Ch. 174             1997 Session Laws of Kansas             1249

An Act concerning the employment security law; amending K.S.A. 1996 Supp. 44-703 and
repealing the existing section.

Be it enacted by the Legislature of the State of Kansas:

Section 1. K.S.A. 1996 Supp. 44-703 is hereby amended to read as
follows: 44-703. As used in this act, unless the context clearly requires
otherwise:

(a) (1) ``Annual payroll'' means the total amount of wages paid or
payable by an employer during the calendar year.

(2) ``Average annual payroll'' means the average of the annual payrolls
of any employer for the last three calendar years immediately preceding
the computation date as hereinafter defined if the employer has been
continuously subject to contributions during those three calendar years
and has paid some wages for employment during each of such years. In
determining contribution rates for the calendar year, if an employer has
not been continuously subject to contribution for the three calendar years
immediately preceding the computation date but has paid wages subject
to contributions during only the two calendar years immediately preced-

1250             1997 Session Laws of Kansas             Ch. 174

ing the computation date, such employer's ``average annual payroll'' shall
be the average of the payrolls for those two calendar years.

(3) ``Total wages'' means the total amount of wages paid or payable
by an employer during the calendar year, including that part of remu-
neration in excess of the limitation prescribed as provided in subsection
(o)(1) of this section.

(b) ``Base period'' means the first four of the last five completed cal-
endar quarters immediately preceding the first day of an individual's ben-
efit year, except that the base period in respect to combined wage claims
means the base period as defined in the law of the paying state.

(c) (1) ``Benefits'' means the money payments payable to an individ-
ual, as provided in this act, with respect to such individual's unemploy-
ment.

(2) ``Regular benefits'' means benefits payable to an individual under
this act or under any other state law, including benefits payable to federal
civilian employees and to ex-servicemen pursuant to 5 U.S.C. chapter 85,
other than extended benefits.

(d) ``Benefit year'' with respect to any individual, means the period
beginning with the first day of the first week for which such individual
files a valid claim for benefits, and such benefit year shall continue for
one full year. In the case of a combined wage claim, the benefit year shall
be the benefit year of the paying state. Following the termination of a
benefit year, a subsequent benefit year shall commence on the first day
of the first week with respect to which an individual next files a claim for
benefits. When such filing occurs with respect to a week which overlaps
the preceding benefit year, the subsequent benefit year shall commence
on the first day immediately following the expiration date of the preceding
benefit year. Any claim for benefits made in accordance with subsection
(a) of K.S.A. 44-709 and amendments thereto shall be deemed to be a
``valid claim'' for the purposes of this subsection if the individual has been
paid wages for insured work as required under subsection (e) of K.S.A.
44-705 and amendments thereto. Whenever a week of unemployment
overlaps two benefit years, such week shall, for the purpose of granting
waiting-period credit or benefit payment with respect thereto, be deemed
to be a week of unemployment within that benefit year in which the
greater part of such week occurs.

(e) ``Commissioner'' or ``secretary'' means the secretary of human re-
sources.

(f) (1) ``Contributions'' means the money payments to the state em-
ployment security fund which are required to be made by employers on
account of employment under K.S.A. 44-710 and amendments thereto,
and voluntary payments made by employers pursuant to such statute.

(2) ``Payments in lieu of contributions'' means the money payments
to the state employment security fund from employers which are required

Ch. 174             1997 Session Laws of Kansas             1251

to make or which elect to make such payments under subsection (e) of
K.S.A. 44-710 and amendments thereto.

(g) ``Employing unit'' means any individual or type of organization,
including any partnership, association, limited liability company, agency
or department of the state of Kansas and political subdivisions thereof,
trust, estate, joint-stock company, insurance company or corporation,
whether domestic or foreign including nonprofit corporations, or the re-
ceiver, trustee in bankruptcy, trustee or successor thereof, or the legal
representatives of a deceased person, which has in its employ one or more
individuals performing services for it within this state. All individuals per-
forming services within this state for any employing unit which maintains
two or more separate establishments within this state shall be deemed to
be employed by a single employing unit for all the purposes of this act.
Each individual employed to perform or to assist in performing the work
of any agent or employee of an employing unit shall be deemed to be
employed by such employing unit for all the purposes of this act, whether
such individual was hired or paid directly by such employing unit or by
such agent or employee, provided the employing unit had actual or con-
structive knowledge of the employment.

(h) ``Employer'' means:

(1) (A) Any employing unit for which agricultural labor as defined in
subsection (w) of this section is performed and which during any calendar
quarter in either the current or preceding calendar year paid remunera-
tion in cash of $20,000 or more to individuals employed in agricultural
labor or for some portion of a day in each of 20 different calendar weeks,
whether or not such weeks were consecutive, in either the current or the
preceding calendar year, employed in agricultural labor 10 or more in-
dividuals, regardless of whether they were employed at the same moment
of time.

