1 COMMITTEE REPORT 2 February 25, 2015 3 4 H. 3576 5 6 Introduced by Reps. Bannister, Merrill, Murphy, Atwater, Collins, 7 Gagnon, Hamilton, Hicks, Pitts, Sandifer, G.R. Smith, Tallon, 8 Whitmire, Henderson and Herbkersman 9 10 S. Printed 2/25/15--H. [SEC 2/26/15 2:17 PM] 11 Read the first time February 11, 2015. 12 13 14 THE COMMITTEE ON JUDICIARY 15 To whom was referred a Bill (H. 3576) to amend the Code of 16 Laws of South Carolina, 1976, by adding Section 411120 so as to 17 provide that certain written agreements between nonprofit youth 18 sports organizations, etc., respectfully 19 REPORT: 20 That they have duly and carefully considered the same and 21 recommend that the same do pass with amendment: 22 23 Amend the bill, as and if amended, by deleting all before and 24 after the enacting words and inserting: 25 / SECTION 1. Chapter 1, Title 41 of the 1976 Code is 26 amended by adding: 27 “Section 411120. (A) Notwithstanding another provision of 28 law, a written agreement between a nonprofit youth sports 29 organization and a coach which specifies that the coach is an 30 independent contractor and not an employee of the nonprofit youth 31 sports organization and also which otherwise satisfies the 32 requirements of this subsection constitutes conclusive evidence 33 that the relationship between the nonprofit youth sports 34 organization and the coach is that of an independent contractor 35 relationship rather than an employment relationship for the 36 purposes of this section, and that the nonprofit youth sports 37 organization consequently is not obligated to: 38 (1) secure compensation for the coach pursuant to the 39 workers’ compensation law; 40 (2) secure unemployment insurance coverage for the coach 41 according to the provisions of this chapter; and

[3576-1] 1 (3) withhold federal and state income taxes from money paid 2 to the coach for services he provides to the organization pursuant 3 to the contract. 4 (B) A written agreement provided in subsection (A) must 5 contain a conspicuously located disclosure appearing in boldfaced, 6 underlined, or large type. This agreement must be acknowledged 7 by the parties as indicated by their signatures, initials, or other 8 means to evince that the parties have read and understand the 9 disclosure. This disclosure clearly must state that the coach is: 10 (1) an independent contractor and not an employee of the 11 nonprofit youth sports organization; 12 (2) not entitled to workers’ compensation benefits or 13 unemployment benefits in connection with his or her contract with 14 the nonprofit youth sports organization; and 15 (3) obligated to pay federal and state income tax on any 16 money paid pursuant to the contract for coaching services, and that 17 as a consequence the nonprofit youth sports organization will not 18 withhold any amounts from the coach for purposes of satisfying 19 the coach’s income tax liability. 20 (C) A written agreement between a nonprofit youth sports 21 organization and a coach formed pursuant to this subsection may 22 not, in and of itself, be construed as conclusive evidence that an 23 independent contractor relationship exists for purposes of any civil 24 action instituted by a third party. 25 (D) As used in this section, ‘nonprofit youth sports 26 organization’ means an organization that is exempt from federal 27 taxation under Section 501(c)(3) of the Internal Revenue Code of 28 1986, as amended, and is primarily engaged in conducting 29 organized sports programs for persons under twentyone years of 30 age.” 31 SECTION 2. This act takes effect upon approval by the 32 Governor. / 33 Renumber sections to conform. 34 Amend title to conform. 35 / TO AMEND THE CODE OF LAWS OF SOUTH 36 CAROLINA, 1976, BY ADDING SECTION 411120 SO AS TO 37 PROVIDE THAT CERTAIN WRITTEN AGREEMENTS 38 BETWEEN NONPROFIT YOUTH SPORTS ORGANIZATIONS 39 AND COACHES PROVIDE CONCLUSIVE EVIDENCE THAT 40 THE COACH IS AN INDEPENDENT CONTRACTOR 41 RATHER THAN AN EMPLOYEE OF THE ORGANIZATION 42 AND THAT THE ORGANIZATION IS EXEMPT FROM 43 CERTAIN OBLIGATIONS CONCERNING WORKERS’

