Caison v. Project Support Servs., Inc.

• Decision Date: 11 September 2014
• Docket Number: No. 12–AA–901.,12–AA–901.
• Citation: 99 A.3d 243
• Parties: Michael CAISON, Petitioner, v. PROJECT SUPPORT SERVICES, INC., et al., Respondents.
• Court: D.C. Court of Appeals

99 A.3d 243

Michael CAISON, Petitioner

v.PROJECT SUPPORT SERVICES, INC., et al., Respondents.

No. 12–AA–901.

District of Columbia Court of Appeals.

Argued Nov. 14, 2013.

Decided Sept. 11, 2014.

Michael Caison, pro se.

Laura Golden Liff, Fairfax, VA, and Adam W. Smith, for respondent, Project Support Services, Inc. Christopher M. Leins was on the brief.

Irvin B. Nathan, Attorney General for the District of Columbia, Todd S. Kim, Solicitor General, and Donna M. Murasky, Deputy Solicitor General, filed a statement in lieu of brief, for respondent, the District of Columbia Department of Employment Services.

Before GLICKMAN and McLEESE, Associate Judges, and REID, Senior Judge.

Opinion

REID, Senior Judge:

Petitioner, Michael Caison, filed a claim for unemployment compensation after he was terminated from employment by respondent, Project Support Services, Inc. (“PSS” or “PSS, Inc.”). His claim was denied by the District of Columbia Department of Employment Services (“DOES”) on the ground that he was an independent contractor and not an employee of PSS. He filed an appeal with the District of Columbia Office of Administrative Hearings (“OAH”). In this court, he challenges the decision of an OAH Administrative Law Judge (“ALJ”) that affirmed the claims examiner's determination. For the reasons stated below we vacate OAH's decision and remand this case to OAH for further proceedings consistent with instructions that appear at the end of this opinion.

FACTUAL SUMMARY

The record establishes that PSS recruits and provides persons to federal agencies who perform a range of services, including engineering, administrative, contract, and realty services. Some of these individuals are designated by PSS as employees and others are designated as independent contractors.¹

At the outset of the evidentiary hearing conducted on May 23, 2012, the ALJ announced that the only issue was whether Mr. Caison was an independent contractor. The ALJ further stated that “[b]ecause the burden of proof is on you, Mr. Caison, you will put your testimony on first” and PSS “will have an opportunity for cross-examination.”

Mr. Caison testified that PSS hired him on February 4, 2002, after he submitted “an application, resume, [and] cover letter.” He was placed with the federal General Services Administration (“GSA”) as a realty specialist “under contract to [PSS].” Mr. Caison started as “a W–2 employee, but became ... an employee with limited benefits,” and he was paid at an hourly rate. In early 2006, Lou Hammond, PSS's President, asked him to “consider becoming an independent contractor.” That year, he received a W–2 tax form and a 1099 tax form. Thereafter PSS provided him with a 1099 form for tax purposes. After this modification, Mr. Caison stated that his interactions with PSS and GSA did not change, PSS continued to refer to him as an employee, and some real-estate specialists were designated employees while others were designated independent contractors. Mr. Caison maintained that he had been misclassified, and that under the common law, he should have been classified as a PSS employee, because his supervisor was Tony Sterling, the PSS official who terminated Mr. Caison's employment. In addition, Mr. Caison was required “to work core government hours,” that is, 9:00 a.m. to 5:00 p.m., and for nine and one-half years he sat at the same desk and performed the same type of service. Mr. Sterling was not at GSA on a daily basis, and did not assign Mr. Caison to GSA work projects.

Troy Hammond, PSS's Executive Vice President, represented PSS at the compensation hearing. He testified that he was not with PSS in 2002, that he was not familiar with Mr. Caison's status when PSS hired him,² and that his parents and another person established PSS. Mr. Caison asked to become an independent contractor in 2006, but Mr. Caison received both a W–2 and a 1099 tax form in 2006. Mr. Hammond explained that the W–2 form concerned Mr. Caison's employment with PSS Associates, LLC, a separate Virginia corporation, and the 1099 form covered Mr. Caison's time with PSS, Inc., a Maryland corporation.³ Mr. Hammond acknowledged that some real-estate specialists may be designated as employees and most of PSS's employees are placed at government agencies.

