Athol Daily News v. Board of Review of the Division of Employment and Training

• Decision Date: 15 April 2003
• Citation: 439 Mass. 171,786 NE 2d 365
• Parties: ATHOL DAILY NEWS v. BOARD OF REVIEW OF THE DIVISION OF EMPLOYMENT AND TRAINING & another.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

439 Mass. 171

786 NE 2d 365

ATHOL DAILY NEWS v. BOARD OF REVIEW OF THE DIVISION OF EMPLOYMENT AND TRAINING & another.¹

Supreme Judicial Court of Massachusetts, Franklin.

March 6, 2003.

April 15, 2003.

Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, COWIN, SOSMAN, & CORDY, JJ.

Sheila L. York, Assistant Attorney General, for the defendants.

James E. Wallace, Jr. (Michael R. Bernardo with him) for the plaintiff.

James C. Heigham, for Massachusetts Newspaper Publishers Association, amicus curiae, submitted a brief.

GREANEY, J.

In this appeal, we consider whether adult carriers who deliver newspapers for the Athol Daily News (News) are eligible for unemployment compensation benefits under G. L. c. 151A. A review examiner in the division of employment and training (division) concluded, after a hearing, that adult carriers were entitled to the benefits. The examiner's decision was entered as the decision of the division's deputy director, and the decision was affirmed by the board of review (board). The News sought judicial review in the District Court as provided in G. L. c. 151A, § 12. A judge in the District Court determined that the adult carriers were not entitled to benefits and reversed the board's decision. The deputy director appealed, and we transferred the case to this court on our own motion. We conclude that the adult carriers are not covered by G. L. c. 151A, and direct that a judgment be entered reversing the board's decision.

1. The undisputed facts are as follows. The News is a small newspaper company² that publishes its newspaper six times a week, Monday through Saturday. The newspapers are then distributed to subscribers within the News's circulation territory³ by carriers, who pick up the newspapers either at the News's circulation room or at bundled drop points near the carriers' homes. The division conducted a random audit of the News's operations. At the time of the division audit, the News engaged twelve adult carriers, whom the News had retained after advertising available routes.

The News intended all carriers to be independent contractors. Each carrier entered into an Independent Newspaper Carrier Agreement (agreement) with the News to deliver the newspaper to subscribers each day, in good condition, not later than 4:30 P.M. on weekdays and 8:30 A.M. on Saturday. Pursuant to the agreement, carriers receive the names and addresses of subscribers on their route from the News. Carriers agree not to sell or give away the route, and not to give customer lists to anyone without permission from the News. Carriers may increase the number of subscribers on their routes without permission, so long as a current list of all subscribers is kept and made available to the News on request. Carriers are free to engage in delivery services for entities other than the News. A carrier who cannot service his or her route for any reason must find a substitute carrier at his or her own expense.

Under the agreement, the News agrees to sell to the carrier newspapers required to be delivered to customers on the carrier's route at a wholesale price determined by the News. The News further agrees to notify the carrier of any changes in the wholesale price at least forty-eight hours prior to any change. Finally, the News agrees that, when monies are paid for advance subscriptions, the News will maintain complete records to ensure that carriers receive full credit for delivery. Carriers are paid based on the number of papers delivered. Although each carrier may establish the price charged to customers on the carrier's route, most, if not all, use the price suggested by the News. Customers either pay the News or the carrier directly for their newspapers. Prepaid customers, who make up the majority of the News's subscribers, pay the News directly and receive a reduced price. The News then refunds the carrier with credit for delivery of those newspapers. If a customer pays the carrier directly, the carrier then pays the News the wholesale rate for that customer's papers and pockets the difference.

In addition to home delivery, some carriers deliver bundles of newspapers to predetermined locations along their routes, to be picked up for subsequent delivery by youth carriers.⁴ Some carriers also deliver newspapers to vending machines along their routes. The News pays carriers a set fee for each "bundle drop," and it reimburses carriers for mileage. The News prepares a statement each week, showing the carrier's previous balance, number of papers delivered that week, credits for bundle drops, store collection, mileage allowance, and tips. At the end of each week, either the carrier owes the News or the News provides the carrier with a refund. The News does not deduct any State or Federal taxes from the carrier's pay and issues no wage statements to the carriers for tax purposes at the end of the year.

