Midwest Property Recovery, Inc. v. Job Service of North Dakota

• Decision Date: 07 October 1991
• Docket Number: No. 910094,910094
• Citation: 475 N.W.2d 918
• Parties: MIDWEST PROPERTY RECOVERY, INC., Appellant, v. JOB SERVICE OF NORTH DAKOTA, Appellee. Civ.
• Court: North Dakota Supreme Court

Page 918

475 N.W.2d 918

MIDWEST PROPERTY RECOVERY, INC., Appellant, v. JOB SERVICE OF NORTH DAKOTA, Appellee.

Civ. No. 910094.

Supreme Court of North Dakota.

Oct. 7, 1991.

Carpenter Offices, Bismarck, for appellant, argued by Deborah J. Carpenter, Bismarck.

Mary Norum Hoberg, Asst. Atty. Gen., Bismarck, for appellee.

ERICKSTAD, Chief Justice.

Midwest Property Recovery, Inc., appealed from the judgment of the District Court for Burleigh County affirming the decision of Job Service of North Dakota determining that service in employment was performed for Midwest Property Recovery, Inc., as defined by section 52-01-01(17)(e), N.D.C.C. We affirm.

Job Service of North Dakota began an investigation into whether or not Midwest Property Recovery, Inc., was liable for unemployment insurance taxes for persons doing repossession work for Midwest. Midwest is engaged in the business of repossessing automobiles and other vehicles for various lending institutions. Apparently, a lending institution needing to repossess a vehicle would contact Midwest who would then forward the request to a person in the area where the vehicle was located. The person contacted would then repossess the vehicle and report to Midwest for instructions as to the disposition of the vehicle. The person who repossessed the vehicle was paid a flat rate for recovery of a vehicle unless the repossession took longer than an hour, in which case the person was paid an additional amount per hour. The person who repossessed the vehicle was also reimbursed for certain expenses such as fax transmissions and gasoline.

On August 27, 1990, Job Service held a hearing over the telephone to determine whether or not Midwest was an employer as defined by section 52-01-01(15), N.D.C.C., and whether or not the services performed for Midwest constituted employment as defined by section 52-01-01(17)(e), N.D.C.C. Job Service determined, on September 21, 1990, that Midwest was an employer and that the services performed for Midwest constituted employment. Midwest first appealed the decision within Job Service. On October 18, 1990, Job Service affirmed its prior determination. Midwest then appealed to the District Court for Burleigh County where the district court affirmed the decision of Job Service. This appeal followed.

When an administrative agency decision is appealed to this Court from a district court, we review the decision of the agency and not that of the district court. Skjefte v. Job Service North Dakota, 392 N.W.2d 815, 817 (N.D.1986). ¹ We limit our review to the record before the agency and do not consider the findings of the district court. Asbridge v. North Dakota State Highway Commissioner, 291 N.W.2d 739, 743 (N.D.1980).

Sections 28-32-21 and 28-32-19, N.D.C.C., set forth the scope and procedure for this Court's review of administrative decisions or orders. ² We are required to affirm an administrative decision unless one of the six enumerated reasons listed in section 28-32-19 is found. ³ In re Annexation of a Part of Donnybrook Public School Dist. No. 24, 365 N.W.2d 514, 519 (N.D.1985). We have noted that our review of administrative decisions under section 28-32-19, N.D.C.C., essentially involves a three-step process: (1) Are the findings of fact supported by a preponderance of the evidence? (2) Are the conclusions of law sustained by the findings of fact? (3) Is the agency decision supported by the conclusions of law? Tobias v. North Dakota Department of Human Services, 448 N.W.2d 175, 178 (N.D.1989); Falcon v. Williams County Social Service Board, 430 N.W.2d 569, 571 (N.D.1988); Otto v. Job Service North Dakota, 390 N.W.2d 550 (N.D.1986).

This Court, in Power Fuels, Inc. v. Elkin, 283 N.W.2d 214 (N.D.1979), discussed at length the preponderance standard to be used in reviewing agency findings of fact. We have subsequently noted that in applying this standard "we do not make independent findings of fact or substitute our judgment for that of the agency, but determine only whether a reasoning mind could reasonably have determined that the factual conclusions were supported by the weight of the evidence." Tobias, 448 N.W.2d at 178-179. This Court exercises restraint and will not act as a "super board" when reviewing administrative findings and decisions. Matter of Boschee, 347 N.W.2d 331, 335 (N.D.1984).

