Kirby of Norwich v. Adm'r, Unemployment Comp. Act, SC 19825, (SC 19826), (SC 19827)

• Decision Date: 31 January 2018
• Docket Number: SC 19825, (SC 19826), (SC 19827)
• Citation: 328 Conn. 38,176 A.3d 1180
• Court: Connecticut Supreme Court
• Parties: KIRBY OF NORWICH v. ADMINISTRATOR, UNEMPLOYMENT COMPENSATION ACT, et al. Kirby of Norwich v. Administrator, Unemployment Compensation Act

328 Conn. 38

176 A.3d 1180

KIRBY OF NORWICH

v.ADMINISTRATOR, UNEMPLOYMENT COMPENSATION ACT, et al.

Kirby of Norwich

v.Administrator, Unemployment Compensation Act

SC 19825, (SC 19826), (SC 19827)

Supreme Court of Connecticut.

Argued October 18, 2017

Officially released January 31, 2018^*

Barbara M. Schellenberg, with whom were Stuart M. Katz and Jeffrey R. Babbin, for the appellant (plaintiff).

Krista D. O'Brien, assistant attorney general, with whom, on the brief, were George Jepsen, attorney general, and Philip M. Schulz, assistant attorney general, for the appellee (named defendant in the first and second cases, and defendant in the third case).

Jeffrey J. White and Thomas J. Dolon filed a brief for the Direct Selling Association as amicus curiae.

Rogers, C.J., and Palmer, McDonald, Robinson and Keller, Js.

PALMER, J.

The issue that we must resolve in these appeals is whether certain individuals who have engaged in door-to-door sales of vacuums provided by the plaintiff, Kirby of Norwich, also known as GP Industries of Norwich, Inc., should be classified as independent contractors or, instead, as employees of the plaintiff for purposes of the Unemployment Compensation Act (act), General Statutes § 31–222 et seq. The named defendant, the Unemployment Compensation Act Administrator (administrator), found that there was an employer-employee relationship between the plaintiff and those individuals, thereby obligating the plaintiff to contribute to the state's unemployment compensation fund (fund),¹ because the plaintiff failed to meet its burden of satisfying the requirements of all three prongs of the ABC test, codified at General Statutes § 31–222 (a) (1) (B) (ii) (I), (II) and (III),² with parts A, B and C of the test corresponding to clauses (I), (II) and (III), respectively, of that statutory provision. After the administrator's decisions were sustained by the Employment Security Appeals Division (appeals division) and the defendant Employment Security Board of Review (board), the plaintiff appealed to the trial court, which agreed with the administrator in three separate cases that such individuals are the plaintiff's employees on the ground that the plaintiff failed to establish that the individuals are "customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed" for the plaintiff, within the meaning of part C of the ABC test. See General Statutes § 31–222 (a) (1) (B) (ii) (III). The plaintiff now appeals from the judgments of the trial court, claiming that the court in each case interpreted § 31–222 (a) (1) (B) (ii) (III) too narrowly and, as a result, incorrectly concluded that the individuals engaged in door-to-door sales of the plaintiff's product were employees of the plaintiff rather than independent contractors. We affirm the judgments of the trial court.

The record reveals the following relevant facts³ and procedural history. The plaintiff is in the business of selling Kirby vacuums to consumers. Its sales force consists of door-to-door sales representatives who sell the vacuums exclusively by performing demonstrations in the homes of potential customers. The plaintiff provides its sales representatives with leads, makes appointments with customers on their behalf, and provides them with nonmandatory training.

In Docket No. SC 19825, the administrator determined that the plaintiff had an employer-employee relationship with one of its sales representatives, the defendant Bryant Gardner, and was therefore liable to make contributions to the fund. The administrator determined that the plaintiff had failed to establish any of the three requirements of the ABC test, which, as we previously explained, are set forth in clauses (I), (II) and (III) of § 31–222 (a) (1) (B) (ii). See footnote 2 of this opinion. The plaintiff appealed from this decision to the appeals division. An appeals referee conducted an evidentiary hearing, at which the plaintiff's president, Vess Zaprianov, testified that Gardner independently sold cell phones while he was engaged as a vacuum sales representative for the plaintiff. The appeals division sustained the decision of the administrator on the ground that the plaintiff had failed to establish the criteria set forth in any of the three prongs of the ABC test.