(B) For the purpose of this subsection (h)(1), any individual who is a
member of a crew furnished by a crew leader to perform service in ag-
ricultural labor for any other person shall be treated as an employee of
such crew leader if:

(i) Such crew leader holds a valid certificate of registration under the
federal migrant and seasonal agricultural workers protection act or sub-
stantially all the members of such crew operate or maintain tractors,
mechanized harvesting or cropdusting equipment or any other mecha-
nized equipment, which is provided by such crew leader; and

(ii) such individual is not in the employment of such other person
within the meaning of subsection (i) of this section.

(C) For the purpose of this subsection (h)(1), in the case of any in-
dividual who is furnished by a crew leader to perform service in agricul-
tural labor for any other person and who is not treated as an employee
of such crew leader:

1252             1997 Session Laws of Kansas             Ch. 174

(i) Such other person and not the crew leader shall be treated as the
employer of such individual; and

(ii) such other person shall be treated as having paid cash remuner-
ation to such individual in an amount equal to the amount of cash re-
muneration paid to such individual by the crew leader, either on the crew
leader's own behalf or on behalf of such other person, for the service in
agricultural labor performed for such other person.

(D) For the purposes of this subsection (h)(1) ``crew leader'' means
an individual who:

(i) Furnishes individuals to perform service in agricultural labor for
any other person;

(ii) pays, either on such individual's own behalf or on behalf of such
other person, the individuals so furnished by such individual for the serv-
ice in agricultural labor performed by them; and

(iii) has not entered into a written agreement with such other person
under which such individual is designated as an employee of such other
person.

(2) (A) Any employing unit which: (i) In any calendar quarter in ei-
ther the current or preceding calendar year paid for service in employ-
ment wages of $1,500 or more, or (ii) for some portion of a day in each
of 20 different calendar weeks, whether or not such weeks were consec-
utive, in either the current or preceding calendar year, had in employment
at least one individual, whether or not the same individual was in em-
ployment in each such day.

(B) Employment of individuals to perform domestic service or agri-
cultural labor and wages paid for such service or labor shall not be con-
sidered in determining whether an employing unit meets the criteria of
this subsection (h)(2).

(3) Any employing unit for which service is employment as defined
in subsection (i)(3)(E) of this section.

(4) (A) Any employing unit, whether or not it is an employing unit
under subsection (g) of this section, which acquires or in any manner
succeeds to (i) substantially all of the employing enterprises, organization,
trade or business, or (ii) substantially all the assets, of another employing
unit which at the time of such acquisition was an employer subject to this
act;

(B) any employing unit which is controlled substantially, either di-
rectly or indirectly by legally enforceable means or otherwise, by the same
interest or interests, whether or not such interest or interests are an em-
ploying unit under subsection (g) of this section, which acquires or in any
manner succeeds to a portion of an employer's annual payroll, which is
less than 100% of such employer's annual payroll, and which intends to
continue the acquired portion as a going business.

(5) Any employing unit which paid cash remuneration of $1,000 or
more in any calendar quarter in the current or preceding calendar year

Ch. 174             1997 Session Laws of Kansas             1253

to individuals employed in domestic service as defined in subsection (aa)
of this section.

(6) Any employing unit which having become an employer under this
subsection (h) has not, under subsection (b) of K.S.A. 44-711 and amend-
ments thereto, ceased to be an employer subject to this act.

(7) Any employing unit which has elected to become fully subject to
this act in accordance with subsection (c) of K.S.A. 44-711 and amend-
ments thereto.

(8) Any employing unit not an employer by reason of any other par-
agraph of this subsection (h), for which within either the current or pre-
ceding calendar year services in employment are or were performed with
respect to which such employing unit is liable for any federal tax against
which credit may be taken for contributions required to be paid into a
state unemployment compensation fund; or which, as a condition for ap-
proval of this act for full tax credit against the tax imposed by the federal
unemployment tax act, is required, pursuant to such act, to be an ``em-
ployer'' under this act.

(9) Any employing unit described in section 501(c)(3) of the federal
internal revenue code of 1986 which is exempt from income tax under
section 501(a) of the code that had four or more individuals in employ-
ment for some portion of a day in each of 20 different weeks, whether or
not such weeks were consecutive, within either the current or preceding
calendar year, regardless of whether they were employed at the same
moment of time.

(i) ``Employment'' means:

(1) Subject to the other provisions of this subsection, service, includ-
ing service in interstate commerce, performed by

(A) Any active officer of a corporation; or

(B) any individual who, under the usual common law rules applicable
in determining the employer-employee relationship, has the status of an
employee; or

(C) any individual other than an individual who is an employee under
subsection (i)(1)(A) or subsection (i)(1)(B) above who performs services
for remuneration for any person:

(i) As an agent-driver or commission-driver engaged in distributing
meat products, vegetable products, fruit products, bakery products, bev-
erages (other than milk), or laundry or dry-cleaning services, for such
individual's principal; or

(ii) as a traveling or city salesman, other than as an agent-driver or
commission-driver, engaged upon a full-time basis in the solicitation on
behalf of, and the transmission to, a principal (except for side-line sales
activities on behalf of some other person) of orders from wholesalers,
retailers, contractors, or operators of hotels, restaurants, or other similar
establishments for merchandise for resale or supplies for use in their
business operations.

