controlled group;(D) When a corporation that does not issue stock is involved, either: (i) 50 percent or more of the members of one corporation's board of directors (or other governing body) are members of the other corporation's board of directors (or other governing body); or(ii) The holders of 50 percent or more of the voting power to select members of one corporation's board of directors (or other governing body) are concurrently the holders of more than 50 percent of that power with respect to the other corporation;(E) 50 percent or more of one corporation's officers are concurrently officers of the other corporation; or(F) 30 percent or more of one corporation's employees are concurrently employees of the other corporation.(3) Concurrent Employment--means the simultaneous existence of an employment relationship between an individual and two or more corporations. Such a relationship contemplates the performance of services by the individual for the benefit of the employing corporation, not merely for the benefit of the group of corporations, in exchange for remuneration. The following are also incorporated into this definition: (A) The simultaneous existence of an employment relationship with each corporation is a decisive factor. If it exists, the fact that a particular employee is on leave or otherwise temporarily inactive is immaterial;(B) Employment is not concurrent with respect to one of the related corporations if the employee's employment relationship with that corporation is completely nonexistent during the periods when the employee is not performing services for that corporation;(C) An individual who does not perform substantial services for a corporation is presumed not employed by that corporation; and(D) A corporation which has no employees performing services for it in Texas cannot be the Common Paymaster for Texas employees of its related corporations.(c) Submission and approval of Common Paymaster. (1) Related corporations which compensate their employees through a Common Paymaster shall file with the Agency the details of their plan on a form prescribed by the Agency. The details shall include the names of the related corporations, the name of the Common Paymaster corporation and the concurrently employed individuals involved. The filing shall include documentation to substantiate the corporations are related as defined in subsection (b)(2) of this section and that employees are the concurrently employed. An amendment to the plan shall be filed whenever there is a change in the related corporations participating in the plan, a change in the Common Paymaster or a change in the concurrently employed individuals involved.(2) Plans and plan amendments submitted pursuant to this rule shall be filed within the 30-day period following the end of the calendar quarter in which the plan is in effect. Eligibility of an employee to be compensated through a Common Paymaster shall be determined on a quarterly basis.(d) Allocation of employment taxes. (1) A Common Paymaster making disbursements on behalf of related corporations to employed individuals shall be responsible for taxes, interest and penalties on all wages disbursed by it.(2) If the Common Paymaster fails to remit taxes, interest and penalties on all wages disbursed by it as required: (A) the Agency may hold each of the related corporations liable for a proportionate share of the obligation. Such proportionate share may be based on sales, property, corporate payroll or any other reasonable basis that reflects the distribution of services of the pertinent employees between the related corporations; or(B) if there is no reasonable basis for allocating the amount owed, it shall be divided equally among the related corporations. If a related corporation fails to pay any amount allocated to it pursuant to this section, the Agency may hold any or all of the other related corporations liable for the full amount of the unpaid taxes, interest and penalties.(3) A Common Paymaster is not a successor corporation pursuant to Texas Labor Code Chapter 204, Subchapter E, for concurrent employees unless the related corporation ceases operations and is acquired in its entirety by the paymaster corporation.(4) Wages paid by separate employing units may not be aggregated or combined for purposes of reporting, except as provided in this rule, unless there is an actual transfer of entity and experience rating as provided by Texas Labor Code Chapter 204, Subchapter E.(e) Benefits. (1) For purposes of charging benefits paid and mailing notices to base year employers, the Common Paymaster shall be considered the employer for all wages disbursed to individuals by the Common Paymaster whether payment was for services performed for the Common Paymaster or for a related corporation.(2) An employer seeking to establish a Common Paymaster arrangement shall designate a mailing address for benefit claim notices with the Agency per §208.003 of the Act.(f) Examples. (1) Common Paymaster. S, T, U, and V are related corporations with 2,000 employees collectively. Forty of these employees are concurrently employed and perform services for S and at least one other of the related corporations, during a calendar quarter. The four corporations arrange for S to disburse remuneration to thirty of these forty employees for their services. Under these facts, S is the Common Paymaster of S, T, U, and V with respect to the thirty employees. S is not a Common Paymaster with respect to the remaining employees.(2) Related Corporations: (A) Parent-subsidiary controlled group. (i) P Corporation owns stock possessing 51 percent of the total combined voting power of all classes of stock entitled to vote of S Corporation. P is the common parent of a parent-subsidiary controlled group consisting of member corporations P and S.(ii) Assume the same facts as in clause (i) of this subparagraph. Assume further that S owns stock possessing 51 percent of the total value of shares of all classes of stock of X Corporation. P is the common parent of a parent-subsidiary controlled group consisting of member corporations P, S, and X. The result would be the same if P, rather than S, owned the X stock.(iii) P Corporation owns 51 percent of the only class of stock of S Corporation and S, in turn, owns 30 percent of the only class of stock of X Corporation. P also owns 51 percent of the only class of stock of Y Corporation and Y, in turn, owns 30 percent of the only class of stock of X. P is the common parent of a parent-subsidiary controlled group consisting of member corporations P, S, X, and Y.(B) Brother-sister controlled group. The outstanding stock of corporations X and Y, which have only one class of stock outstanding, is owned by the following unrelated individuals: A owns 40% of X and 20% of Y; B owns 10% of X and 30% of Y; C owns 30% of X and 40% of Y; D owns 20% of X; and E owns 10% of Y. The result is that Corporations X and Y have 3 common owners - A, B, and C. D and E are disregarded from the brother-sister test because they don't have ownership in both companies. A, B, and C have the following Identical Ownership (the lesser of X or Y): A has 20%; B has 10%; and C has 30%. A, B, and C meet the identical ownership test because their identical ownership is more than 50 percent of X and Y.(C) Combined group. (i) A, an individual, owns stock possessing 100 percent of the total combined voting power of all classes of the stock of corporations X and Y. Y, in turn, owns stock possessing 51 percent of the total combined voting power of all classes of the stock of corporation Z. X, Y, and Z are members of the same combined group since X, Y, and Z are each members of either a parent-subsidiary or brother-sister controlled group of corporations AND Y is the common parent of a parent-subsidiary controlled group of corporations consisting of Y and Z, and also is a member of a brother-sister controlled group of corporations consisting of X and Y.(ii) Assume the same facts as in clause (i) of this subparagraph and further assume that corporation X owns 51 percent of the total value of shares of all classes of stock of corporation S. X, Y, Z, and S are members of the same combined group.(3) Concurrent Employment. M, N, and O are related corporations which use N as a Common Paymaster. Their respective headquarters are located in three separate cities several hundred miles apart. A is an officer of M, N, and O who performs substantial services for each corporation. A does not work a set length of time at each corporate headquarters, and when A leaves one corporate headquarters, it is not known when A will return, although it is expected that A will return. Under these facts, A is concurrently employed by the three corporations.40 Tex. Admin. Code § 815.117
Adopted by Texas Register, Volume 45, Number 04, January 24, 2020, TexReg 589, eff. 1/27/2020