School bus drivers in a township in Indiana were hired pursuant to standard written contracts to transport children to and from school under the Indiana School Bus Act.

The drivers’ hours of service and the routes they followed were set by the townships, which had the right to change these factors according to their own convenience. The buses were owned by the townships, which paid for repairs and maintenance. The drivers’ compensation was paid as a daily wage. They did not participate in any of the profits and losses of the business. The townships had the right to change and direct the manner in which the drivers’ performed their work.

The state had a federal/state agreement pursuant to Section 218 of the Social Security Act. Under this agreement, the state could request a review of assessments made by the federal government. Indiana made such a request, challenging the assessments and claiming that the bus drivers were independent contractors.

However, under the circumstances described above, the drivers were determined to be employees. Under common law rules, the townships had a sufficient degree of control over the manner in which the drivers’ work was performed to establish an employer/employee relationship.

See Social Security Ruling (SSR) 67-12.

This material should not be construed as legal advice for any particular fact situation, but is intended for general informational purposes only. For advice specific to any individual situation, an experienced attorney should be contacted