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For purposes of subsection (i)(1)(D), the term ``employment'' shall in-
clude services described in paragraphs (i) and (ii) above only if:

(a) The contract of service contemplates that substantially all of the
services are to be performed personally by such individual;

(b) the individual does not have a substantial investment in facilities
used in connection with the performance of the services (other than in
facilities for transportation); and

(c) the services are not in the nature of a single transaction that is not
part of a continuing relationship with the person for whom the services
are performed.

(2) The term ``employment'' shall include an individual's entire serv-
ice within the United States, even though performed entirely outside this
state if,

(A) The service is not localized in any state, and

(B) the individual is one of a class of employees who are required to
travel outside this state in performance of their duties, and

(C) the individual's base of operations is in this state, or if there is no
base of operations, then the place from which service is directed or con-
trolled is in this state.

(3) The term ``employment'' shall also include:

(A) Services performed within this state but not covered by the pro-
visions of subsection (i)(1) or subsection (i)(2) shall be deemed to be
employment subject to this act if contributions are not required and paid
with respect to such services under an unemployment compensation law
of any other state or of the federal government.

(B) Services performed entirely without this state, with respect to no
part of which contributions are required and paid under an unemploy-
ment compensation law of any other state or of the federal government,
shall be deemed to be employment subject to this act only if the individual
performing such services is a resident of this state and the secretary ap-
proved the election of the employing unit for whom such services are
performed that the entire service of such individual shall be deemed to
be employment subject to this act.

(C) Services covered by an arrangement pursuant to subsection (l) of
K.S.A. 44-714 and amendments thereto between the secretary and the
agency charged with the administration of any other state or federal un-
employment compensation law, pursuant to which all services performed
by an individual for an employing unit are deemed to be performed en-
tirely within this state, shall be deemed to be employment if the secretary
has approved an election of the employing unit for whom such services
are performed, pursuant to which the entire service of such individual
during the period covered by such election is deemed to be insured work.

(D) Services performed by an individual for wages or under any con-
tract of hire shall be deemed to be employment subject to this act unless
and until it is shown to the satisfaction of the secretary that: (i) Such

Ch. 174             1997 Session Laws of Kansas             1255

individual has been and will continue to be free from control or direction
over the performance of such services, both under the individual's con-
tract of hire and in fact; and (ii) such service is either outside the usual
course of the business for which such service is performed or that such
service is performed outside of all the places of business of the enterprise
for which such service is performed.

(E) Service performed by an individual in the employ of this state or
any instrumentality thereof, any political subdivision of this state or any
instrumentality thereof, any instrumentality of more than one of the fore-
going or any instrumentality which is jointly owned by this state or a
political subdivision thereof and one or more other states or political sub-
divisions of this or other states, provided that such service is excluded
from ``employment'' as defined in the federal unemployment tax act by
reason of section 3306(c)(7) of that act and is not excluded from ``em-
ployment'' under subsection (i)(4)(A) of this section.

(F) Service performed by an individual in the employ of 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 section 3306(c)(8) of that act, and is not excluded from
employment under paragraphs (I) through (M) of subsection (i)(4).

(G) The term ``employment'' shall include the service of an individual
who is a citizen of the United States, performed outside the United States
except in Canada, in the employ of an American employer (other than
service which is deemed ``employment'' under the provisions of subsec-
tion (i)(2) or subsection (i)(3) or the parallel provisions of another state's
law), if:

(i) The employer's principal place of business in the United States is
located in this state; or

(ii) the employer has no place of business in the United States, but

(A) The employer is an individual who is a resident of this state; or

(B) the employer is a corporation which is organized under the laws
of this state; or

(C) the employer is a partnership or a trust and the number of the
partners or trustees who are residents of this state is greater than the
number who are residents of any other state; or

(iii) none of the criteria of paragraphs (i) and (ii) above of this sub-
section (i)(3)(G) are met but the employer has elected coverage in this
state or, the employer having failed to elect coverage in any state, the
individual has filed a claim for benefits, based on such service, under the
law of this state.

(H) An ``American employer,'' for purposes of subsection (i)(3)(G),
means a person who is:

(i) An individual who is a resident of the United States; or

(ii) a partnership if 2/3 or more of the partners are residents of the
United States; or

1256             1997 Session Laws of Kansas             Ch. 174

(iii) a trust, if all of the trustees are residents of the United States; or

(iv) a corporation organized under the laws of the United States or
of any state.

(I) Notwithstanding subsection (i)(2) of this section, all service per-
formed by an officer or member of the crew of an American vessel or
American aircraft on or in connection with such vessel or aircraft, if the
operating office, from which the operations of such vessel or aircraft op-
erating within, or within and without, the United States are ordinarily and
regularly supervised, managed, directed and controlled is within this state.

(J) Notwithstanding any other provisions of this subsection (i), service
with respect to which a tax is required to be paid under any federal law
imposing a tax against which credit may be taken for contributions re-
quired to be paid into a state unemployment compensation fund or which
as a condition for full tax credit against the tax imposed by the federal
unemployment tax act is required to be covered under this act.

(K) Domestic service in a private home, local college club or local
chapter of a college fraternity or sorority performed for a person who
paid cash remuneration of $1,000 or more in any calendar quarter in the
current calendar year or the preceding calendar year to individuals em-
ployed in such domestic service.

