All-State Const. Co. v. Gordon, ALL-STATE

• Decision Date: 09 March 1967
• Docket Number: ALL-STATE,No. 38279,38279
• Parties: In the Matter of the Appeal of All-State Construction Co., Inc.CONSTRUCTION CO., Inc., a corporation, Respondent, v. John F. GORDON, as Commissioner of Employment Security, Appellant.
• Court: Washington Supreme Court

Page 657

70 Wn.2d 657

425 P.2d 16

In the Matter of the Appeal of All-State Construction Co., Inc. ALL-STATE CONSTRUCTION CO., Inc., a corporation, Respondent, v. John F. GORDON, as Commissioner of Employment Security, Appellant.

No. 38279.

Supreme Court of Washington, Department 2.

March 9, 1967.

As Amended on Denial of Rehearing May 22, 1967.

John J. O'Connell Atty. Gen., Richard M. Montecucco, Robert H. Gates, Jr., Olympia, for appellant.

George R. Mosler, Seattle, for respondent.

DONWORTH, Judge.

This is an appeal by the commissioner of employment security from a superior court judgment setting aside an assessment against respondent, All-State Construction Company, for unemployment compensation fund contributions.

On July 23, 1963, an order and notice of assessment for contributions to the unemployment compensation fund allegedly due under RCW 50.24.010, in the amount of $6,935.62, was served on All-State as provided in RCW 50.24.070. All-State appealed therefrom to the appeal tribunal under RCW 50.32.030, contending that the individuals whose wages or remunerations were covered by the assessment were not employees under the terms of the Employment Security Act and, consequently, no payment was due from All-State. A hearing was had before an appeals examiner for the appeal tribunal, who affirmed the assessment. Upon petition for review filed by All-State with the commissioner of employment security, the commissioner reviewed the case and upheld the decision of the appeal tribunal.

Respondent, All-State, then appealed by the Superior Court for King County from the commissioner's decision as provided in RCW 50.32.120 and 50.32.150. The superior court set aside the assessment, holding that the 'applicators,' who installed aluminum siding pursuant to respondent's contracts with homeowners, were 'independent contractors,' and not employees of All-State.

We note that this is an administrative appeal. Under the statutory provision last referred to, the decision of the commissioner is to be considered as prima facie correct, and the burden of the proof is upon the party attacking it. The facts as found by the examiner and adopted by both the appeal tribunal and the commissioner are the established facts upon appeal to the superior court. Since that court expressly adopted those findings and no error is assigned thereto, this court is bound thereby.

The facts, as found by the examiner for the appeal tribunal, are as follows:

The All-State Construction Company, Inc. (hereinafter called the petitioner) is a Washington corporation engaged in home modernization and improvements since January 1961, with special emphasis on the use of aluminum siding. However, contracts are accepted for the addition of rooms, concrete work, installing doors and windows, roofing, ornamental iron work, etc.

Although the company uses direct advertising in magazines, on radio and television, and occasionally telephone solicitation, the principal means of obtaining business is through salesmen, also referred to as dealers or agents. Salesmen contact the prospective customer, sell them a home modernization job, and obtain a signed contract from the home owner setting out the specific work to be performed and the total price for the materials and the installation. If the payment is not to be cash, an application for deferred payment is also completed by the salesman so the necessary financing can be arranged through a finance company or bank. After approval of credit, the salesman confers with an applicator, an individual who applies the aluminum siding, to agree on a price the applicator will charge for any special work required by the customer including such items as adding on a porch, installing windows or doors, adding on a room to the house, or other remodeling desired by the customer. Although some of the jobs obtained by the salesmen are entirely remodeling, the overwhelming majority are for the installation of aluminum siding with some additional remodeling or for siding only.

The petitioner (respondent in this court) knows a number of applicators and their special qualifications.