[3576-2] 1 COMPENSATION COVERAGE, UNEMPLOYMENT 2 INSURANCE COVERAGE, AND INCOME TAX 3 WITHHOLDINGS, TO PROVIDE SPECIFIC REQUIREMENTS 4 FOR THESE WRITTEN AGREEMENTS, TO PROVIDE THESE 5 WRITTEN AGREEMENTS ARE NOT CONCLUSIVE PROOF 6 OF THE EXISTENCE OF AN INDEPENDENT CONTRACTOR 7 RELATIONSHIP FOR PURPOSES OF ANY CIVIL ACTIONS 8 INSTITUTED BY THIRD PARTIES, AND TO DEFINE THE 9 TERM “NONPROFIT YOUTH SPORTS ORGANIZATION”. / 10 11 F. GREGORY DELLENEY, JR. for Committee. 12

[3576-3] 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 12 1976, BY ADDING SECTION 411120 SO AS TO PROVIDE 13 THAT CERTAIN WRITTEN AGREEMENTS BETWEEN 14 NONPROFIT YOUTH SPORTS ORGANIZATIONS AND 15 COACHES PROVIDE CONCLUSIVE EVIDENCE THAT THE 16 COACH IS AN INDEPENDENT CONTRACTOR RATHER 17 THAN AN EMPLOYEE OF THE ORGANIZATION AND THAT 18 THE ORGANIZATION IS EXEMPT FROM CERTAIN 19 OBLIGATIONS CONCERNING WORKERS’ 20 COMPENSATION COVERAGE, UNEMPLOYMENT 21 INSURANCE COVERAGE, AND INCOME TAX 22 WITHHOLDINGS, TO PROVIDE SPECIFIC REQUIREMENTS 23 FOR THESE WRITTEN AGREEMENTS, TO PROVIDE THESE 24 WRITTEN AGREEMENTS ARE NOT CONCLUSIVE PROOF 25 OF THE EXISTENCE OF AN INDEPENDENT CONTRACTOR 26 RELATIONSHIP FOR PURPOSES OF ANY CIVIL ACTIONS 27 INSTITUTED BY THIRD PARTIES, AND TO DEFINE THE 28 TERM “NONPROFIT YOUTH SPORTS ORGANIZATION”. 29 30 Whereas, the South Carolina General Assembly finds youth sports 31 programs are a vital part of the culture of this State, encouraging 32 young people to become active from an early age; and 33 34 Whereas, the South Carolina General Assembly finds nonprofit 35 youth sports organizations such as soccer clubs and youth 36 basketball programs rely heavily on parttime, independent coaches 37 to provide coaching services to the organizations and the various 38 teams within the organizations so that the organizations can offer 39 affordable programs to young South Carolinians; and 40 41 Whereas, the South Carolina General Assembly finds these 42 parttime youth sports coaches for nonprofit youth sports

