Definition of employee

# (a)

For purposes of computing the payroll factor, the term “employee” means any individual whose relationship with the surcharge taxpayer is that of employer and employee, as described in subdivision (b) of this section. The wages, salaries and other personal service compensation of every such individual, except general executive officers, will be included in the computation of the payroll factor of the MCTD apportionment percentage.

# (b)

Generally, the relationship of employer and employee exists when the surcharge taxpayer has the right to control and direct the individual not only as to the result to be accomplished by such employee, but also as to the means by which such result is to be accomplished. If the relationship of employer and employee exists, the designation or description of the relationship, as well as the measure, method and designation of the employee’s compensation, are immaterial.

# (c)

A director of a corporation is not an employee. Therefore, compensation paid to directors for acting in their capacity as directors should not be included in computing the payroll factor. In addition, a partner in a partnership cannot be an employee of that partnership.

# (d)

# (1)

For purposes of this section, a general executive officer is an appointed or elected officer of the corporation who either has company-wide authority with respect to the officer’s assigned functions or duties or is responsible for an entire division of the company. Specifically, a general executive officer:
(i) will have been elected by the shareholders of the corporation;
(ii) will have been elected or appointed by the board of directors of the corporation; or
(iii) if initially appointed by another officer, will have had such appointment ratified by the board of directors of the corporation.

# (2)

If the jurisdiction of incorporation is other than New York State, the officer of the corporation must be elected or appointed in accordance with the laws of the state or country of incorporation.

# (3)

General executive officers include the chairperson, president, vice-president, secretary, assistant secretary, treasurer, assistant treasurer, comptroller, and any other officer charged with and performing general executive duties of the corporation.

# (4)

Any person who has merely been designated as an officer but who is not an appointed or elected officer, as described in paragraph (1) of this subdivision, is not a general executive officer.

# (5)

Personal service compensation paid to general executive officers of the taxpayer for acting in the role of a general executive officer should not be included in the computation of the payroll factor.