The plaintiff then appealed from the appeals division's decision to the board. The board concluded that, although the plaintiff had established that Gardner had sold cell phones during the course of his work relationship with the plaintiff, the plaintiff had provided "no evidence that [Gardner] was engaged in the independent sale of vacuum[s] ... before, during or after his relationship with the [plaintiff]" and, therefore, that it had failed to establish that Gardner was "customarily engaged in an independently established ... business of the same nature as that of the service performed," as required by part C of the ABC test. (Internal quotation marks omitted.) The board did not address the first two prongs of the ABC test. The plaintiff appealed from the board's decision to the trial court. The trial court, Hon. Seymour L. Hendel , judge trial referee, agreed with the board that the requirements of part C were not satisfied because the plaintiff had presented no evidence to establish that Gardner was engaged in an independent vacuum sales business, and the court rendered judgment dismissing the plaintiff's appeal.

In Docket No. SC 19826, the administrator determined that the plaintiff had an employer-employee relationship with its sales representative, the defendant Rick Magee. The plaintiff appealed from this decision to the appeals division. An appeals referee conducted an evidentiary hearing, at which Zaprianov testified that Magee worked at a church. The appeals division sustained the administrator's decison on the ground that the plaintiff had failed to establish the criteria set forth in any of the three prongs of the ABC test.

The plaintiff then appealed from the decision of the appeals division to the board. The board concluded that the plaintiff had provided "no evidence that [Magee] was engaged in the independent sale of vacuum[s] ... before, during or after his relationship with the [plaintiff]" and, therefore, that it had failed to establish that Magee was "customarily engaged in an independently established ... business of the same nature as that of the service performed," as required by part C of the ABC test. (Internal quotation marks omitted.) Again, the board did not address the first two prongs of the ABC test. The plaintiff appealed from the board's decision to the trial court, Hon. Seymour L. Hendel , judge trial referee. As in the case involving Gardner, Judge Hendel agreed with the board that the requirements of part C were not satisfied because the plaintiff had presented no evidence to establish that Magee was engaged in an independent vacuum sales business, and rendered judgment dismissing the plaintiff's appeal.⁴

In Docket No. SC 19827, the administrator conducted an audit of the plaintiff's business and concluded that the plaintiff's entire sales force should be classified as employees for purposes of the act. The plaintiff appealed from this determination to the appeals division. An appeals referee conducted an evidentiary hearing, at which the plaintiff presented evidence that many of the plaintiff's sales representatives sold vacuums for only a very short time period. Specifically, according to the plaintiff, the evidence showed that, out of a total of 378 sales representatives who worked for the plaintiff between 2012 and 2014, 194 worked for only one week and 104 worked for between two weeks and one month. The appeals referee sustained the administrator's determination on the ground that the plaintiff had failed to establish the criteria set forth in any of the three prongs of the ABC test.

The plaintiff then appealed from the decision of the appeals division to the board. The board concluded that the plaintiff had "failed to present any evidence, such as business cards, advertisements or web sites, to show that any of the individuals in question were ‘customarily engaged’ in a business of the same nature as the [plaintiff]," as required by part C of the ABC test. Again, the board did not address the first two prongs of the test. The plaintiff appealed to the trial court. The court, Hon. Robert C. Leuba , judge trial referee, concluded that "the record is replete with evidence to support the conclusion of the board that an employer-employee relationship existed" and dismissed the plaintiff's appeal.

Thereafter, the plaintiff filed a motion for articulation of the factual and legal bases for Judge Leuba's decision.

In response, Judge Leuba issued an articulation in which he explained that, to meet the requirements of part C of the ABC test, the plaintiff bore "the burden of maintaining that its sales persons were customarily engaged as independently established sellers of vacuum [s] ...." Because it had failed to do so, Judge Leuba concluded that the board properly determined that the sales representatives were employees.

The plaintiff then filed the present appeals,⁵ which were subsequently consolidated for purposes of argument and briefing.⁶ The plaintiff claims that, in each case, the trial court⁷ incorrectly upheld the board's unduly narrow interpretation of part C of the ABC test. Specifically, the plaintiff contends that part C was satisfied because the plaintiff's sales representatives have an occupation or calling of the same nature as that involved in the service performed for the plaintiff that they can pursue after terminating their services to the plaintiff, and the plaintiff was not required to establish that the sales representatives actually independently engaged in that occupation or calling while providing services to the plaintiff. We conclude that, because the plaintiff presented no...