September 17, 1985

Ms. Karen A. Johnson 
Custer County Deputy State's Attorney 
Post Office Box 31 
Custer, South Dakota 57730

OFFICIAL OPINION NO. 85-37

Worker's compensation coverage for county employees

Dear Ms. Johnson:

You have requested an opinion from this office in regard to the following factual situation:

FACTS: 

The Custer County Historical Society operates a museum in the old Custer County Courthouse, Custer County deeded the building to the Historical Society upon the condition that if the Historical Society ceased to exist, it would deed the building back to the County.  The County budgets $2,000 per year for the Historical Society.  The rest of the Society's funds come from donations, sale of books, etc.  Most of the workers volunteer their time to operate the museum.  The janitor and the curator are paid employees.  The Historical Society occasionally hires a part-time laborer for construction and maintenance work.

Based on the above facts, you have asked the following question:

QUESTION: 

Can the employees of the Historical Society at the courthouse museum be covered under the County's worker's compensation policy?

In order to resolve the worker's compensation coverage question herein presented, it is first necessary to determine whether or not the museum employees can be classified as county employees.  The Historical Society is not a direct subdivision of Custer County. The Custer County Historical Society is  classified as a non-profit, separate entity authorized by the county commissioners and governed by the Custer County 1881 Courthouse Museum Board. The only nexus between the County of Custer and the Historical Society is the $2,000 per year stipend granted to the Society for maintenance and the fact that the County deeded the courthouse to the Society upon the condition that the building would revert back to the County if it were ever used for purposes other than a museum.  The County Auditor has no responsibility whatsoever or connection with the payroll process for the Historical Society employees. These employees are not covered by county health insurance or benefit plans. The county does not withhold income taxes or deduct social security taxes from the amounts paid to the Historical Society employees.  The Historical Society employees, therefore, are not connected to or considered to be county employees.

The South Dakota Worker's Compensation Laws 62-1-2 and 62-1-3 set forth the definitions of employers and employees.  The term employer 'includes the state or any political subdivision of this state and any individual, firm, association or corporation . . . using the service of another for pay.' Employees are defined in 62-1-3 as 'every person, including a minor, in the services of another under any contract or employment express or implied.'  The statute goes on to list exceptions from coverage.  The Historical Society, therefore, is considered to be an employer and the paid workers employed in the  courthouse are employees under the statute because they are working under a contract for pay.  As such the Historical Society as their employer must provide its employees with worker's compensation.

Part-time employees must receive the same coverage as full-time employees under the worker's compensation statutes.  Volunteer workers for employers other than the state or its subdivisions or affiliations do not have to be given worker's compensation coverage pursuant to 62-1-5.1.  The Museum Board, however, may negotiate with its insurer for coverage for volunteers if it so desires.

As concerns coverage for the Historical Society employees under the county's worker's compensation policy, the Historical Society employees are not technically county employees and are not ordinarily eligible for coverage under its policy.  Some insurance brokers, however, grant supplemental coverage to workers who are not county employees but who have some connection with or provide a service to the county.  The Museum Board is free to negotiate with the county's insurance agency for coverage similar to that given county employees.  If the Museum Board does wish to pursue such coverage, it should include in the contract a provision which clearly states that although they are not county employees, they will receive coverage nonetheless, up to that provided for by the worker's compensation statutes.

Respectfully submitted,

Mark V. Meierhenry
Attorney General