Excell Const., Inc. v. State
| Decision Date | 21 June 2005 |
| Docket Number | No. 30931.,30931. |
| Citation | 116 P.3d 18,141 Idaho 688 |
| Parties | EXCELL CONSTRUCTION, INC., Employer Account: 001790501, Employer-Appellant, v. STATE of Idaho, DEPARTMENT OF LABOR, Respondent. |
| Court | Idaho Supreme Court |
Wetzel & Wetzel, Coeur d'Alene, for appellant. Dana L.R. Wetzel argued.
Hon. Lawrence G. Wasden, Attorney General, Boise, for respondent. Anne Baker Wilde, Deputy Attorney General, argued.
Excell Construction Inc. (Excell) appeals a ruling by the Idaho Industrial Commission finding Excell liable for unpaid unemployment insurance taxes. The Industrial Commission determined Excell had mischaracterized many employees engaged in covered employment as "independent contractors," resulting in Excell's alleged unemployment insurance underpayment. We reverse and remand to the Industrial Commission for further proceedings.
Excell is in the business of selling and installing sheetrock, also known as "drywall." The company bids for sheetrocking and related work offered by primary contractors and homeowners, providing both the materials and the labor needed to complete a project.
Excell maintains supplies of sheetrock and related items in a central storehouse, and uses company trucks and heavy equipment to haul these supplies to construction sites. On site, "hangers" cut and install the sheetrock. When they are finished, other workers clear away the resulting debris. Next "tapers" arrive to tape the sheetrock slabs and apply "mud" to make the walls appear seamless. They are followed by workers who apply texture finishes and paint.
Excell categorizes some of its workers as "employees," and some as "independent contractors." Those workers who transport the sheetrock to construction sites, as well as those who clean the site and those who apply paint and texture are designated by Excell as employees. In contrast, Excell permits hangers and tapers to elect whether they will be classified as employees or as independent contractors. For those hangers and tapers categorized as employees, Excell deducts taxes and social security from their wages. For those who are categorized as independent contractors, Excell makes no such deductions. Workers can elect to provide worker's compensation coverage themselves, or Excell will pay for worker's compensation coverage but adjust the worker's rate of reimbursement accordingly. Most of the hangers and tapers that perform work for Excell are defined by the company as independent contractors.
Excell bids on the projects its workers perform, and the workers have no part in the bidding process. After reporting in as available for work or being contacted by Excell, hangers and tapers are assigned to work projects. They are paid a flat rate based on the footage of drywall completed.
Excell requires workers designated as independent contractors to sign documents Excell styles as "sub-contract agreement[s]." These open-ended documents are signed only by the workers and place responsibility on the workers to pay any appropriate taxes and to provide liability and worker's compensation insurance on their own. Excell does not enter into written contracts with its hangers or tapers regarding the individual projects on which they work.
The Industrial Commission found that Excell determines what materials are needed and provides these at the jobsite at its own expense. The hangers and tapers generally supply personal tools. Workers are permitted to charge tools on an Excell account and reimburse the company later.
The Industrial Commission additionally found that hangers and tapers contact Excell when they have questions about a particular project. Hangers and tapers have the authority to hire others to assist in completing projects, but this is rarely done. Most of those Excell designates as independent contractors perform work only for Excell, although they are permitted to seek work elsewhere. Either Excell or its workers may terminate the working relationship between them without incurring any liability beyond reimbursement for any labor already performed.
In March 2001, the Idaho Department of Commerce and Labor (the Department) conducted a compliance audit of Excell covering the first quarter of 1999 through the first quarter of 2001. Following the audit, the Department issued a status determination concluding that the hangers and tapers represented by Excell as independent contractors had performed services in covered employment and therefore were reportable and taxable for unemployment insurance purposes. As Excell had not reported these workers, the company was assessed for unpaid unemployment insurance taxes and penalties in the amount of $10,671.77, later adjusted downward to $6,353.26.
