BRO-2-01-CO:R:C:E 225561 AJS
Mr. Randy L. Pohler
International Consultation Services
P.O. Box 999
Del Rio TX 78841
RE: 19 CFR 111.3(a); personnel from one company performing
clerical support for other company are not employees of other
company; "employee"; 54 Fed. Reg. 13,136; "independent
contractor".
Dear Mr. Pohler:
This is in reply to your request of July 5, 1994, concerning
the scope of the term "employees" as it relates to 19 CFR
111.3(a).
FACTS:
Your company provides clerical support to companies involved
in the importation of assembled or manufactured merchandise. We
assume that your company provides this support through its own
personnel. Your company is employed by companies which do not
wish to maintain offices and or employees on the United States-
Mexico border. Normally, these companies would have a
manufacturing plant in Mexico and a plant manager who would
travel from the U.S. to Mexico daily to oversee the plant
operations. The clerical support provided by your company
includes, but is not limited to, inter-company memorandums,
English/Spanish translations, form preparation, charts/graphs,
etc. The plant manager would direct that your personnel
accomplish clerical tasks in support of the companies
import/export activities. All documents requiring a signature
are signed by the plant manager who, of course, has a power-of-
attorney to sign customs documents. Your company is paid on a
weekly basis for providing this clerical support.
Based on our previous correspondence (i.e., HQ 224768
October 20, 1993), it is understood that you are submitting this
request in connection with the language of section 648 of the
North American Free Trade Agreement Implementation Act (Act of
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December 8, 1993, 107 Stat. 2053, Pub. L. No. 103-182). That
section amended 19 U.S.C. 1641 to include within the definition
of "Customs business" the preparation of documents or forms
intended to be filed with the Customs Service in furtherance of
the statutory listed activities. This letter is intended to
cover only that understanding.
ISSUE:
Whether personnel from your company are "regular employees
or officers" of the companies for which they perform clerical
support within the meaning of 19 CFR 111.3(a).
LAW AND ANALYSIS:
19 CFR 111.3(a) provides that an importer or exporter
transacting customs business solely on his own account and in no
sense on behalf of another is not required to be licensed, nor
are his "authorized regular employees or officers" who act only
for him in the transaction of such business.
Customs has previously discussed the meaning of the terms
"employee" and "employer" as they relate to the terms
"responsible supervision and control" in 19 U.S.C. 1641. See 54
Fed. Reg. 13,136 (1989). In our discussion, we cited to 26
U.S.C. 3401(c) and (d) in which these terms are defined for
purposes of the Internal Revenue Code. In addition, we stated
that the common law rules in determining the employer-employee
relationship apply. Marvel v. U.S., 719 F. 2d 1507, 1514-1516
(10th Cir. 1983). Generally, by virtue of 26 U.S.C. 3402, an
employer is required to deduct and withhold a tax on the wages of
each employee. Under 26 U.S.C. 3403, an employer is liable for
the payment of the tax imposed by section 3402. Your request
states that your company is paid on a weekly basis for providing
clerical support. No information is provided concerning the
deduction or withholding arrangement for your personnel. We
assume that your company deducts and withholds a tax on the wages
of its personnel. Therefore, it does not appear that your
personnel are employees of the other companies under these
definitions.
In the above discussion, Customs also stated that in an
employer-employee relationship, unless it can be shown that an
employee was clearly outside the scope of the employment, an act
of the employee binds the employer. If the subject personnel are
provided from your company, it would not appear that their acts
would bind the other companies. Therefore, it also does not
appear that your personnel are employees of the other companies
under this definition.
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Customs additionally stated that an employee has been
defined as a person who renders service to another for wages and
who in the performance of such service is entirely subject to the
direction and control of the employer. Weaver v. Weinberger, 392
F. Supp. 721, 723 (S.D. W. Va 1975); Beliz v. W.H. McLeod & Sons
Packing Co., 765 F.2d 1317, 1327-1330 (5th Cir. 1985); and
Sandwiches, Inc. v. Wendy's Intern., Inc., 654 F.Supp. 1066 (E.D.
Wis. 1987). If your company is providing personnel to other
companies, it would not appear that such personnel would satisfy
this definition. We assume that your company would be paid a fee
for the services performed by its personnel and not wages. In
addition, we assume that your personnel are entirely subject to
the direction and control of your company in the performance of
the subject clerical support. Your request states that the plant
manager would direct that your personnel accomplish the subject
clerical tasks. Inasmuch as your company is providing its
expertise in the import/export area, it would naturally follow
that your company would direct and control the performance of
clerical tasks related to this area.
In our above discussion concerning "employee" and
"employers", we stated that "a person who hires an independent
contractor does not enter into an employer-employee relationship:
as such, an independent contractor retains the right to select
the method and manner to perform the work, free from the
direction and control of the person who hires the contractor in
all matters, except as to the result or product of the work." As
discussed previously, we assume that your company would select
the method and manner for its personnel to perform the subject
clerical tasks for the other companies. We assume that the plant
manager for the other company would only direct that the clerical
tasks be accomplished. Accordingly, your personnel would appear
to be independent contractors of the other companies.
HOLDINGS:
Personnel from your company are not "regular employees or
officers" of the companies for which they perform clerical
support within the meaning of 19 CFR 111.3(a).
Sincerely,
John Durant, Director
Commercial Rulings Division