(4) The term ``employment'' shall not include: (A) Service performed
in the employ of an employer specified in subsection (h)(3) of this section
if such service is performed by an individual in the exercise of duties:

(i) As an elected official;

(ii) as a member of a legislative body, or a member of the judiciary,
of a state or political subdivision;

(iii) as a member of the state national guard or air national guard;

(iv) as an employee serving on a temporary basis in case of fire, storm,
snow, earthquake, flood or similar emergency;

(v) in a position which, under or pursuant to the laws of this state, is
designated as a major nontenured policymaking or advisory position or as
a policymaking or advisory position the performance of the duties of
which ordinarily does not require more than eight hours per week;

(B) service with respect to which unemployment compensation is
payable under an unemployment compensation system established by an
act of congress;

(C) service performed by an individual in the employ of such indi-
vidual's son, daughter or spouse, and service performed by a child under
the age of 21 years in the employ of such individual's father or mother;

(D) service performed in the employ of the United States govern-
ment or an instrumentality of the United States exempt under the con-
stitution of the United States from the contributions imposed by this act,
except that to the extent that the congress of the United States shall
permit states to require any instrumentality of the United States to make
payments into an unemployment fund under a state unemployment com-

Ch. 174             1997 Session Laws of Kansas             1257

pensation law, all of the provisions of this act shall be applicable to such
instrumentalities, and to services performed for such instrumentalities, in
the same manner, to the same extent and on the same terms as to all
other employers, employing units, individuals and services. If this state
shall not be certified for any year by the federal security agency under
section 3304(c) of the federal internal revenue code of 1986, the payments
required of such instrumentalities with respect to such year shall be re-
funded by the secretary from the fund in the same manner and within
the same period as is provided in subsection (f) of K.S.A. 44-717 and
amendments thereto with respect to contributions erroneously collected;

(E) service covered by an arrangement between the secretary and
the agency charged with the administration of any other state or federal
unemployment compensation law pursuant to which all services per-
formed by an individual for an employing unit during the period covered
by such employing unit's duly approved election, are deemed to be per-
formed entirely within the jurisdiction of such other state or federal
agency;

(F) service performed by an individual under the age of 18 in the
delivery or distribution of newspapers or shopping news, not including
delivery or distribution to any point for subsequent delivery or distribu-
tion;

(G) service performed by an individual for an employing unit as an
insurance agent or as an insurance solicitor, if all such service performed
by such individual for such employing unit is performed for remuneration
solely by way of commission;

(H) service performed in any calendar quarter in the employ of any
organization exempt from income tax under section 501(a) of the federal
internal revenue code of 1986 (other than an organization described in
section 401(a) or under section 521 of such code) if the remuneration for
such service is less than $50. In construing the application of the term
``employment,'' if services performed during 1/2 or more of any pay period
by an individual for the person employing such individual constitute em-
ployment, all the services of such individual for such period shall be
deemed to be employment; but if the services performed during more
than 1/2 of any such pay period by an individual for the person employing
such individual do not constitute employment, then none of the services
of such individual for such period shall be deemed to be employment. As
used in this subsection (i)(4)(H) the term ``pay period'' means a period
(of not more than 31 consecutive days) for which a payment of remuner-
ation is ordinarily made to the individual by the person employing such
individual. This subsection (i)(4)(H) shall not be applicable with respect
to services with respect to which unemployment compensation is payable
under an unemployment compensation system established by an act of
congress;

(I) services performed in the employ of a church or convention or

1258             1997 Session Laws of Kansas             Ch. 174

association of churches, or an organization which is operated primarily
for religious purposes and which is operated, supervised, controlled, or
principally supported by a church or convention or association of
churches;

(J) service performed by a duly ordained, commissioned, or licensed
minister of a church in the exercise of such individual's ministry or by a
member of a religious order in the exercise of duties required by such
order;

(K) service performed in a facility conducted for the purpose of car-
rying out a program of:

(i) Rehabilitation for individuals whose earning capacity is impaired
by age or physical or mental deficiency or injury, or

(ii) providing remunerative work for individuals who because of their
impaired physical or mental capacity cannot be readily absorbed in the
competitive labor market, by an individual receiving such rehabilitation
or remunerative work;

(L) service performed as part of an employment work-relief or work-
training program assisted or financed in whole or in part by any federal
agency or an agency of a state or political subdivision thereof, by an in-
dividual receiving such work relief or work training;

(M) service performed by an inmate of a custodial or correctional
institution, unless such service is performed for a private, for-profit em-
ployer;

(N) service performed, in the employ of a school, college, or univer-
sity, if such service is performed by a student who is enrolled and is
regularly attending classes at such school, college or university;

(O) service performed by an individual who is enrolled at a nonprofit
or public educational institution which normally maintains a regular fac-
ulty and curriculum and normally has a regularly organized body of stu-
dents in attendance at the place where its educational activities are carried
on as a student in a full-time program, taken for credit at such institution,
which combines academic instruction with work experience, if such serv-
ice is an integral part of such program, and such institution has so certified
to the employer, except that this subsection (i)(4)(O) shall not apply to
service performed in a program established for or on behalf of an em-
ployer or group of employers;