Although this Court will generally not consider new issues raised on appeal, Illies v. Illies, 462 N.W.2d 878, 881 (N.D.1990), we note that there have been some recent legislative changes to section 52-01-01(17)(e), N.D.C.C. Effective July 17, 1991, section 52-01-01(17)(e) was changed to incorporate the so-called "common law" test for when a contract for hire is to be deemed employment subject to the North Dakota Unemployment Compensation Law. The prior version of section 52-01-01(17)(e) incorporated what is often termed the "ABC" test. ⁴ Initially we note that this appeal was filed before the effective date of the latest legislation. It is significant that this Court, since 1979, has consistently adhered to the principle embodied in section 1-02-10, N.D.C.C., that no statutory enactment is retroactive unless it is expressly declared to be so. Reiling v. Bhattacharyya, 276 N.W.2d 237, 238 (N.D.1979) and Gofor Oil, Inc. v. State, 427 N.W.2d 104, 108 (N.D.1988). In State v. Cummings, 386 N.W.2d 468 (N.D.1986), we departed, for reasons not present in this case, from that principle because the statute in question involved an ameliorating amendment to a criminal statute. We thus created a narrow exception to the general rule for ameliorating penal legislation. Id. at 471, 472. Upon review, we find nothing in the new version of section 52-01-01(17)(e) which expresses a retroactive intent. ⁵

Thus this appeal will be tested under the former version of section 52-01-01(17)(e), N.D.C.C., which incorporated the so-called "ABC" test.

As both parties candidly admit, the issue of whether a worker is an independent contractor or an employee is a mixed question of law and fact. See generally Lakeland Tool And Engineering, Inc. v. Engle, 450 N.W.2d 349, 352 (Minn.App.1990); McGuire v. Department of Employment Security, 768 P.2d 985, 987 (Utah App.1989). This was implicit in this Court's handling of similar appeals from Job Service determinations in such recent cases as Schaefer v. Job Service North Dakota, 463 N.W.2d 665 (N.D.1990), and Speedway, Inc. v. Job Service North Dakota, 454 N.W.2d 526 (N.D.1990). Put in terms of section 28-32-19, N.D.C.C., we separately inquire whether the order or decision is "not in accordance with the law"; whether "the findings of fact made by the agency are not supported by a preponderance of the evidence"; and, whether the conclusions of the agency "are not supported by its findings of fact."

The former version of section 52-01-01(17)(e), N.D.C.C., which is applicable to this case provides:

"Services performed by an individual for wages or under any contract of hire must be deemed to be employment subject to the North Dakota Unemployment Compensation Law unless and until it is shown that: (1) such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; (2) such service is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of the enterprise for which such service is performed; and (3) such individual is customarily engaged in an independently established trade, occupation, profession, or business."

This statute is commonly referred to as the "ABC" test. Under this provision, a person who meets all three of the subparts is deemed an independent contractor for job insurance taxation purposes. The burden is, however, on the employer to establish all three prongs of the test. Schaefer, 463 N.W.2d at 666. If any one of the three is missing or not established by the employer, the person in question cannot be deemed an independent contractor.

Initially, it is important to recognize that the label the parties place on the relationship is not determinative. It is how the relationship between the parties actually operates which is important. Ellison, Inc. v. Board of Review of the Industrial Commission of Utah, Department of Employment Security, 749 P.2d 1280, 1284 (Utah App.1988). In this case, Midwest referred to its workers as independent contractors. Additionally, Greg Holte, a worker for Midwest, referred to himself as a "self-employed independent contractor." However, the label Midwest and workers such as Holte choose to attach to the workers is not important. The actual relationship between Midwest and workers such as Holte is what is at issue.

The first prong of the so-called "ABC" test deals with whether or not the person "has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact." Section 52-01-01(17)(e), N.D.C.C. As Job Service correctly noted, however, it is the right to control which is in issue. The mere fact that the employer has not exercised any control is not determinative.

In this case, Job Service made the determination that Midwest did retain the right to control the performance of services rendered to it. In support of this determination, Job Service stressed that Midwest set the fees to be paid to the persons doing the repossession work, and that the workers could be deprived of further work with Midwest without Midwest incurring any liability. Job Service also noted that after a vehicle was repossessed, the worker submitted a report and received instructions from Midwest on disposition of the vehicle. Lastly, Job Service asserted that the nature of the work performed by the workers was such an integral part of Midwest's business that for Midwest to maintain its standing with its clients it must have some ability to...