Latimer v. Administrator, Unemployment Compensation Act, 13863

• Decision Date: 14 August 1990
• Docket Number: No. 13863,13863
• Citation: 216 Conn. 237,579 A.2d 497
• Court: Connecticut Supreme Court
• Parties: Walter N. LATIMER v. ADMINISTRATOR, UNEMPLOYMENT COMPENSATION ACT.

Page 497

579 A.2d 497

216 Conn. 237

Walter N. LATIMER v. ADMINISTRATOR, UNEMPLOYMENT COMPENSATION ACT.

No. 13863.

Supreme Court of Connecticut.

Argued May 3, 1990.

Decided Aug. 14, 1990.

Brian McCormick, Torrington, for appellant (plaintiff).

Thadd A. Gnocchi, Asst. Atty. Gen., with whom, on the brief, were Clarine Nardi Riddle, Atty. Gen., and Charles A. Overend, Asst. Atty. Gen., for appellee (defendant).

Before PETERS, C.J., and SHEA, CALLAHAN, COVELLO and HULL, JJ.

CALLAHAN, Justice.

This is an appeal from an assessment by the defendant administrator ¹ of the Connecticut Unemployment Compensation Act pursuant to General Statutes § 31-270 ² for unpaid contributions allegedly due under the act from the plaintiff, Walter N. Latimer. The assessment was based on a determination by the administrator that the plaintiff was the employer, within the meaning of General Statutes § 31-222(a)(1)(B)(ii), of certain individuals who rendered services to him in his home during the first two calendar quarters of 1987. ³ The plaintiff claimed, to the contrary, that the subject individuals were independent contractors, not his employees, and that he is not liable for any contributions under the act.

On December 14, 1987, the plaintiff filed an appeal from the assessment to the Superior Court pursuant to § 31-270. After the appeal was filed, the plaintiff and the administrator entered into an agreement that allowed the plaintiff the opportunity to present factual claims and legal arguments directly to the administrator in writing. Following the written submission the plaintiff and the administrator agreed that an evidentiary hearing should be held. ⁴ Pursuant to this agreement a hearing was held on May 23, 1988, before a hearing officer appointed by the administrator. Subsequent to the hearing, additional written arguments were submitted to the hearing officer by both parties.

Thereafter, the hearing officer rendered a decision determining that the plaintiff had failed to show that the persons providing him services were free from his control and direction in connection with their performance of those services. The hearing officer concluded, therefore, that those persons furnishing services to the plaintiff were his employees, not independent contractors, and that the plaintiff was liable for the amount assessed by the administrator. ⁵ See General Statutes § 31-222(a)(1)(B)(ii)(I). The trial court upheld the hearing officer's decision albeit upon a different ground from that relied on by the hearing officer. ⁶

In connection with the administrative hearing afforded the plaintiff, the hearing officer made an extensive and detailed finding of facts. That finding is not disputed by the parties. Its relevant portions are summarized herein and it is printed in its entirety in the footnote below. ⁷ The hearing officer found that the plaintiff was eighty-eight years old when he suffered a stroke in March, 1987. Following a period of hospitalization at Charlotte Hungerford Hospital, and a period of rehabilitation therapy at Gaylord Hospital, the plaintiff returned to his home on June 1, 1987. Due to physical limitations resulting from his stroke, he was unable thereafter to manage his day-to-day affairs. His affairs, therefore, were attended to by George Christian, his attorney-in-fact, under a general power of appointment given to Christian by the plaintiff on April 4, 1984.

Prior to the plaintiff's discharge from Gaylord Hospital his personal physician, Frank Vanoni, informed Christian that the plaintiff should either be placed in a nursing facility or receive twenty-four hour care at home because he was incapable of independent living. In response, Christian contacted Carol Johnson, the president of the Litchfield Hills Nurses Registry (registry), and requested that she provide home health aides to the plaintiff in order to furnish him with the level of care and assistance he needed on a daily basis.

Pursuant to Christian's request, personal care assistants (PCAs) were supplied by the registry and placed in the plaintiff's home. The PCAs placed with the plaintiff were either certified nurse's aides, certified home health aides, or had had prior experience working as nurse's aides. They offered their services to the general public through the Registry and in some instances were enrolled with more than one registry and also advertised their services independently. The plaintiff was initially provided with twenty-four hour care for seven days per week, but his care was gradually reduced to eight hours per day for six days per week.