(P) service performed in the employ of a hospital licensed, certified
or approved by the secretary of health and environment, if such service
is performed by a patient of the hospital;

(Q) services performed as a qualified real estate agent. As used in
this subsection (i)(4)(Q) the term ``qualified real estate agent'' means any
individual who is licensed by the Kansas real estate commission as a
salesperson under the real estate brokers' and salespersons' license act
and for whom:

(i) Substantially all of the remuneration, whether or not paid in cash,

Ch. 174             1997 Session Laws of Kansas             1259

for the services performed by such individual as a real estate salesperson
is directly related to sales or other output, including the performance of
services, rather than to the number of hours worked; and

(ii) the services performed by the individual are performed pursuant
to a written contract between such individual and the person for whom
the services are performed and such contract provides that the individual
will not be treated as an employee with respect to such services for state
tax purposes;

(R) services performed for an employer by an extra in connection
with any phase of motion picture or television production or television
commercials for less than 14 days during any calendar year. As used in
this subsection, the term ``extra'' means an individual who pantomimes in
the background, adds atmosphere to the set and performs such actions
without speaking and ``employer'' shall not include any employer which
is a governmental entity or any employer described in section 501(c)(3)
of the federal internal revenue code of 1986 which is exempt from income
under section 501(a) of the code;

(S) services performed by an oil and gas contract pumper. As used in
this subsection (i)(4)(S), ``oil and gas contract pumper'' means a person
performing pumping and other services on one or more oil or gas leases,
or on both oil and gas leases, relating to the operation and maintenance
of such oil and gas leases, on a contractual basis for the operators of such
oil and gas leases and ``services'' shall not include services performed for
a governmental entity or any organization described in section 501(c)(3)
of the federal internal revenue code of 1986 which is exempt from income
taxation under section 501(a) of the code;

(T) service not in the course of the employer's trade or business per-
formed in any calendar quarter by an employee, unless the cash remu-
neration paid for such service is $200 or more and such service is per-
formed by an individual who is regularly employed by such employer to
perform such service. For purposes of this paragraph, an individual shall
be deemed to be regularly employed by an employer during a calendar
quarter only if:

(i) On each of some 24 days during such quarter such individual per-
forms for such employer for some portion of the day service not in the
course of the employer's trade or business, or

(ii) such individual was regularly employed, as determined under sub-
paragraph (i), by such employer in the performance of such service during
the preceding calendar quarter.

Such excluded service shall not include any services performed for an
employer which is a governmental entity or any employer described in
section 501(c)(3) of the federal internal revenue code of 1986 which is
exempt from income taxation under section 501(a) of the code; and

(U) service which is performed by any person who is a member of a

1260             1997 Session Laws of Kansas             Ch. 174

limited liability company and which is performed as a member or manager
of that limited liability company.; and

(V) services performed as a qualified direct seller. The term ``direct
seller'' means any person if:

(i) Such person:

(aa) is engaged in the trade or business of selling or soliciting the sale
of consumer products to any buyer on a buy-sell basis or a deposit-
commission basis for resale, by the buyer or any other person, in the home
or otherwise rather than in a permanent retail establishment; or

(bb) is engaged in the trade or business of selling or soliciting the sale
of consumer products in the home or otherwise than in a permanent retail
establishment;

(ii) substantially all the remuneration whether or not paid in cash for
the performance of the services described in subparagraph (i) is directly
related to sales or other output including the performance of services
rather than to the number of hours worked;

(iii) the services performed by the person are performed pursuant to
a written contract between such person and the person for whom the
services are performed and such contract provides that the person will
not be treated as an employee for federal and state tax purposes; and

(iv) for purposes of this act, a sale or a sale resulting exclusively from
a solicitation made by telephone, mail, or other telecommunications
method, or other nonpersonal method does not satisfy the requirements
of this subsection.

(j) ``Employment office'' means any office operated by this state and
maintained by the secretary of human resources for the purpose of as-
sisting persons to become employed.

(k) ``Fund'' means the employment security fund established by this
act, to which all contributions and reimbursement payments required and
from which all benefits provided under this act shall be paid and including
all money received from the federal government as reimbursements pur-
suant to section 204 of the federal-state extended compensation act of
1970, and amendments thereto.

(l) ``State'' includes, in addition to the states of the United States of
America, any dependency of the United States, the Commonwealth of
Puerto Rico, the District of Columbia and the Virgin Islands.

(m) ``Unemployment.'' An individual shall be deemed ``unemployed''
with respect to any week during which such individual performs no serv-
ices and with respect to which no wages are payable to such individual,
or with respect to any week of less than full-time work if the wages payable
to such individual with respect to such week are less than such individual's
weekly benefit amount.

(n) ``Employment security administration fund'' means the fund es-
tablished by this act, from which administrative expenses under this act
shall be paid.

