Excell v. Dept. of Commerce and Labor, 33574.
| Decision Date | 04 June 2008 |
| Docket Number | No. 33574.,33574. |
| Court | Idaho Supreme Court |
| Parties | EXCELL CONSTRUCTION, INC., Employer-Appellant, v. IDAHO DEPARTMENT OF COMMERCE AND LABOR, Respondent. |
Wetzel & Wetzel, P.L.L.C., Coeur d'Alene, for appellant. Dana L. Rayborn Wetzel argued.
The Hon. Lawrence Wasden, Attorney General, Boise, for respondent. Katherine Takasugi argued.
This is an appeal from a determination that various sheetrock hangers and tapers were not engaged in an independently established trade and that their work therefore constituted covered employment. We reverse the determination and award attorney fees to the appellant.
Excell Construction, Inc., (Excell) is a construction company that, among other things, installs sheetrock on building projects. There are two types of sheetrock workers — hangers and tapers. Hangers install the sheetrock, cutting it to fit and sawing or cutting holes for electrical outlets, air-conditioning units, and plumbing. Tapers use joint compound and tape to finish the joints between sheetrock panels, and they fill nail or screw depressions and other imperfections. Their work takes several sequential steps, including sanding, to produce a smooth surface.
Excell permits the workers who hang and/or tape the sheetrock to elect whether they will work as employees or independent contractors. In March 2001, the Idaho Department of Commerce and Labor (Department) conducted a compliance audit of Excell covering the first quarter of 1999 through the first quarter of 2001. As a result of that audit, the Department determined that the sheetrock hangers and tapers who had elected to be independent contractors were engaged in covered employment under Idaho's Employment Security Law, Idaho Code §§ 72-1301 et seq. It assessed Excell unemployment insurance taxes and penalties totaling $6,353.26. Excell appealed, and the matter was heard by an appeals examiner. After two days of hearings, the appeals examiner upheld the determination. Excell appealed to the Industrial Commission, asking it to take additional evidence. It refused to do so, but did conduct a de novo review of the record.
In order to overcome the presumption that the hangers and tapers were engaged in covered employment, Excell was required to establish two things: (a) that they had been and will continue to be free from control or direction in the performance of their work, both under their contracts and in fact, and (b) that they were engaged in an independently established trade, occupation, profession, or business. I.C. § 72-1316(4). The Industrial Commission determined that Excell had failed to prove that the sheetrock hangers and tapers were free from control or direction in the performance of their work and therefore found that Excell had failed in its burden of proof.
Excell appealed to this Court. We reversed the Commission's finding because its legal conclusion that Excell controlled how the sheetrock hangers and tapers performed their work was not supported by the facts and because the Commission had misapplied the facts to the law. Because the Commission had not addressed whether the sheetrock hangers and tapers were engaged in an independently established trade, occupation, profession, or business, we remanded the case for a determination of that issue. Excell Constr., Inc. v. State, Dept. of Labor, 141 Idaho 688, 116 P.3d 18 (2005).
Upon the case being remanded to the Commission, it remanded it to the appeals examiner to take additional evidence. After three days of evidentiary hearings, the appeals examiner found that Excell had failed to prove that sheetrock hangers and tapers were engaged in an independently established trade, occupation, profession, or business. The appeals examiner therefore affirmed the ruling that they were engaged in covered employment. Excell appealed to the Industrial Commission, which conducted a de novo review of the record. It adopted the findings of fact of the appeals examiner, added some additional findings, and affirmed the finding that the sheetrock hangers and tapers were engaged in covered employment. Excell timely appealed to this Court.
Excell offers the sheetrock hangers and tapers the option of being independent contractors or employees. The issue in this case is whether those who chose to be independent contractors are engaged in covered employment. Idaho Code § 72-1316(4) provides:
Services performed by an individual for remuneration shall, for the purposes of the employment security law, be covered employment unless it is shown:
(a) That the worker has been and will continue to be free from control or direction in the performance of his work, both under his contract of service and in fact; and
(b) That the worker is engaged in an independently established trade, occupation, profession, or business.
