Davis Bancorp v. Board Review Dept. Employ.

• Citation: 911 N.E.2d 1125
• Decision Date: 30 June 2009
• Docket Number: No. 1-07-2029.,No. 1-07-1902.,1-07-1902.,1-07-2029.
• Parties: DAVIS BANCORP, INCORPORATED, Plaintiff-Appellant, v. THE BOARD OF REVIEW OF THE DEPARTMENT OF EMPLOYMENT SECURITY, and J. Hunt Bonan, Chairman; Stanley Deassler, Jr.; William J. Nolan; Lori Q. Chaib; Brenda A. Russell, Director of Illinois Department of Employment Security; and Daniel Calambas, Defendants-Appellees. Davis Bancorp, Incorporated, Plaintiff-Appellant, v. The Board of Review of the Department of Employment Security, and J. Hunt Bonan, Chairman; Stanley Deassler, Jr.; William J. Nolan; Lori Q. Chaib; Brenda A. Russell, Director of Illinois Department of Employment Security; and Luis Garcia, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

911 N.E.2d 1125

DAVIS BANCORP, INCORPORATED, Plaintiff-Appellant, v. THE BOARD OF REVIEW OF THE DEPARTMENT OF EMPLOYMENT SECURITY, and J. Hunt Bonan, Chairman; Stanley Deassler, Jr.; William J. Nolan; Lori Q. Chaib; Brenda A. Russell, Director of Illinois Department of Employment Security; and Daniel Calambas, Defendants-Appellees.

Davis Bancorp, Incorporated, Plaintiff-Appellant, v. The Board of Review of the Department of Employment Security, and J. Hunt Bonan, Chairman; Stanley Deassler, Jr.; William J. Nolan; Lori Q. Chaib; Brenda A. Russell, Director of Illinois Department of Employment Security; and Luis Garcia, Defendants-Appellees.

No. 1-07-1902.

No. 1-07-2029.

Appellate Court of Illinois, First District, Sixth Division.

June 30, 2009.

Rehearing Denied July 28, 2009.

Loewenstein, Hagan & Smith, P.C., Gary L. Smith, Springfield, IL, for Appellant Davis Bancorp, Incorporated.

Lisa Madigan, Illinois Attorney General, Michael A. Scodro, Illinois Solicitor General and Jerald S. Post, Assistant Attorney General, Chicago, IL, for Appellees The Board of Review of the Department of Employment Security.

Justice O'MALLEY delivered the opinion of the court:

Plaintiff, Davis Bancorp, appeals the decision of the Illinois Department of Employment Security Board of Review (the Board) finding that its driver, Daniel Calambas, was "in employment" with plaintiff and he was not exempt from unemployment coverage under section 212.1 of the Unemployment Insurance Act (the Act) (820 ILCS 405/212.1 (West 2006)).¹ The circuit court affirmed the decision of the Board and plaintiff appeals arguing that: (1) the Board erred in finding that Calambas' 1997 Toyota Corolla was not a truck as defined by section 212.1 of the Act; (2) Calambas maintained a separate business identity under section 212.1(a)(6) of the Act; and (3) plaintiff did not set Calambas' schedule, the shipper-banks set the deadlines and, thus, section 212.1(a)(3) if the Act was satisfied. For the reasons that follow, we affirm the judgment of the circuit court.

BACKGROUND

Plaintiff is a licensed motor carrier under a certificate of authority with the Illinois Commerce Commission. Part of plaintiff's business is transporting checks from banks to the Federal Reserve for processing under very strict deadlines. Calambas was a driver who delivered checks for plaintiff from June 1992 until October 2004. During the time that Calambas worked as a driver for plaintiff, he owned and maintained his own vehicle, paid all the costs for licensing, received bimonthly paychecks without any withholdings and received a "1099 tax form" at the end of each year. In October 2004, plaintiff terminated Calambas, who subsequently applied for unemployment insurance benefits. Both parties submitted questionnaires to the Illinois Department of Employment Security regarding Calambas' claim for benefits, and an initial ruling in plaintiff's favor was entered finding that Calambas was the operator of a "truck" pursuant to section 212.1 of the Act and his compensation did not constitute wages for purposes of benefit credit. Calambas appealed the ruling and a telephone hearing was scheduled for December 21, 2004.

Calambas testified that he had been a driver for plaintiff for 12 or 13 years, and worked 6 days per week, transporting bags of checks at the time he was terminated. Calambas began his day around 6 a.m. and worked until 8 or 8:15p.m. Monday through Friday; however, he only worked two to three hours on Saturdays. When Calambas first started working for plaintiff, he was trained for one or two days and sent out on his own to make deliveries. When new banks were added to the route, he would attend training meetings at plaintiff's location on Sundays to learn the details.

