Jack Bradley, Inc. v. Department of Employment Sec.

• Decision Date: 19 December 1991
• Docket Number: No. 71146,71146
• Citation: 146 Ill.2d 61,165 Ill.Dec. 727,585 N.E.2d 123
• Parties: , 165 Ill.Dec. 727 JACK BRADLEY, INC., Appellant, v. The DEPARTMENT OF EMPLOYMENT SECURITY et al., Appellees.
• Court: Illinois Supreme Court

Page 123

585 N.E.2d 123

146 Ill.2d 61, 165 Ill.Dec. 727

JACK BRADLEY, INC., Appellant, v. The DEPARTMENT OF EMPLOYMENT SECURITY et al., Appellees.

No. 71146.

Supreme Court of Illinois.

Dec. 19, 1991.

Rehearing Denied Feb. 3, 1992.

Michael A. Fleming, Cusack & Fleming, P.C., Peoria, for appellant.

Roland W. Burris, Atty. Gen., Springfield (Rosalyn B. Kaplan, Sol. Gen., and Daniel N. Malato, Asst. Atty. Gen., Chicago, of counsel), for appellees.

Justice FREEMAN delivered the opinion of the court:

The plaintiff, Jack Bradley, Inc. (Bradley, Inc.), sought an administrative review of a decision by defendant Sally A. Ward, Director of Employment Security (Director), which adopted and affirmed an Illinois Department of Employment Security (Department) representative's determination that services performed by food demonstrators for plaintiff are "employment" under the Unemployment Insurance Act (the Act) (Ill.Rev.Stat.1987, ch. 48, par. 316); that such services are not exempt under section 212 of the Act (Ill.Rev.Stat.1987, ch. 48, par. 322); and that plaintiff owes $13,898.16 plus interest in unpaid unemployment contributions. The circuit court reversed the Director's decision as against the manifest weight of the evidence. The appellate court reversed the judgment of the circuit court. (204 Ill.App.3d 708, 149 Ill.Dec. 881, 562 N.E.2d 345.) Plaintiff now appeals from the judgment of the appellate court under Supreme Court Rule 315 (134 Ill.2d R. 315).

The issue presented on review is whether the Director's decision, that services of certain food demonstrators are "employment" (Ill.Rev.Stat.1987, ch. 48, par. 316) and are not exempt under section 212 of the Act, is against the manifest weight of the evidence. A related issue is whether the Department was estopped from determining that the services of Bradley, Inc.'s food demonstrators were "employment" and thus subject to unemployment contributions. After careful consideration of the matter, we conclude that the Director's decision was not in error and that the Department was not estopped. Accordingly, we affirm.

FACTUAL BACKGROUND

Jack Bradley, Inc. (Bradley, Inc.) is a company formed in 1977 by Jack Bradley and his son, Mark Bradley, which is located in Chillicothe, Illinois. Bradley, Inc. is involved in the advertising and public relations business. The company is comprised of three divisions, Media Consultants, an advertising agency; Jack Bradley Photo and Frame Shop, a retail photo/camera and custom picture-framing shop; and Media Consultants Marketing, which provides food demonstrators for food vendors or retailers. Food demonstrators are persons who demonstrate and offer food and other product samples to the consuming public. Such demonstrations usually take place in supermarkets. Mark Bradley, Bradley, Inc.'s vice-president, has described Media Consultants Marketing as a "demo" company.

In 1983, the Department first considered whether Bradley, Inc.'s food demonstrators were employees under the Act when a demonstrator filed a claim seeking unemployment compensation. Bradley, Inc. registered its protest to the claim on the theory that the demonstrator was an "independent contractor" whose services were exempt under section 212 of the Act (Ill.Rev.Stat.1987, ch. 48, par. 322).

In September 1983, as a result of a Department audit, Department representatives Jim Kelly and Lee Pickens met with Bradley, Inc.'s representatives, Mark Bradley, Jack Bradley, and Steven Cushing. At the time, some of the food demonstrators had signed written contracts with Bradley, Inc. stating that they were independent contractors and some had not.

According to Bradley, Inc., Pickens decided at this meeting that food demonstrators who had not signed a written contract with Bradley, Inc. would be subject to unemployment contributions and those who had signed would not be subject to contributions. Bradley, Inc. conceded, and agreed to compile a list of those demonstrators who had not signed contracts so that Kelly could determine the amount of contributions owed. This understanding or agreement was not reduced to writing.

[165 Ill.Dec. 730] Bradley, Inc. subsequently compiled the list, but Kelly did not revisit Bradley, Inc.'s offices to review it. Bradley, Inc. also advised all its food demonstrators that they were required to be under contract.