Ch. 174             1997 Session Laws of Kansas             1261

(o) ``Wages'' means all compensation for services, including commis-
sions, bonuses, back pay and the cash value of all remuneration, including
benefits, paid in any medium other than cash. The reasonable cash value
of remuneration in any medium other than cash, shall be estimated and
determined in accordance with rules and regulations prescribed by the
secretary. Compensation payable to an individual which has not been
actually received by that individual within 21 days after the end of the
pay period in which the compensation was earned shall be considered to
have been paid on the 21st day after the end of that pay period. Effective
January 1, 1986, gratuities, including tips received from persons other
than the employing unit, shall be considered wages when reported in
writing to the employer by the employee. Employees must furnish a writ-
ten statement to the employer, reporting all tips received if they total $20
or more for a calendar month whether the tips are received directly from
a person other than the employer or are paid over to the employee by
the employer. This includes amounts designated as tips by a customer
who uses a credit card to pay the bill. Notwithstanding the other provi-
sions of this subsection (o), wages paid in back pay awards or settlements
shall be allocated to the week or weeks and reported in the manner as
specified in the award or agreement, or, in the absence of such specificity
in the award or agreement, such wages shall be allocated to the week or
weeks in which such wages, in the judgment of the secretary, would have
been paid. The term ``wages'' shall not include:

(1) That part of the remuneration which has been paid in a calendar
year to an individual by an employer or such employer's predecessor in
excess of $3,000 for all calendar years prior to 1972, $4,200 for the cal-
endar years 1972 to 1977, inclusive, $6,000 for calendar years 1978 to
1982, inclusive, $7,000 for the calendar year 1983, and $8,000 with re-
spect to employment during any calendar year following 1983, except that
if the definition of the term ``wages'' as contained in the federal unem-
ployment tax act is amended to include remuneration in excess of $8,000
paid to an individual by an employer under the federal act during any
calendar year, wages shall include remuneration paid in a calendar year
to an individual by an employer subject to this act or such employer's
predecessor with respect to employment during any calendar year up to
an amount equal to the dollar limitation specified in the federal unem-
ployment tax act. For the purposes of this subsection (o)(1), the term
``employment'' shall include service constituting employment under any
employment security law of another state or of the federal government;

(2) the amount of any payment (including any amount paid by an
employing unit for insurance or annuities, or into a fund, to provide for
any such payment) made to, or on behalf of, an employee or any of such
employee's dependents under a plan or system established by an em-
ployer which makes provisions for employees generally, for a class or
classes of employees or for such employees or a class or classes of em-

1262             1997 Session Laws of Kansas             Ch. 174

ployees and their dependents, on account of (A) sickness or accident
disability, except in the case of any payment made to an employee or such
employee's dependents, this subparagraph shall exclude from the term
``wages'' only payments which are received under a workers compensation
law. Any third party which makes a payment included as wages by reason
of this subparagraph (2)(A) shall be treated as the employer with respect
to such wages, or (B) medical and hospitalization expenses in connection
with sickness or accident disability, or (C) death;

(3) any payment on account of sickness or accident disability, or med-
ical or hospitalization expenses in connection with sickness or accident
disability, made by an employer to, or on behalf of, an employee after the
expiration of six calendar months following the last calendar month in
which the employee worked for such employer;

(4) any payment made to, or on behalf of, an employee or such em-
ployee's beneficiary:

(A) From or to a trust described in section 401(a) of the federal in-
ternal revenue code of 1986 which is exempt from tax under section
501(a) of the federal internal revenue code of 1986 at the time of such
payment unless such payment is made to an employee of the trust as
remuneration for services rendered as such employee and not as a ben-
eficiary of the trust;

(B) under or to an annuity plan which, at the time of such payment,
is a plan described in section 403(a) of the federal internal revenue code
of 1986;

(C) under a simplified employee pension as defined in section
408(k)(1) of the federal internal revenue code of 1986, other than any
contribution described in section 408(k)(6) of the federal internal revenue
code of 1986;

(D) under or to an annuity contract described in section 403(b) of
the federal internal revenue code of 1986, other than a payment for the
purchase of such contract which was made by reason of a salary reduction
agreement whether evidenced by a written instrument or otherwise;

(E) under or to an exempt governmental deferred compensation plan
as defined in section 3121(v)(3) of the federal internal revenue code of
1986;

(F) to supplement pension benefits under a plan or trust described
in any of the foregoing provisions of this subparagraph to take into ac-
count some portion or all of the increase in the cost of living, as deter-
mined by the secretary of labor, since retirement but only if such sup-
plemental payments are under a plan which is treated as a welfare plan
under section 3(2)(B)(ii) of the federal employee retirement income se-
curity act of 1974; or

(G) under a cafeteria plan within the meaning of section 125 of the
federal internal revenue code of 1986;

(5) the payment by an employing unit (without deduction from the

Ch. 174             1997 Session Laws of Kansas             1263

remuneration of the employee) of the tax imposed upon an employee
under section 3101 of the federal internal revenue code of 1986 with
respect to remuneration paid to an employee for domestic service in a
private home of the employer or for agricultural labor;

(6) remuneration paid in any medium other than cash to an employee
for service not in the course of the employer's trade or business;

(7) remuneration paid to or on behalf of an employee if and to the
extent that at the time of the payment of such remuneration it is reason-
able to believe that a corresponding deduction is allowable under section
217 of the federal internal revenue code of 1986 relating to moving
expenses;

