Sec. 105. Elective classification service provider payees
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A service provider payee that does not meet either of the requirements of section 103 or section 104 is an elective classification service provider payee. Each elective classification service provider payee shall elect whether to be classified as an employee or an independent contractor in accordance with this section. The elective classification service provider payee shall make the election required by this section in writing upon entering into an economic relationship with a service recipient payor.
Subject to subsection (c), the election need not be in any particular form as long as the election— clearly indicates the service provider payee’s intent regarding whether to be classified as an independent contractor or an employee; is dated; is signed by the elective classification service provider payee; and is countersigned by the service recipient payor. The elective classification service provider payee shall secure the counter-signature of the service recipient payor acknowledging that the service recipient payor knows the classification election made by the service provider payee.
The election required under subsection
(a)is not effective until the counter-signature of the service recipient payor is secured, subject to subsection (f). The election required under subsection
(a)shall be made by the elective classification service provider payee upon entering into an economic relationship with a service recipient payor. Failure by the elective classification service provider payee to make the election required by subsection
(a)within 14 days of entering into an economic relationship with a service recipient payor shall be subject to a penalty under subsection (g)(1), subject to subsection (f). Both the elective classification service provider payee and the service recipient payor are required to maintain a copy of the countersigned election required under subsection
(b)for a period of 3 years following its countersignature. Failure by the elective classification service provider payee or the service recipient payor to maintain a copy of the countersigned election required by this section shall be subject to a penalty under subsection (g)(2). In the event that an elective classification service provider payee makes the election required under subsection
(a)except that the elective classification service provider payee requests, but does not receive, the countersignature required by subsection
(c)within 14 days of entering into an economic relationship with a service recipient payor, the elective classification service provider payee shall be classified as an independent contractor and shall not be in violation of subsection (g)(1). The Secretary shall impose a penalty not to exceed $100 on an elective classification service provider payee who fails to make the election required by subsection
(a)within 14 days of entering into an economic relationship with a service recipient payor. The Secretary shall impose a penalty not to exceed $100 on elective classification service provider payees or service recipient payors who fail to maintain the records required by subsection (e). The Secretary shall impose a penalty on a service recipient payor or service provider payee responsible for a classification determination under this section who willfully or recklessly misclassifies a service provider payee as an independent contractor in an amount equal to 15 percent of the compensation paid to the independent contractor. Nothing in this title shall be read as a requirement by a service provider payee or a service recipient payor to enter into an economic relationship.