863 to Go, Inc. v. Dep't of Labor

• Decision Date: 13 June 2014
• Docket Number: No. 13–413.,13–413.
• Citation: 2014 VT 61,99 A.3d 629
• Court: Vermont Supreme Court
• Parties: 863 TO GO, INC. v. DEPARTMENT OF LABOR.

99 A.3d 629

2014 VT 61

863 TO GO, INC.

v.DEPARTMENT OF LABOR.

No. 13–413.

Supreme Court of Vermont.

June 13, 2014.

Pietro J. Lynn and Alexander G. Lewis of Lynn, Lynn & Blackman, P.C., Burlington, for Plaintiff–Appellant.

Dirk Anderson, Montpelier, for Defendant–Appellee.

Present: REIBER, C.J., DOOLEY, SKOGLUND, ROBINSON and CRAWFORD, JJ.

Opinion

CRAWFORD, J.

¶ 1. The single issue in this appeal is whether payments by employer 863 To Go, Inc. to its delivery drivers should be excluded from the calculation of employer's contribution to Vermont's system of unemployment compensation. We affirm

the decision of the Vermont Employment Security Board requiring employer to include these payments in the calculation of its unemployment contribution.

¶ 2. Employer is a Vermont corporation which provides food delivery services to Burlington-area restaurants that do not employ drivers of their own. The company commenced operations in 2005. Its business model involves five groups or entities: employer; the restaurants that contract with employer for marketing and delivery services; Delivery Drivers, Inc. (DDI), an employment agency located in California; the individual drivers; and the individual consumers who order food for home delivery.

¶ 3. Consumers call employer, frequently after visiting the company's website, which displays the menus of participating restaurants. They place an order and arrange payment to employer either by credit card or by cash to be collected by the delivery driver. The price includes a delivery charge that varies by location and distance. Employer faxes the order to the restaurant. It pays the restaurant directly for the meal on a discounted basis.

¶ 4. In the meantime, the delivery job is placed on a website for approved drivers. These drivers are people willing to deliver food to customers in their own vehicles. Drivers learn about the employment opportunity through word of mouth, local advertisements, or a Craigslist advertisement. People who respond are directed to DDI. DDI collects information from applicants including their driver's license number and proof of automobile insurance. DDI then arranges for each applicant to meet with a representative from employer. If the applicant is eligible for employment, they are given access to employer's website. Each driver decides whether to accept a particular delivery assignment.

¶ 5. At the end of each night, the drivers “cash out” at employer's office, meaning that they turn over the cash or credit card slips paid by the customers. The amounts collected by drivers include the cost of the meal and the fixed delivery charge. They keep any cash tips. Employer sends enough money to DDI to pay for its commission and a per-trip payment to the drivers.

¶ 6. Individual drivers play no role in taking the orders from customers. Their responsibility is limited to delivering the food to the customers. They are also required to pick up payment from customers who have not already paid by credit card over the telephone. They purchase equipment necessary for delivery such as an insulated food carrier from employer. At one time they were

required to wear a uniform shirt, but this policy was dropped in favor of a requirement of clean, neat attire. Some drivers place employer advertising decals on their cars, but this is not mandatory.

¶ 7. Following a field audit, the Unemployment Insurance and Wage Division of the Vermont Department of Labor assessed an unemployment compensation contribution against employer for wages paid to 136 individual drivers over twelve quarterly periods. Employer petitioned for a hearing. A factual hearing was held before an administrative law judge in the Office of Administrative Hearings at the Department of Labor. The judge ruled in favor of the Department. This decision was upheld by a written decision of the Vermont Employment Security Board. Employer appealed directly from the Board to this Court. See 21 V.S.A. § 1332.

¶ 8. Our review of decisions by the Employment Security Board is highly deferential. See Fleece on Earth v. Dep't of Emp't & Training, 2007 VT 29, ¶ 4, 181 Vt. 458, 923 A.2d 594 (“The Board's decision is entitled to great weight on appeal.” (quotation omitted)). We will uphold the Board's factual findings unless clearly erroneous, and its conclusions if reasonably supported by the findings. Blue v. Dep't of Labor, 2011 VT 84, ¶ 6, 190 Vt. 228, 27 A.3d 1096. “We will also generally defer to its interpretations of the statutes it is charged with administering.” Id. Decisions within the Board's expertise are presumed to be correct unless there is a clear showing to the contrary. Bouchard v. Dep't of Emp't & Training, 174 Vt. 588, 589, 816 A.2d 508, 510 (2002) (mem.).^*

¶ 9. Under Vermont's unemployment compensation statute, all persons who receive wages from an employer are presumed to be engaged in “employment” and are entitled to unemployment compensation benefits. 21 V.S.A. § 1301(5), (6)(B), (12) ; Fleece on Earth, 2007 VT 29, ¶ 7, 181 Vt. 458, 923 A.2d 594. Employers are required to pay for

unemployment compensation insurance for their employees. 21 V.S.A. §§ 1321, 1358.

¶ 10. In this case, employer initially contended that its drivers were self-employed persons whose services were exempt from the definition of employment under the so-called “ABC test” set forth in 21 V.S.A. § 1301(6)(B). Employer dropped that argument on appeal to the Employment Security Board, and instead argued that it was not required to make unemployment contributions on behalf of its drivers because they were “direct sellers” within the meaning of 21 V.S.A. § 1301(6)(C)(xxi). On appeal to this Court, employer limits its argument to the direct-seller exemption.

¶ 11. Section 1301(6)(C)(xxi) exempts from the definition of employment “[s]ervice[s] performed by a direct seller if the individual is in compliance with all” of the following factors:

(I) The individual is engaged in the trade or business of selling or soliciting the sale of consumer products, including services or other intangibles, in the home or a location other than in a permanent retail establishment, including whether the sale or solicitation of a sale is to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis for resale by the buyer or any other person.

(II) Substantially all the remuneration, whether or not received in cash, for the performance of the services described in subdivision (I) of this subdivision (C)(xxi) is directly related to sales or other output, including the performance of services, rather than to the number of hours worked.

(III) The services performed by the individual are performed pursuant to a written contract between the individual and the person for whom the services are performed, and the contract provides that the individual will not be treated as an employee for federal and state tax purposes.

21 V.S.A. § 1301(6)(C)(xxi). The provision exempts independent sales staff located somewhere other than a store who are paid on the basis of sales concluded rather than hours spent on the job. Familiar examples include commission-based sales of products, often door-to-door.

¶ 12. In reviewing the claim that employer's drivers were direct sellers, the Employment Security Board ruled that the drivers were not “ selling” anything since the sale occurred prior to the delivery of the products:

The sale or solicitation of sale has already occurred by the time the driver even becomes aware that there is work available for him or her. The drivers in this case are similarly situated to drivers employed by courier services, whom we have repeatedly found to be employees rather than independent contractors.

¶ 13. We agree with the Board that the facts in the record support the determination that the drivers are not engaged in “selling or soliciting the sale of consumer products.” 21 V.S.A. § 1301(6)(C)(xxi)(I). In a process known to anyone who has ever ordered a pizza, the customer calls in his or her order. A bilateral contract based on an exchange of mutual promises is formed. The customer promises to pay for the meal either upon delivery or before. The price is set, except for any gratuity, as is the description of the meal. Employer promises to obtain the food and arrange for its delivery. In theory, either party could sue for damages in the event of a breach. In practice, a consumer unhappy with the food will make a different choice next time.

¶ 14. The delivery driver plays no discernible role in creating the contract of sale. The record contains no...