The documentary evidence, presented and discussed at the hearing by Mr. Caison and Mr. Hammond, revealed that for the 2006 tax year, Mr. Caison filed a 1099 tax form declaring “Nonemployee compensation” of a specified amount. On October 23, 2006, he completed a PSS certification of business form, indicating his status as a “small business.” Mr. Caison executed a professional services agreement with PSS on October 1, 2007, in which he identified himself as a “sole proprietor” and “subcontractor.” Under the agreement he was required to provide services as a project manager to GSA, at an hourly rate of $73.17, and he had to submit an invoice on a monthly basis for payment.⁴ Section 3 of the agreement stated “Subcontractor Warranties,” and Mr. Caison warranted that he had an independent contractor relationship with PSS, that he “is a separate, independent licensed business entity,” and that the agreement could not be construed as creating an employer/employee relationship. Mr. Caison filed 1099 tax forms, related to his “Nonemployee compensation” work at GSA and his subcontractor status with PSS, covering the period from 2007 through the ending date of his employment in 2011.

On June 27, 2011, Mr. Troy Hammond sent an email to Mr. Sterling advising him about a PSS contract modification requiring the elimination of three PSS positions due to a reduction in GSA's workload. The related GSA email, dated June 22, 2011, stated that PSS could decide which positions would be eliminated, but that there were “some [c]ontractors whose service has been deemed exceptional by their [s]upervisors” and “[h]opefully this factor will be considered” by PSS.⁵ Mr. Sterling informed Mr. Caison on June 30, 2011, that his position would be eliminated and that he would have to leave at the end of the day and return his government identification.⁶

Mr. Caison submitted a claim for unemployment compensation with DOES on March 26, 2011.⁷ DOES denied his claim on April 20, 2012, on the ground that Mr. Caison was “employed as an independent contractor employee,” and that “[w]ork performed as an independent contractor employee is not covered employment and is exempt from the payment of the Unemployment Insurance Tax” under the District of Columbia Code. Mr. Caison requested a hearing before OAH, arguing that under the common law, he was PSS's employee. Following that hearing the ALJ issued a final order affirming DOES's determination, on May 29, 2012. She declared, in part, that: “The burden is on the claimant to demonstrate that he meets unemployment eligibility requirements, both as an initial matter and in subsequent appeals.” After reviewing applicable statutory provisions and case law, the ALJ identified the factors this court has relied on to determine whether an individual is an employee under the common law. The ALJ emphasized the “control” factor and concluded that Mr. Caison was not an employee under the common law; rather, he was an independent contractor.

ANALYSIS

Mr. Caison contends that the ALJ failed to make findings of fact on each of the factors this court has articulated for determining whether an individual is a common law employee, and that some of the findings, in particular those concerning the control factor, are not based on substantial evidence. He also argues that the ALJ committed procedural errors, including shifting the burden of proof to him regarding whether he was an independent contractor, and failing to apply the presumption of compensability. PSS supports the ALJ's final order and maintains, in essence, that the ALJ properly applied the factors articulated by this court to determine whether an individual is an employee or an independent contractor under the common law.⁸

We are guided by the following standard of review, statutory and regulatory provisions, and applicable legal principles. This court will affirm an OAH decision unless it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.”Savage–Bey v. La Petite Acad., 50 A.3d 1055, 1060 (D.C.2012) (internal quotation marks and citations omitted). We review an OAH decision to determine whether “(1) OAH made findings of fact on each materially contested issue of fact, (2) substantial evidence supports each finding, and (3) OAH's conclusions flow rationally from its findings of fact.” Rodriguez v. Filene's Basement Inc., 905 A.2d 177, 180 (D.C.2006). “Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Gardner v. District of Columbia Dep't of Emp't Servs., 736 A.2d 1012, 1015 (D.C.1999) (internal quotation marks and citations omitted).

“The goal of the [District of Columbia's] unemployment compensation act is to protect employees against economic dependency caused by temporary unemployment and to reduce the necessity of relief or other [government subsidized] welfare programs.” Brannum v. District of Columbia Pub. Sch., 946 A.2d 962, 966 (D.C.2008) (internal quotation marks omitted) (citing Nelson v. District of Columbia Dep't of Emp't Servs., 530 A.2d 1193, 1197 (D.C.1987) (per curiam)). “The statute is remedial humanitarian legislation of vast import, and its provisions must be liberally and broadly construed.” Hamilton v. Hojeij Branded Food, Inc., 41 A.3d 464, 474 (D.C.2012). Employers are required to make a contribution to the District's Unemployment Fund based on wages paid with respect to employment.⁹ D.C.Code §§ 51–102, –103(b) (2012 Repl.); 7 DCMR § 318.1 (2012). “Employment” means “service performed ... by ... [a]ny individual who, under the usual common-law rules applicable in determining the employer-employee relationship, has the...