Usually the petitioner calls an applicator, although in some instances the applicator may call the company. Some of the applicators work exclusively for the petitioner while others may work for several companies engaged in modernization work similar to that done by the petitioner. The applicator is given a work order listing the location of the job, the type and amount of material to be installed, and listing special work other than roofing or siding, such as installation of doors, windows, etc. After looking at the job, the applicator makes his bid for the labor costs on extra work because the price for installing aluminum siding is standardized and all applicators get $15.00 a square (100 sq. ft.) for installing aluminum siding, regardless of which company has the job. If the salesman and applicator agree on the price, he is given the job. If the salesman thinks the price too high, he asks another applicator to bid. The amount finally agreed upon is the price or the labor cost which the applicator receives upon completion of the job. The average job is completed in two days, although some take longer. At the completion of the job, the applicator submits a form showing what materials were installed and obtains a completion certificate from the customer for whom the work is done. Upon bringing these documents to the petitioner's office, he is immediately paid in full for the job, less any materials he may have charged to the company. The aluminum siding and components are always furnished by the petitioner, but the applicator may have purchased lumber, casings, etc. from some other supply house or lumber yard. Usually these purchases are charged directly to the petitioner with the petitioner's knowledge and consent. In a few instances the applicator may make a cash purchase of material for which he is reimbursed at the time of settlement. The applicator guarantees his workmanship as a part of his contract and would be required to re-do work without additional compensation if it is established his workmanship was faulty. None of the witnesses at the hearing could recall of an instance when they were called back to do such additional work because of faulty workmanship, although one witness did recall re-doing a job some other installer had not done correctly.

An applicator who takes a job from the petitioner follows his own methods but is expected to complete the job in a manner to satisfy the customer. He may work alone or have a helper, usually a partner. He furnishes all of his hand and power tools, the scaffolding or other equipment needed to perform the work, and usually has his own truck or station wagon to carry tools and equipment and allow him to haul small items he might need, such as doors or windows. Most of the material needed, such as the siding and components, is delivered to the customer's house by the petitioner. The applicator may also work on more than one job at a time and ordinarily there is no set date he must finish a job. Usually the applicator is anxious to finish the job as quickly as possible since he receives no money until it is completed. The applicator does not solicit business directly from home owners, nor do any of them advertise or represent themselves as contractors or installers of aluminum siding. When working on a job, should the home owner want some additional work done, the applicator notifies the company and the salesman is sent out to make arrangements for the additional work desired. The petitioner pays premiums to the State Department of Labor and Industries to cover injuries or accidents sustained by the applicators when working on any contract with All-State Construction. The petitioner does not withhold income tax or Social Security and has not paid Social Security taxes or Unemployment Insurance on the amount paid to applicators. Some of the applicators indicate that they make their own Social Security payments as a self-employed individual, although some witnesses worked enough for other companies that did deduct for Social Security they were already fully covered. There appears to be no uniform practice, but the testimony of the witnesses indicates that most of the companies installing aluminum siding withhold income tax and Social Security from the remuneration paid to the applicator.

In doing a job, no one from the petitioner's office routinely inspects the work or directs the applicator in the performance of his job. In those instances where the applicator does not complete a job, it is usually the decision of the applicator himself or a mutual agreement between the applicator and the petitioner because of a complaint from the customer and the applicator considers it best to have another man finish the job. In such instances each applicator has been paid for the proportion of the work he performed on the job. (Italics ours.)

The sole issue involved in this appeal is the legal question whether the applicators are employees or independent contractors under the statutory definition of the Employment Security Act (RCW Title 50).

RCW 50.04.100 provides that:

'Employment', subject only to the other provisions of this title, means personal service, of whatever nature, unlimited by the relationship of master and servant as known to the common law or any other legal relationship, including service in interstate commerce, performed for wages or under any contract calling for the performance of personal services, written or oral, express or implied.

Personal services performed for an employing unit by one or more contractors or subcontractors acting individually or as a partnership, which do not meet the provisions of RCW 50.04.140, shall be considered employment of the employing unit: Provided, however, That such contractor or subcontractor shall be an employer under the provisions of this title...