Rev. Rul. 70-573

The purpose of this Revenue Ruling is to update and restate, under the current statute and regulations, the position set forth in S.S.T. 311, C.B. 1938-2, 284.

The question presented is whether, under the circumstances described below, a jockey engaged under a contract with a race horse owner is an employee of such owner for purposes of the Federal Insurance Contributions Act, the Federal Unemployment Tax Act, and the Collection of Income Tax at Source on Wages (chapters 21, 23, and 24, respectively, subtitle C, Internal Revenue Code of 1954).

The contract provides that the jockey will perform services for the owner as both jockey and exercise boy for a specific period. He is to render faithful service in such capacity and will report to the stable for duty any day that his services may be needed subsequent to a date specified in the contract. It further provides that the jockey will at all times be under the control and direction of the owner, will be ready to ride at a weight not to exceed a specified maximum, and must have the owner's consent to ride for any other individual.

Guides for determining the employer-employee relationship are found in three substantially similar sections of the Employment Tax Regulations, namely, sections 31.3121(d)-1, 31.3306(i)-1, and 31.3401(c)-1. Section 31.3121(d)-1(c) of the regulations provides that every individual is an employee if under the usual common law rules the relationship between him and the person for whom he performs services is the legal relationship of employer and employee.

The regulations further provide that, generally, such relationship exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished. That is, an employee is subject to the will and control of the employer not only as to what shall be done but how it shall be done. In this connection, it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he has the right to do so. The right to discharge is also an important factor indicating that the person possessing that right is an employer.

Under the terms of the contract in this case the race horse owner has the right to exercise such direction and control over the jockey as is necessary to establish the relationship of employer and employee under the usual common law rules. Accordingly, the jockey is an employee of the race horse owner for purposes of the Federal Insurance Contributions Act, the Federal Unemployment Tax Act, and the Collection of Income Tax at Source on Wages.

See Revenue Ruling 70-572, page 221, this Bulletin, which holds, under the facts set forth therein, that a "free-lance" jockey engaged by a race horse owner for one race is not an employee of the owner but is an independent contractor.

S.S.T. 311 is superseded, since the position set forth therein is restated under current statute and regulations in this Revenue Ruling.

¹ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.