(8) any payment or series of payments by an employer to an employee
or any of such employee's dependents which is paid:

(A) Upon or after the termination of an employee's employment re-
lationship because of (i) death or (ii) retirement for disability; and

(B) under a plan established by the employer which makes provisions
for employees generally, a class or classes of employees or for such em-
ployees or a class or classes of employees and their dependents, other
than any such payment or series of payments which would have been paid
if the employee's employment relationship had not been so terminated;

(9) remuneration for agricultural labor paid in any medium other than
cash;

(10) any payment made, or benefit furnished, to or for the benefit of
an employee if at the time of such payment or such furnishing it is rea-
sonable to believe that the employee will be able to exclude such payment
or benefit from income under section 129 of the federal internal revenue
code of 1986 which relates to dependent care assistance programs;

(11) the value of any meals or lodging furnished by or on behalf of
the employer if at the time of such furnishing it is reasonable to believe
that the employee will be able to exclude such items from income under
section 119 of the federal internal revenue code of 1986;

(12) any payment made by an employer to a survivor or the estate of
a former employee after the calendar year in which such employee died;
or

(13) any benefit provided to or on behalf of an employee if at the
time such benefit is provided it is reasonable to believe that the employee
will be able to exclude such benefit from income under section 74(c), 117
or 132 of the federal internal revenue code of 1986.

Nothing in any paragraph of subsection (o), other than paragraph (1),
shall exclude from the term ``wages'': (1) Any employer contribution un-
der a qualified cash or deferred arrangement, as defined in section 401(k)
of the federal internal revenue code of 1986, to the extent that such
contribution is not included in gross income by reason of section 402(a)(8)
of the federal internal revenue code of 1986; or (2) any amount treated

1264             1997 Session Laws of Kansas             Ch. 174

as an employer contribution under section 414(h)(2) of the federal inter-
nal revenue code of 1986.

Any amount deferred under a nonqualified deferred compensation
plan shall be taken into account for purposes of this section as of the later
of when the services are performed or when there is no substantial risk
of forfeiture of the rights to such amount. Any amount taken into account
as wages by reason of this paragraph, and the income attributable thereto,
shall not thereafter be treated as wages for purposes of this section. For
purposes of this paragraph, the term ``nonqualified deferred compensa-
tion plan'' means any plan or other arrangement for deferral of compen-
sation other than a plan described in subsection (o)(4).

(p) ``Week'' means such period or periods of seven consecutive cal-
endar days, as the secretary may by rules and regulations prescribe.

(q) ``Calendar quarter'' means the period of three consecutive cal-
endar months ending March 31, June 30, September 30 or December
31, or the equivalent thereof as the secretary may by rules and regulations
prescribe.

(r) ``Insured work'' means employment for employers.

(s) ``Approved training'' means any vocational training course or
course in basic education skills approved by the secretary or a person or
persons designated by the secretary.

(t) ``American vessel'' or ``American aircraft'' means any vessel or air-
craft documented or numbered or otherwise registered under the laws
of the United States; and any vessel or aircraft which is neither docu-
mented or numbered or otherwise registered under the laws of the
United States nor documented under the laws of any foreign country, if
its crew performs service solely for one or more citizens or residents of
the United States or corporations organized under the laws of the United
States or of any state.

(u) ``Institution of higher education,'' for the purposes of this section,
means an educational institution which:

(1) Admits as regular students only individuals having a certificate of
graduation from a high school, or the recognized equivalent of such a
certificate;

(2) is legally authorized in this state to provide a program of education
beyond high school;

(3) provides an educational program for which it awards a bachelor's
or higher degree, or provides a program which is acceptable for full credit
toward such a degree, a program of postgraduate or postdoctoral studies,
or a program of training to prepare students for gainful employment in a
recognized occupation; and

(4) is a public or other nonprofit institution.

Notwithstanding any of the foregoing provisions of this subsection (u),
all colleges and universities in this state are institutions of higher educa-
tion for purposes of this section, except that no college, university, junior

Ch. 174             1997 Session Laws of Kansas             1265

college or other postsecondary school or institution which is operated by
the federal government or any agency thereof shall be an institution of
higher education for purposes of the employment security law.

(v) ``Educational institution'' means any institution of higher educa-
tion, as defined in subsection (u) of this section, or any institution, except
private for profit institutions, in which participants, trainees or students
are offered an organized course of study or training designed to transfer
to them knowledge, skills, information, doctrines, attitudes or abilities
from, by or under the guidance of an instructor or teacher and which is
approved, licensed or issued a permit to operate as a school by the state
department of education or other government agency that is authorized
within the state to approve, license or issue a permit for the operation of
a school. The courses of study or training which an educational institution
offers may be academic, technical, trade or preparation for gainful em-
ployment in a recognized occupation.

(w) (1) ``Agricultural labor'' means any remunerated service:

(A) On a farm, in the employ of any person, in connection with cul-
tivating the soil, or in connection with raising or harvesting any agricul-
tural or horticultural commodity, including the raising, shearing, feeding,
caring for, training, and management of livestock, bees, poultry, and fur-
bearing animals and wildlife.

