Higgins v. Missouri Div. Of Employment Sec.

• Decision Date: 19 July 2005
• Docket Number: No. WD 64572.,WD 64572.
• Citation: 167 S.W.3d 275
• Parties: Bonnie Sue HIGGINS d/b/a American Cab Co. and City Cab Co., Appellant, v. MISSOURI DIVISION OF EMPLOYMENT SECURITY, Respondent.
• Court: Missouri Supreme Court

Page 275

167 S.W.3d 275

Bonnie Sue HIGGINS d/b/a American Cab Co. and City Cab Co., Appellant, v. MISSOURI DIVISION OF EMPLOYMENT SECURITY, Respondent.

No. WD 64572.

Missouri Court of Appeals, Western District.

July 19, 2005.

Austin L. Mitchell, Salem, MO, for Appellant.

Ninion S. Riley, Jefferson City, MO, for Respondent.

Before ELLIS, P.J., and SPINDEN and HOWARD, JJ.

VICTOR C. HOWARD, Judge.

Bonnie Higgins ("Higgins") appeals from a decision by the Labor and Industrial Relations Commission ("the Commission"), which found that during the years of 1999 and 2000, and since January 1, 2001, cab drivers performed services for "wages" in "employment" by Higgins, within the meaning of those terms as defined in sections 288.034 and 288.036¹ of Missouri's Unemployment Law. Higgins raises two points on appeal. First, she claims that the Commission erred in finding that she "paid, albeit indirectly" the cab drivers. Second, Higgins claims that the Commission erred in finding the cab drivers were her employees rather than independent contractors.

For the reasons set forth below, we affirm the Commission's decision.

Background²

Higgins solely owns and operates the only two public taxicab ("cab") businesses, which are known as City Cab Co. and American Cab Co., in Rolla, Missouri. In accordance with Chapter 38 of the Rolla City Code, which regulates the public cab business within the City's jurisdiction, Higgins maintains City licenses to operate her cab businesses, regularly notifies the City authorities of each cab actually in operation as a public cab, and maintains sufficient amounts of liability insurance to compensate for damages resulting from the operation of her businesses.

Higgins is a "hands-off" owner. She uses a management system that she inherited from her late father, who had once owned and operated a cab business. Higgins keeps the cabs for both businesses on a rented parking lot, adjacent to her boyfriend's car lot. Higgins owns twenty cabs, which she painted yellow with the names of either American or City Cab with the companies' phone numbers. However, Higgins indicated that there were rarely more than four cabs (two per company) in working condition. The keys are left in the operable cabs, which are left on the lot unlocked.

Any person ("the applicant") who is interested in driving a cab speaks to a current driver. That driver instructs the applicant to obtain a copy of his or her driving record.³ After obtaining the record, the applicant gives it to a current driver, who then turns the record over to Higgins, to Higgins' boyfriend, or directly to Higgins' insurance company. Once the insurance company approves the applicant as an acceptable driver, the driver who had taken the application lets the applicant know that he or she can drive, and Higgins assigns the applicant an identification number to be reported on that driver's log sheets and daily summaries. Higgins then assigns the approved driver to drive a specific available cab.

Inside each operable cab is: a sheet for logging cab trips; an instruction sheet entitled "TAXI CAB DRIVERS RULES," the contents of which are set forth in our discussion of Point II; and a daily summary sheet. Except for dialysis patients, whose fares are paid by a third party to Higgins, all fares are paid to the driver in cash. The fare is $3 per trip anywhere within the Rolla city limits. Outside the city limits, a $1-per-mile surcharge is added to the fare. Before each shift, the driver is required to check the cab for oil, transmission, radiator, and steering fluids and to add more as needed. At the end of the shift, the driver is required to check the air pressure in the tires. Higgins authorizes the drivers to purchase gasoline for the cabs as needed, the cost of which is split 50-50 by the driver and Higgins. The drivers can also spend money on minor repairs, for which Higgins reimburses them. The cab drivers do not pay any costs or expenses, other than their one-half share of gas, in order to work for her. Despite a form Higgins has a driver sign acknowledging his or her responsibility for the $500 insurance deductible due to his or her negligence in any accident, Higgins pays the insurance deductible without recourse against the driver who causes damage to a cab in an accident.