Excell appealed the status determination, and two days of hearings were conducted before a Department appeals examiner. After making detailed findings of fact, the appeals examiner upheld the Department's status determination. Excell appealed to the Industrial Commission, requesting the Industrial Commission consider additional evidence not presented at the hearing before the appeals examiner. The Industrial Commission declined to consider further evidence, and after a de novo review of the record it affirmed the appeals examiner's decision.
Excell filed a timely appeal, which is presently before this Court.
"On appeal from the Industrial Commission, this Court exercises free review of the Commission's legal conclusions, but will not disturb findings of fact if they are supported by substantial and competent evidence." Steen v. Denny's Restaurant, 135 Idaho 234, 235, 16 P.3d 910, 911 (2000). "Substantial and competent evidence is relevant evidence that a reasonable mind might accept to support a conclusion." Uhl v. Ballard Medical Products, 138 Idaho 653, 657, 67 P.3d 1265, 1269 (2003). The conclusions reached by the Industrial Commission regarding the credibility and weight of evidence will not be disturbed unless the conclusions are clearly erroneous. Hughen v. Highland Estates, 137 Idaho 349, 351, 48 P.3d 1238, 1240 (2002). We will not re-weigh the evidence or consider whether we would have drawn a different conclusion from the evidence presented. Id.
Excell argues the Industrial Commission abused its discretion in refusing to consider additional evidence not presented in the hearing conducted by the appeals examiner. The evidence at issue related to Shawn Stovall, who formerly installed drywall for Excell and who served as one of the Department's witnesses at the hearing. Stovall testified he did not have an independent business when he worked for Excell, and that despite his ostensible status as an "independent contractor" he was fired from his position with the company.
After his termination, Stovall applied with the Department for unemployment benefits. Because Excell had not reported Stovall's work for the purposes of unemployment insurance, he had no qualifying wages on record with the Department. Stovall's request for benefits came shortly after the Department issued its status determination finding that Excell's drywall installers were engaged in covered employment for unemployment insurance purposes. Because the Department found Stovall was entitled to benefits, he was allowed to receive unemployment insurance payments. However, the Department warned Stovall that Excell was appealing the status determination to the Industrial Commission—if the decision regarding the status of Stovall and the other drywall installers were reversed, Stovall might be required to repay the benefits he had received.
Some time after the first day of the hearings conducted by the appeals examiner, Excell obtained from the Department documents showing the Department agreed to pay unemployment benefits to Stovall. Contending that Stovall's receipt of unemployment compensation undermined his credibility as a witness, Excell asked the Industrial Commission to consider the new evidence regarding Stovall's credibility although it was not presented at the hearing below. In its "application for rehearing/reconsideration" submitted to the Industrial Commission, Excell described the new evidence, arguing it was relevant and significant. Excell did not, however, mention why it failed to raise the evidence previously.
In reviewing a decision by an appeals examiner, the record before the Industrial Commission is the same as that considered by the appeals examiner, "unless it appears to the commission that the interests of justice require that the interested parties be permitted to present additional evidence." I.C. § 72-1368(7). The Industrial Commission's decision to permit or exclude evidence not raised before the examiner is discretionary. Id.; Teevan v. Office of the Attorney General, 130 Idaho 79, 81, 936 P.2d 1321, 1323 (1997). A party before the Industrial Commission does not possess "the unbridled right to present a substantially new case, absent some showing as to why the evidence had been unavailable earlier." Teevan, 130 Idaho at 81, 936 P.2d at 1323 (quoting Rogers v. Trim House, 99 Idaho 746, 750, 588 P.2d 945, 949 (1979)).
The Industrial Commission is empowered to "decide all claims for review filed by any interested party in accordance with its own rules of procedure not in conflict [with other law]." I.C. § 72-1368(7). The "Rules of Appellate Practice and Procedure under the Idaho Employment Security Law" adopted by the Industrial Commission require a party requesting a new hearing to submit with its request:
1. the reason for requesting the hearing;
2. whether the party desires to present evidence to the Industrial Commission in addition to that presented to the appeals examiner;
3. a description of the evidence the party desires to present;
4. an...
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