(B) In the employ of the owner or tenant or other operator of a farm,
in connection with the operating, management, conservation, improve-
ment, or maintenance of such farm and its tools and equipment, or in
salvaging timber or clearing land of brush and other debris left by a hur-
ricane, if the major part of such service is performed on a farm.

(C) In connection with the production or harvesting of any commod-
ity defined as an agricultural commodity in section (15)(g) of the agri-
cultural marketing act, as amended (46 Stat. 1500, sec. 3; 12 U.S.C. 1141j)
or in connection with the ginning of cotton, or in connection with the
operation or maintenance of ditches, canals, reservoirs or waterways, not
owned or operated for profit, used exclusively for supplying and storing
water for farming purposes.

(D) (i) In the employ of the operator of a farm in handling, planting,
drying, packing, packaging, processing, freezing, grading, storing, or de-
livering to storage or to market or to a carrier for transportation to market,
in its unmanufactured state, any agricultural or horticultural commodity;
but only if such operator produced more than 1/2 of the commodity with
respect to which such service is performed;

(ii) in the employ of a group of operators of farms (or a cooperative
organization of which such operators are members) in the performance
of service described in paragraph (i) above of this subsection (w)(1)(D),
but only if such operators produced more than 1/2 of the commodity with
respect to which such service is performed;

(iii) the provisions of paragraphs (i) and (ii) above of this subsection

1266             1997 Session Laws of Kansas             Ch. 174

(w)(1)(D) shall not be deemed to be applicable with respect to service
performed in connection with commercial canning or commercial freez-
ing or in connection with any agricultural or horticultural commodity after
its delivery to a terminal market for distribution for consumption.

(E) On a farm operated for profit if such service is not in the course
of the employer's trade or business.

(2) ``Agricultural labor'' does not include service performed prior to
January 1, 1980, by an individual who is an alien admitted to the United
States to perform service in agricultural labor pursuant to sections 214(c)
and 101(a)(15)(H) of the federal immigration and nationality act.

(3) As used in this subsection (w), the term ``farm'' includes stock,
dairy, poultry, fruit, fur-bearing animal, and truck farms, plantations,
ranches, nurseries, ranges, greenhouses, or other similar structures used
primarily for the raising of agricultural or horticultural commodities, and
orchards.

(4) For the purpose of this section, if an employing unit does not
maintain sufficient records to separate agricultural labor from other em-
ployment, all services performed during any pay period by an individual
for the person employing such individual shall be deemed to be agricul-
tural labor if services performed during 1/2 or more of such pay period
constitute agricultural labor; but if the services performed during more
than 1/2 of any such pay period by an individual for the person employing
such individual do not constitute agricultural labor, then none of the serv-
ices of such individual for such period shall be deemed to be agricultural
labor. As used in this subsection (w), the term ``pay period'' means a
period of not more than 31 consecutive days for which a payment of
remuneration is ordinarily made to the individual by the person employ-
ing such individual.

(x) ``Reimbursing employer'' means any employer who makes pay-
ments in lieu of contributions to the employment security fund as pro-
vided in subsection (e) of K.S.A. 44-710 and amendments thereto.

(y) ``Contributing employer'' means any employer other than a re-
imbursing employer or rated governmental employer.

(z) ``Wage combining plan'' means a uniform national arrangement
approved by the United States secretary of labor in consultation with the
state unemployment compensation agencies and in which this state shall
participate, whereby wages earned in one or more states are transferred
to another state, called the ``paying state,'' and combined with wages in
the paying state, if any, for the payment of benefits under the laws of the
paying state and as provided by an arrangement so approved by the
United States secretary of labor.

(aa) ``Domestic service'' means any service for a person in the oper-
ation and maintenance of a private household, local college club or local
chapter of a college fraternity or sorority, as distinguished from service

Ch. 174             1997 Session Laws of Kansas             1267

as an employee in the pursuit of an employer's trade, occupation, pro-
fession, enterprise or vocation.

(bb) ``Rated governmental employer'' means any governmental entity
which elects to make payments as provided by K.S.A. 44-710d and
amendments thereto.

(cc) ``Benefit cost payments'' means payments made to the employ-
ment security fund by a governmental entity electing to become a rated
governmental employer.

(dd) ``Successor employer'' means any employer, as described in sub-
section (h) of this section, which acquires or in any manner succeeds to
(1) substantially all of the employing enterprises, organization, trade or
business of another employer or (2) substantially all the assets of another
employer.

(ee) ``Predecessor employer'' means an employer, as described in
subsection (h) of this section, who has previously operated a business or
portion of a business with employment to which another employer has
succeeded.

(ff) ``Lessor employing unit'' means any independently established
business entity which engages in the business of providing leased em-
ployees to a client lessee.

(gg) ``Client lessee'' means any individual, organization, partnership,
corporation or other legal entity leasing employees from a lessor employ-
ing unit.

Sec. 2. K.S.A. 1996 Supp. 44-703 is hereby repealed.

Sec. 3. This act shall take effect and be in force from and after its
publication in the statute book.

Approved May 15, 1997.