The News employs a circulation manager who oversees carrier routes. Customers direct complaints regarding the delivery of newspapers to either the carrier or the News, and the News informs the carrier of any complaint received about him or her. Although the agreement provides that the carrier will notify the News at least two weeks in advance of the carrier's intention to terminate delivery services, both the News and the carrier may terminate the agreement without incurring any liability for breach of contract. The agreement expressly states that carriers are not employees of the publisher and disclaims responsibility on the part of the News for any liability that may arise during the performance of the carrier's route.

2. We review the decision of the board⁵ according to the standards set forth in G. L. c. 30A, § 14 (7), giving "due weight to the experience, technical competence, and specialized knowledge of the agency, as well as to the discretionary authority conferred upon it." In addition, we are required to construe G. L. c. 151A liberally, in view of its overriding purpose "to lighten the burden which now falls on the unemployed worker and his family." G. L. c. 151A, § 74. See Still v. Commissioner of the Dep't of Employment & Training, 423 Mass. 805, 809 (1996). So long as the facts in the board's decision are supported by substantial evidence (a matter not in issue here) and the board utilizes the proper legal standards (a matter in issue), its decision will be upheld. See Silva v. Director of the Div. of Employment Sec., 398 Mass. 609, 611 (1986); New England Tel. & Tel. Co. v. Department of Pub. Utils., 372 Mass. 678, 685-686 (1977). We are not, however, bound by an erroneous construction of G. L. c. 151A. See Johnson v. Martignetti, 374 Mass. 784, 790 (1978). General Laws c. 151A, § 2, provides that:

"Service performed by an individual ... shall be deemed to be employment[⁶] subject to this chapter irrespective of whether the common-law relationship of master and servant exists, unless and until it is shown to the satisfaction of the commissioner that —

"(a) such individual has been and will continue to be free from control and direction in connection with the performance of such services, both under his contract for the performance of service and in fact; and

"(b) such service is performed either outside the usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and

"(c) such individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed."

An employment relationship thus exists, for purposes of G. L. c. 151A, unless it can be demonstrated that the services at issue are performed (a) free from control or direction of the employing enterprise; (b) outside of the usual course of business, or outside of all the places of business, of the enterprise; and (c) as part of an independently established trade, occupation, profession, or business of the worker. The employer bears the burden of proof, and, because the conditions are conjunctive, its failure to demonstrate any one of the criteria set forth in subsections (a), (b), or (c), suffices to establish that the services in question constitute "employment" within the meaning of G. L. c. 151A. See Silva v. Director of the Div. of Employment Sec., supra at 613-614. Conversely, an employing entity who successfully meets the criteria of subsections (a), (b), and (c) establishes that the services do not constitute employment and, thus, the workers performing the services are independent contractors and not "employees"⁷ within the meaning of G. L. c. 151A. This tripartite test is commonly known as the "ABC" test.

In this case, the board determined that the News had failed to meet its burden with respect to all three prongs of the ABC test. Based on the undisputed factual findings, the board concluded that the carriers "do not control the routes, accounts or subscribers list," and thus "do not have a proprietary interest ... to the extent that he/she can operate [a delivery business] without a hindrance from any individual or force whatsoever." In addition, the board determined that the carriers performed services "in the usual course of [the News's] business and were not "free from [the News's] direction and control in connection with the performance" of these services. Based on these determinations, the board decided that the carriers are "employees" who perform services constituting "employment" within the meaning of G. L. c. 151A.⁸ The judge reversed the board's decision, and the division appealed.

3. The question before the judge and before us is one of law, whether, on the undisputed facts, and consistent with the standards stated above, the News has demonstrated that the adult carriers are independent contractors under the ABC test. Based on our review of the record and consideration of the applicable principles of law, we...