IDAPA 09.01.35.112.04 lists fifteen factors to be considered when determining whether a worker is engaged in an independently established trade, occupation, profession, or business. We will address the Commission's findings as to each of those factors.
1. Skills, qualifications, and training required for the job. The Commission found that it requires "moderate skill" to perform hanging and taping services. The workers typically learned their job by on-the-job training rather than through formal training. The Commission did not find that hanging and taping sheetrock required such little skill, qualifications, and training that it could not be considered a trade. This factor is neutral because sheetrock hangers and tapers could be either employees or engaged in an independently established trade.
2. Method of payment, benefits, and tax withholding. The workers at issue were paid by the square foot, not by the hour. Excell did not provide them with benefits, nor did it withhold taxes from its payments to them. It reported their earnings to the Internal Revenue Service as non-employee compensation. This factor indicates that the workers were engaged in an independently established trade. Department of Employment v. Bake Young Realty, 98 Idaho 182, 187, 560 P.2d 504, 509 (1977). The Commission did not mention this factor in its weighing process.
3. Right to negotiate agreements with other workers. The workers had the right to negotiate agreements with other workers. The Commission also found that they generally did not do so, apparently discounting its significance. By doing so, the Commission erred. The relevant factor is whether the workers had the right to negotiate agreements with other workers, not the extent to which they found it advantageous or necessary to do so.
4. Right to choose sales techniques or other business techniques. The hangers and tapers had the right to choose sales techniques or other business techniques. The Commission found that they "did not typically advertise their services." This finding is contrary to the evidence. It is undisputed that they advertised by word of mouth and some used business cards and signs. The Commission's finding may have been based upon evidence offered by the Department that none of the workers at issue advertised in the yellow pages in telephone directories. The issue is whether the workers had the right to choose sales techniques, not whether the techniques chosen met the Commission's approval. This factor supports the conclusion that the workers were engaged in an independently established trade.
5. Right to determine hours. The Commission found, "The workers were not required to set hours." They could work the hours that they wanted and were not required to work at any particular time of day. Although not mentioned by the Commission in its weighing process, this is a strong indication that the workers were engaged in an independently established trade. Department of Employment v. Bake Young Realty, 98 Idaho 182, 187-88, 560 P.2d 504, 509-10 (1977).
6. Existence of outside businesses or occupations. None of the workers were involved in any businesses or occupations other than sheetrock hanging and taping. In the Bake Young Realty case, this Court reversed the Commission's determination that real estate salesmen were not engaged in an independently established occupation. In doing so, we mentioned various facts showing that they were, including, "They were frequently possessed of substantial real estate and other business interests aside from their occupation as licensed real estate salesmen." 98 Idaho at 188, 560 P.2d at 510. In Vendx Marketing Co., Inc. v. Department of Employment, 122 Idaho 890, 841 P.2d 420 (1992), we listed various factors that this Court had considered over the years in deciding whether particular workers were engaged in an independent trade or business. The factors listed included the "[e]xistence of outside businesses or occupations," which was based upon the Bake Young Realty opinion. 122 Idaho at 896, 841 P.2d at 426. We have repeated that list in subsequent cases, but have never discussed this particular factor. Although the existence of outside businesses was mentioned as a factor in the Bake Young Realty case, it is of little or no significance. It is common for employees to have outside businesses that are not connected with their employment. Conversely, it is also common for a person engaged in an independently established trade, occupation, profession, or business not to have a second business. The Commission did not mention this factor in its weighing process.
7. Special licensing or regulatory requirements for performance of work. During the period of the audit, there were no special licensing or regulatory requirements to perform sheetrock hanging and taping. Although the existence of such licensing or regulatory requirements would indicate that sheetrock hanging and taping were independently established trades, John L. King, P.A. v. State, Dept. of Employment, 110 Idaho 312, 314...
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