In accordance with the procedures established by the registry, the PCAs were paid at an agreed hourly rate directly by the plaintiff, Christian, acting through his attorney-in-fact. ⁸ Christian, thereafter, issued an Internal Revenue Service form 1096 to each of the PCAs who performed services for, and were paid by, the plaintiff during 1987. That form listed all remunerations to the PCAs as "non employee compensation." The plaintiff also treated the PCAs as independent contractors for federal income tax purposes and neither the plaintiff nor the registry assumed any responsibility for social security taxes, personal or professional liability insurance or individual life, health or disability insurance. Furthermore, each PCA placed with the plaintiff by the registry signed an agreement with the registry that he or she "is an independent contractor unless otherwise employed directly by the Registry Client."

The hearing officer also found that the plaintiff, through his attorney-in-fact, retained the right to discharge any PCA and that the registry acknowledged that the plaintiff, or any client of the registry, could communicate to any PCA at any time that the PCA's services were no longer needed. Moreover, the hearing officer found that although Christian did not directly supervise the performance of the PCAs' duties, the PCAs did report their day-to-day activities to him and he monitored the care given the plaintiff. The trial court rendered its decision on the appeal after reviewing the findings of fact and the record submitted by the hearing officer. ⁹ The Nurses Registry recognizes that the appellant or any client may directly communicate to a PCA that his services are no longer needed, although it would encourage the appellant or any client to inform the Nurses Registry when it takes such an action, in order to preclude further billing by the Registry with respect to that individual PCA."

The Unemployment Compensation Act (act) defines employment in General Statutes § 31-222(a)(1)(A) and (B). ¹⁰ Besides codifying the common law rules used to determine the existence of an employer-employee relationship, the act was amended in 1971 to include the use of what is popularly known in Connecticut and throughout the country in similar legislation as the "ABC test." The ABC test is utilized to ascertain whether an employer-employee relationship exists under the act. The ABC test is embodied in subdivisions (I), (II) and (III) of § 31-222(a)(1)(B)(ii). F.A.S. International, Inc. v. Reilly, 179 Conn. 507, 511, 427 A.2d 392 (1980). In order to demonstrate that he is not an employer and therefore has no liability for unemployment taxes under the act, a recipient of services must show that he has satisfied the criteria necessary to establish nonliability under all three prongs of the ABC test. Id.; State Department of Labor v. Medical Placement Services, Inc., 457 A.2d 382, 385-86 (Del.Super.1982), aff'd, 467 A.2d 454 (Del.1983); Unemployment Ins. Tax Contribution v. Friedrichs, 233 Mont. 384, 760 P.2d 93 (1988); Nielsen v. Department of Employment Security, 692 P.2d 774, 776 (Utah 1984) "The test is conjunctive; all parts must be satisfied to exclude an employer from the Act." Gay Hill Field Service v. Board of Review, 750 P.2d 606, 608 (Utah App.1988); Appeal of Work-A-Day of Nashua, Inc., 132 N.H. 289, 564 A.2d 445 (1989).

Under the ABC test any service provided by an individual is considered employment, unless and until the recipient of the services provided has sustained the burden of showing "to the satisfaction of the administrator that (I) such individual has been and will continue to be free from control and direction in connection with the performance of such service, both under his contract for the performance of service and in fact; and (II) such service is performed either outside the usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and (III) such individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed...." General Statutes § 31-222(a)(1)(B)(ii); F.A.S. International, Inc. v. Reilly, supra, 179 Conn. at 511-12, 427 A.2d 392. Under Part A of the ABC test, therefore, in order to denominate them as independent contractors, the plaintiff bore the burden of showing that the PCAs who cared for him have "been and will continue to be free from control and direction in connection with the performance of such service, both under [their] contract for the performance of service and in fact." General Statutes § 31-222(a)(1)(B)(ii)(I); State Department of Labor v. Medical Placement Services, Inc., supra, 384; Appeal of Work-A-Day of Nashua, Inc., supra, 564 A.2d 447.

"The fundamental distinction between an employee and an independent contractor depends upon the existence or nonexistence of the right to control the means and methods of work." Beaverdale Memorial Park, Inc. v. Danaher, 127 Conn. 175, 179, 15 A.2d 17 (1940); Northwestern Mutual Life Ins. Co. v. Tone, 125 Conn. 183, 190, 4 A.2d 640 (1939); Norwalk Gaslight Co. v. Norwalk, 63 Conn. 495, 524, 28 A. 32 (1893); see Yurs v. Director of Labor, 94 Ill.App.2d 96, 103, 104, 235 N.E.2d 871 (1968)....