In July 1985, Kelly's replacement at the Department, Suzanne Faulkner, contacted Bradley, Inc. concerning records for its food demonstrators. Cushing advised Faulkner that, in 1983, the agreement described above had been reached. He offered to make available those records showing amounts paid to food demonstrators who had not signed contracts. Consequently, Faulkner checked with Pickens, who denied that any such agreement had been reached. Faulkner then requested all of Bradley, Inc.'s records.

On December 2, 1986, and April 9, 1987, the Director served Bradley, Inc. with "Notices of Determination and Assessments and Demands for Payment." The notice of determination stated that Bradley, Inc. failed to make unemployment contributions and therefore owed the Department contributions plus interest and penalties. Bradley, Inc. filed protests and petitioned for an administrative hearing.

On August 26, 1987, an administrative hearing was held before a representative of the Director. Bradley, Inc. presented exhibits and the testimony of Mark Bradley, its vice-president, Steven Cushing, its auditor, and Betty Thomas, a food demonstrator. The evidence presented during the hearing was not in substantial dispute and is summarized below.

Bradley, Inc. maintains a list of 200 to 250 available food demonstrators. Bradley, Inc. has compiled this list by advertising for people who have experience in food and beverage sampling and by also receiving referrals from its listed demonstrators. Food vendors and retailers contact Bradley, Inc. for these food demonstrators' services and Bradley, Inc. then contacts a listed demonstrator. Approximately 20% of Bradley, Inc.'s total business is derived from arranging jobs between vendors or retailers and demonstrators.

Before being placed on the list, all demonstrators sign a written contract provided by Bradley, Inc. stating a standard hourly rate of pay. The agreement is a nonexclusive form agreement, and further states that demonstrators are not employees but "independent contractor[s]" who have "sole control of the manner and means of performing" their services. The contract provides that either party may terminate the agreement upon written notice. By 1987, all demonstrators listed with Bradley, Inc. had signed the contract.

The food demonstration job process begins when a food vendor or retailer contacts Bradley, Inc. and provides it with information concerning a food demonstration that the vendor or retailer wishes to schedule. The vendor or retailer determines the date of the demonstration, the starting and ending times for the demonstration, and the product to be demonstrated. Bradley, Inc. then contacts food demonstrators on its list to find someone to perform the job. When contacted by Bradley, Inc., a demonstrator may refuse the job because of either personal or business plans, the locale of the demonstration, or personal feelings about the product. No penalty results from a refusal.

When a listed food demonstrator accepts a job, Bradley, Inc. provides the demonstrator with information about the job such as where the demonstrator is to report and who the demonstrator should contact. Bradley, Inc. subsequently sends a written confirmation "slip" with information about the job to the demonstrator. Bradley, Inc. also sends the demonstrator a "time sheet."

After receiving the information about a job from Bradley, Inc., the food demonstrator reports to the designated location, usually a supermarket, on the specified date. No demonstrations take place in Bradley, Inc.'s offices. Betty Thomas testified that after checking in with the supermarket's management, she performs an "inventory check" by counting and recording the number of demonstration products on hand at the store. The particular food vendor determines whether an inventory check is required. A demonstrator then sets up her demonstration area.

Equipment and supplies are provided at the store by either the food vendor or retailer. A demonstrator may bring his or her own supplies. Bradley, Inc. provides no training to the food demonstrators, but it may, in some instances, provide demonstrators with written food preparation and demonstration guides which Bradley, Inc. receives directly from food vendors. Food vendors and retailers provide the demonstrators with instructions concerning presentation, set-up, food preparation and serving. They may also provide demonstrators with product information and the same type of written preparation guides which Bradley, Inc. receives directly from vendors.

No one from Bradley, Inc. instructs or supervises the food demonstrators at the job site. However, Bradley, Inc. had at one time employed a "supervisor" for its demonstrators in the southern Illinois area because the company needed "help with the hands-on operation of the contract work [Bradley, Inc.] did down there." If a problem arises at the job site, supermarket management or the food vendor advises the demonstrator.

When a job is completed, the food demonstrator may take an "ending" inventory if required by a vendor. The demonstrator records the "ending" inventory on a sheet which others send to Bradley, Inc. The demonstrator also reports in writing the number of items "demoed" and leaves this report for the food vendor at the store. Thomas testified that she did not punch a time clock owned or controlled by Bradley, Inc. but she did record her time on a "time sheet," signed by a store manager, which she sent to Bradley, Inc. or "whomever [she was] working for" after she completed a job. Demonstrators for Bradley, Inc. are paid...