The drivers are required to write down the time when each passenger is picked up, the place of pick-up, and the place where the passenger is dropped off. Additionally, the drivers are required to log the amount of the fare received from each passenger. At the end of each driving shift, each driver, on the summary sheet submitted to Higgins: (1) totals up the gross amount of fares collected, (2) subtracts the amount of gasoline purchased from the gross fares, and (3) keeps fifty percent of the cash balance. The driver leaves the remainder of the cash, plus a $3 fee charged by Higgins "to help pay for the logs," with the completed driving log and summary sheet in a sealed envelope. Someone, usually Higgins' boyfriend, then delivers the envelope to Higgins.

Higgins maintains a separate telephone number and a separate listing in the Rolla area telephone books for each of her cab companies. The telephone calls to both companies come into a phone system located in a Rolla office maintained by Higgins. A dispatcher does not answer the calls. Rather, Higgins installed a device on each telephone line that redirects the call directly to the cab belonging to the respective company. A cab driver answers the routed call from a phone device in the cab and either picks up the calling passenger himself or has another on-duty driver get the passenger. Higgins installed a monitoring and recording device on the phone system to keep track of the drivers by comparing the calls with their reported daily logs.

During the times relevant to this appeal, Higgins has filed income tax returns with the IRS using Form 1040 with attached schedules. For the tax year 2000, Higgins reported on Schedule C, as the sole proprietor of American Cab Co. and City Cab Co., that those businesses generated $134,641 in gross receipts and that she paid $107,178 in deductible costs for gasoline, vehicle repairs, insurance, telephone service, taxes, and licenses. She did not file W-2's (wage and tax statements) or 1099's (miscellaneous income) with the IRS with regard to the drivers. In the summer of 2003, an IRS agent examined Higgins' federal income tax returns and relevant records for the tax years 2000 and 2001. On August 12, 2003, the IRS reported to Higgins that she did not owe any additional tax and was not subject to any penalty.

On January 9, 2001, the Rolla office of the Division of Employment Security ("the Division") notified Higgins that it was going to audit her cab businesses' books and records. Over a year later, the Division notified Higgins that it had determined, as a result of the audit, that the cab drivers were paid remuneration, which constituted "wages" under section 288.036 of the Missouri Employment Security Law, for the drivers' services during the 1999 and 2000 tax years. Higgins appealed the Division's determination to the Appeals Tribunal. After conducting a hearing, the Appeals Tribunal affirmed the Division's determination. Higgins then applied for review of the Appeals Tribunal's decisions with the Commission. On August 11, 2004, the Commission affirmed and adopted the decision of the Appeals Tribunal. This appeal follows.

Standard of Review

Section 288.210, RSMo 2000, governs our review of the Commission's decision and states in relevant part:

The findings of the commission as to the facts, if supported by competent and substantial evidence and in the absence of fraud, shall be conclusive, and the jurisdiction of the appellate court shall be confined to questions of law. The court, on appeal, may modify, reverse, remand for rehearing, or set aside the decision of the commission on the following grounds and no other:

(1) That the commission acted without or in excess of its powers;

(2) That the decision was procured by fraud;

(3) That the facts found by the commission do not support the award; or

(4) That there was no sufficient competent evidence in the record to warrant the making of the award.

We will affirm the Commission's decision if we find, upon a review of the whole record that "there is sufficient competent and substantial evidence to support the [Commission's decision]." Hampton v. Big Boy Steel Erection, 121 S.W.3d 220, 223 (Mo. banc 2003).⁴ We defer to the Commission on issues of credibility. See Tendai v. Mo. State Bd. of Registration for the Healing Arts, 161 S.W.3d 358, 366 (Mo. banc 2005). However, we owe no deference to the Commission's conclusions of law or application of the law to the facts. Hoover v. Cmty. Blood Ctr., 153 S.W.3d 9, 12 (Mo.App. W.D.2005).

Point I

In Higgins' first point on appeal she claims:

The Commission erred in finding that [she] "paid, albeit indirectly" the cab drivers because the weight of the evidence and the application of the law demonstrate that [she] did not pay the cab drivers, in that "splitting up a pot or till" is not payment by one party to the other, and that such absence of "payment" excludes [her] from coverage under the Missouri Employment Security Law.

We begin with the statutes and regulations relevant to Higgins' argument that she did not "pay" the cab drivers:

Section 288.034 provides in relevant part:

1. "Employment" means service, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, express or implied, and notwithstanding any other provisions of this section, service with respect to which a tax is required to be paid under any federal unemployment tax law imposing a tax against which credit may be taken for contributions required to be paid into a state unemployment fund or which, as a condition for full tax credit against the tax imposed by the...