[3576] 4 1 organizations have traditionally worked as independent contractors 2 for the organizations, earning a few thousand dollars per year for 3 providing parttime coaching services for several hours a week 4 during the season for a particular sport; and 5 6 Whereas, the South Carolina General Assembly finds these 7 parttime coaches satisfy many of the characteristics of an 8 independent contractor under the Workers’ Compensation Act of 9 South Carolina in that they frequently have obtained a coaching 10 license or qualifications on their own, they may coach for multiple 11 clubs or schools, and they frequently are employed on a fulltime 12 basis by a traditional employer; and 13 14 Whereas, the South Carolina General Assembly finds traditionally, 15 these parttime coaches have understood that they are independent 16 contractors with, and not employees of, the nonprofit youth sports 17 organization, have not expected to be and have not been covered 18 under the Workers’ Compensation Act of South Carolina, and have 19 not been entitled to workers’ compensation benefits under that act; 20 and 21 22 Whereas, the South Carolina General Assembly finds while these 23 parttime coaches have been treated as independent contractors, 24 because of their direct contact with young players, nonprofit youth 25 sports organizations necessarily have to impose some guidelines 26 and rules to create uniform standards for coaches’ behavior across 27 the organization; and 28 29 Whereas, the South Carolina General Assembly finds the nonprofit 30 youth sports organization, as the organizer of the programs it 31 offers, generally designates certain practice locations and times 32 and may ask the parttime coaches to use a certain curriculum for 33 players of certain ages; and 34 35 Whereas, the South Carolina General Assembly finds this 36 imposition of limited, though necessary, direction to the parttime 37 coaches may create the appearance of an employeremployee 38 relationship rather than an independent contractor relationship, 39 even though the organization and the coaches have agreed to an 40 independent contractor relationship; and 41 42 Whereas, the South Carolina General Assembly finds it is 43 important to clarify that the relationship between nonprofit youth

[3576] 5 1 sports organizations and parttime, independent coaches, when 2 evidenced by a valid, written agreement between the coach and the 3 organization, detailing the nature, scope, and consequences of the 4 independent contractor relationship and specifying that the 5 organization is not the employer of the parttime coach, the coach is 6 an independent contractor for purposes of workers’ compensation 7 coverage, unemployment insurance coverage, and state income tax 8 withholding. Now, therefore, 9 10 Be it enacted by the General Assembly of the State of South 11 Carolina: 12 13 SECTION 1. Chapter 1, Title 41 of the 1976 Code is amended by 14 adding: 15 16 “Section 411120. (A) Notwithstanding another provision of 17 law, a written agreement between a nonprofit youth sports 18 organization and a coach which specifies that the coach is an 19 independent contractor and not an employee of the nonprofit youth 20 sports organization and also which otherwise satisfies the 21 requirements of this subsection constitutes conclusive evidence 22 that the relationship between the nonprofit youth sports 23 organization and the coach is that of an independent contractor 24 relationship rather than an employment relationship for the 25 purposes of this section, and that the nonprofit youth sports 26 organization consequently is not obligated to: 27 (1) secure compensation for the coach pursuant to the 28 workers’ compensation law; 29 (2) secure unemployment insurance coverage for the coach 30 according to the provisions of this chapter; and 31 (3) withhold federal and state income taxes from money paid 32 to the coach for services he provides to the organization pursuant 33 to the contract. 34 (B) A written agreement provided in subsection (A) must 35 contain a conspicuously located disclosure appearing in boldfaced, 36 underlined, or large type. This agreement must be acknowledged 37 by the parties as indicated by their signatures, initials, or other 38 means to evince that the parties have read and understand the 39 disclosure. This disclosure clearly must state that the coach is: 40 (1) an independent contractor and not an employee of the 41 nonprofit youth sports organization;

[3576] 6 1 (2) not entitled to workers’ compensation benefits or 2 unemployment benefits in connection with his or her contract with 3 the nonprofit youth sports organization; and 4 (3) obligated to pay federal and state income tax on any 5 money paid pursuant to the contract for coaching services, and that 6 as a consequence the nonprofit youth sports organization will not 7 withhold any amounts from the coach for purposes of satisfying 8 the coach’s income tax liability. 9 (C) A written agreement between a nonprofit youth sports 10 organization and a coach formed pursuant to this subsection may 11 not, in and of itself, be construed as conclusive evidence that an 12 independent contractor relationship exists for purposes of any civil 13 action instituted by a third party. 14 (D) As used in this section, ‘nonprofit youth sports 15 organization’ means an organization that is exempt from federal 16 taxation under Section 501(c)(3) of the Internal Revenue Code of 17 1986, as amended, and is primarily engaged in conducting 18 organized sports programs for persons under twentyone years of 19 age.” 20 21 SECTION 2. This act takes effect upon approval by the 22 Governor. 23 XX 24

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