Calambas testified that he was given a uniform bearing plaintiff's name and emblem when he was hired. During his last year of work, he testified that he was given a shirt and jacket that merely had the initials JRD on them. According to Calambas, drivers were required to wear a uniform or be fined $25. Each driver was furnished with a locker at plaintiff's location with a route number on it through which messages were relayed from management to the drivers. Plaintiff also provided the drivers with receipts bearing plaintiff's emblem and name which were filled out by the banks sending and receiving deliveries. From time to time, he was required to attend meetings at plaintiff's place of business on Sundays for which no compensation was given. Calambas testified that he would be suspended or not given a route if he did not attend the meetings. He generally drove the same route everyday, and if a change occurred, plaintiff's secretary would call and advise him of the change. Similarly, if Calambas was delayed, he was required to call in to plaintiff's secretary and advise her of his status.

Calambas testified that he used his own vehicle and had it licensed as a passenger vehicle with the appropriate government agencies. He was given signs by plaintiff to put on his car while making deliveries so that he would not be ticketed or towed. Calambas also testified that plaintiff furnished him with a beeper; however, he was required to use his own mobile phone and was not reimbursed for those expenses. When asked if he obtained an Illinois Commerce Commission Transportation Division Public Carrier Certificate, Calambas responded that plaintiff obtained those documents, gave them to him and took the same from him when he was terminated. Plaintiff also obtained a federal employer's identification number (FEIN) for Calambas.

Payment to Calambas was made by check every two weeks and sent by mail. No taxes were withheld from his checks and he paid any taxes due directly to the taxing authority. There was no vacation time, and if he wanted to take any time off, he was required to get approval from plaintiff and find a replacement for his route, which he did from time to time.

J.R. Davis, president and secretary for plaintiff Davis Bancorp, testified on plaintiff's behalf at the hearing. Davis stated that plaintiff is a transporter of currency and checks. About 70% of the business consists of transporting cash and 30% is transporting checks. He testified that the drivers, including Calambas, did not have a supervisor, but rather, a contact person who would coordinate collections according to the banks' needs. The drivers begin their day at the Chicago clearinghouse where large banks deliver checks that are sorted and sent to smaller banks. The banks set the delivery times for these checks and, based on timely delivery, earn interest on the funds. From time to time, delivery schedules would change based on factors such as the closing or opening of banks. Under these circumstances, the delivery deadlines would be changed by the banks and plaintiff would convey the information to the drivers or show them the new location.

Davis testified that drivers were not currently required to wear uniforms, but that all drivers were required to "look business like." Plaintiff had distributed uniforms years ago, but stopped that practice because the check delivery drivers looked too much like the currency delivery drivers. Plaintiff did not, however, instruct the check delivery drivers that they were no longer required to wear the uniforms.

Sometime in 2001 or 2002, plaintiff decided that it would avail itself of the exemption from unemployment compensation under section 212.1 of the Act. Plaintiff entered into a lease agreement with Calambas and all of its check delivery drivers under which the drivers agreed to lease their vehicles and provide driving services to plaintiff. Davis testified that plaintiff's law firm drafted the contracts following a change in the law. The drivers were able to terminate the contract with reasonable notice and could also offer their services to others. The contract required Calambas to display his name and address on the vehicle, and Davis stated that Calambas never indicated that he failed to comply with this provision. Davis did not inspect the drivers' vehicles, but had he learned that Calambas was not compliant, he would have terminated his contract.

Relative to plaintiff's facilities and equipment, Davis testified that plaintiff did not provide lockers, but it had collection bins located at the Chicago clearinghouse which contained deposits awaiting delivery. He admitted that plaintiff maintained a supply of beepers and that drivers were required to use their own mobile phones while driving. Davis stated drivers were required to find replacements if they wanted to go on vacation and that Calambas had a replacement drive for him while he went on vacation for a month. With regard to the Sunday meetings, Davis said that if a new shipper or existing customer had additions or changes to the route, Sunday meetings would be held to communicate the information to the drivers. None of these meetings had been held since December 2, 2002, which was before the contract had been executed between Calambas and plaintiff Finally, Davis testified that no taxes were withheld from Calambas' paychecks and he was issued a 1099 form which referenced an FEIN that Calambas, rather than plaintiff, provided.

On December 30, 2004, the hearing referee issued a decision finding that Calambas was "in employment" with plaintiff and he was not exempt from coverage because: (1) the 1997 Toyota Corolla was not a "truck" for purposes of section 212.1 of the Act; (2) plaintiff failed to show that Calambas paid all costs for licensing and operating the vehicle under section 212.1(a)(5); and (3) plaintiff failed to show that Calambas maintained a separate business identity under section 212.1(a)(6) of the Act. Although an exemption under section 212 of the Act was not raised by plaintiff, the referee analyzed the case under section 212 and determined that plaintiff did not meet the criteria for a general exemption. The referee held...