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Opinion #6882
The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



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STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL


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Opinion No. 6882

November 29, 1995

COMMISSION FOR THE BLIND:

Operators of vending stands in government owned buildings

Blind vending stand operators under the Michigan Commission for the Blind Business Enterprise Program are not state employees.

Lowell W. Perry

Director

Michigan Department of Labor

P.O. Box 30015

Lansing, MI 48909

You have asked if blind vending stand operators under the Michigan Commission for the Blind Business Enterprise Program are state employees. You indicate your question is prompted by the claims of some operators that they are employees of the State of Michigan and, thus, do not have to comply with state laws applicable to employers concerning paying unemployment compensation taxes and providing workers' compensation insurance.

Under 1978 PA 260, MCL 393.351 et seq; MSA 17.581(1) et seq (Act), the Michigan Commission for the Blind operates a program designed to aid blind and visually handicapped individuals. Section 9 of the Act requires that "[a] concession in a building or on property owned or occupied by this state shall be operated by a blind person." I have previously concluded under this Act that blind persons have the exclusive authority to operate concessions in state owned buildings, OAG, 1989-1990, No 6651, p 356, 357 (July 24, 1990), and that the Department of Management and Budget may not charge rent for the operation of a concession by a blind person. OAG, 1981-1982, No 5940, p 279 (August 4, 1981).

In order to carry out the mandates of the Act, the Commission for the Blind has established a Business Enterprise Program (BEP). In section 13 of the Act, the Legislature has also designated the Commission to implement the Randolph Sheppard vending stand act, 20 USC Sec. 107 et seq. This is a federally funded state program that seeks to provide opportunities to blind individuals by placing them in vending facilities in various government buildings. Under section 5(g) of the Act, the Commission for the Blind has promulgated administrative rules to implement the BEP. 1983 AACS, R 393.101 et seq.

This office has been informed that following evaluation, training, and other services, a blind person is placed as an operator in the BEP running a concession in a government building. The operator and the Commission for the Blind enter into a contract that provides, among other things, that the operator will pay a certain percentage of the concession profits to the Commission in what is called a set-aside fee. The Commission, in turn, will provide supervision and advice, needed equipment, and an initial stock of goods. The operator sets his own prices and purchases his own stock after the initial stock is provided.

The operator must obtain a comprehensive liability insurance policy. The operator may hire other individuals as employees and is required to provide workers' disability compensation coverage for any employees hired. Rule 393.107(c).

Under the contract between the operator and the Commission for the Blind, the operator is not paid by the State of Michigan for performing work for the state. Rather, operators receive the proceeds from the operations of their vending facilities after paying their operating costs and set-aside fees. Rule 393.106(2).

If the blind vendors were state employees, it would be necessary for the Civil Service Commission to classify them in the classified state civil service in accordance with Const 1963, art 11, Sec. 5, which provides, in part:

The classified state civil service shall consist of all positions in the state service except those filled by popular election, heads of principal departments, members of boards and commissions, the principal executive officer of boards and commissions heading principal departments, employees of courts of record, employees of the legislature, employees of the state institutions of higher education, all persons in the armed forces of the state, eight exempt positions in the office of the governor, and within each principal department, when requested by the department head, two other exempt positions, one of which shall be policy-making. The civil service commission may exempt three additional positions of a policy-making nature within each principal department.

It has been held that except to the extent that a position may be exempt under this section, all employees of the state are required to be classified into the state civil service. Commissioner of Insurance v Michigan State Accident Fund, 173 Mich App 566, 582; 434 NW2d 433 (1988), lv den 433 Mich 872 (1989). The position of vending stand operator has never been exempted from the classified state civil service or classified in the state civil service by the Civil Service Commission.

Blind concession operators are included within the state employees' retirement system. Section 13a of 1943 PA 240, MCL 38.13a; MSA 3.981(13a) provides in part:

Effective January 1, 1973, blind or partially sighted persons licensed as vending stand operators within the controlled programs of the bureau of blind services are deemed to be employees within the meaning of this act for state retirement purposes only, and except as hereinafter provided are entitled to all the rights and benefits of state employees covered by the provisions of this act. [ Emphasis added.]

The language "for state retirement purposes only" evidences an intent that blind vending stand operators are not considered state employees for general purposes.

It is clear that blind vending operators in the BEP are clients rather than employees of the Michigan Commission for the Blind. With the exception of those services provided by the Commission in accordance with the Act and implementing administrative rules, the operators are independent concessionaires with the authority, in their capacities as employers, to employ other persons.

It is my opinion, therefore, that blind vending stand operators under the Michigan Commission for the Blind Business Enterprise Program are not state employees.

Frank J. Kelley

Attorney General

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