Omaha World-Herald v. Dernier, WORLD-HERAL

• Decision Date: 24 October 1997
• Docket Number: WORLD-HERAL,No. S-95-321,A,S-95-321
• Parties: OMAHAppellee, v. William DERNIER, Appellant, and Commissioner of Labor of the State of Nebraska, Appellee.
• Court: Nebraska Supreme Court

Page 508

570 N.W.2d 508

253 Neb. 215

OMAHA WORLD-HERALD, Appellee, v. William DERNIER, Appellant and Commissioner of Labor of the State of Nebraska, Appellee.

No. S-95-321.

Supreme Court of Nebraska.

Oct. 24, 1997.

Syllabus by the Court

1. Employment Security: Judgments: Appeal and Error. In an appeal from the appeal tribunal to the district court regarding unemployment benefits, the district court conducts a review de novo on the record; on review by the Nebraska Court of Appeals or the Nebraska Supreme Court, the judgment of the district court may be reversed, vacated or modified for errors appearing on the record. When reviewing a judgment for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.

2. Judgments: Appeal and Error. When reviewing a question of law, an appellate court reaches a conclusion independent of the lower court's ruling.

3. Statutes. In construing a statute, a court must attempt to give effect to all of its parts, and if it can be avoided, no word, clause, or sentence will be rejected as superfluous or meaningless; it is not within the province of a court to read anything plain, direct, and unambiguous out of a statute.

4. Employment Security: Independent Contractor. The so-called ABC test embodied in Neb.Rev.Stat. § 48-604(5) (Reissue 1993) for determining whether one is engaged in employment by performing services for wages does not apply for determining whether one is engaged in employment by performing services under a contract of hire.

5. Employment Security: Independent Contractor. One performing services under a contract but not receiving wages, as defined by Neb.Rev.Stat. § 48-602(16) (Reissue 1993), performs services under a contract of hire unless one is an independent contractor, as defined by the common law.

6. Independent Contractor: Words and Phrases. Under the common law, an independent contractor is one who, in the course of an independent occupation or employment, undertakes work subject to the will or control of the person for whom the work is done only as to the result of the work and not as to the methods or means used.

7. Employer and Employee: Independent Contractor. There is no single test for determining whether one performs services for another as an employee or as an independent contractor; rather, the following factors must be considered: (1) the extent of control which, by the agreement, the employer may exercise over the details of the work; (2) whether the one employed is engaged in a distinct occupation or business; (3) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision; (4) the skill required in the particular occupation; (5) whether the employer or the one employed supplies the instrumentalities, tools, and the place of work for the person doing the work; (6) the length of time for which the one employed is engaged; (7) the method of payment, whether by the time or by the job; (8) whether the work is part of the regular business of the employer; (9) whether the parties believe they are creating an agency relationship; and (10) whether the employer is or is not in business.

8. Employer and Employee: Independent Contractor. While not in itself determinative, control is the most important factor to be considered in determining whether someone acts as an independent contractor or as an employee.

Bruce H. Brodkey, Edith T. Peebles, and Lisa M. Line, of Brodkey, Cuddigan & Peebles, Omaha, for appellant.

Soren S. Jensen, of Erickson & Sederstrom, P.C., Omaha, for appellee Omaha World-Herald.

John F. Sheaff and John H. Albin, Lincoln, for appellee Commissioner of Labor.

WHITE, C.J., and CAPORALE, WRIGHT, CONNOLLY, GERRARD, STEPHAN, and McCORMACK, JJ.

PER CURIAM.

This is an action for unemployment compensation benefits. The defendant-appellant, William Dernier, entered into a five-page "Independent Distributor Agreement" with the plaintiff-appellee, Omaha World-Herald, calling for Dernier to purchase from the World-Herald newspapers at fixed prices and to sell them in a delivery area designated by the World-Herald by placing them in news racks which Dernier rented from the World-Herald and through retail outlet dealers such as stores and service stations. Dernier's compensation consisted of the difference between the price Dernier paid the World-Herald and the prices at which he sold the newspapers. The amount Dernier charged the dealers was determined by agreement between Dernier and the dealers the World-Herald determined the price of the newspapers dispensed from the news racks.

The World-Herald had the right to suggest the locations of the news racks, and only World-Herald newspapers and promotional signs and materials supplied by the World-Herald could be placed in them. On occasion, the World-Herald caused the move of a news rack to a less profitable location. Although Dernier was responsible for the basic appearance and maintenance of the news racks, the World-Herald submitted a list of the news racks to the city to check for compliance with its codes. If the news racks were found to be in violation of the codes, the World-Herald was fined.

Dernier billed and collected for his own accounts and agreed to prepare and distribute bills to those who did not pay the World-Herald directly. He determined the number of newspapers he wished to purchase each day, but was obligated to stock the news racks and supply the dealers with sufficient newspapers so as to avoid "sold out" conditions. Moreover, the World-Herald could unilaterally increase or decrease the size of Dernier's orders. Dernier paid the World-Herald weekly for the newspapers he purchased, and although title to the newspapers passed to Dernier as he took delivery of them, he could return any unsold newspapers for full credit.

Dernier was to supply the World-Herald with a constantly updated "run" list showing the location of the news racks, the dealers he was serving, and the amount of sales to each of the dealers. In addition, the World-Herald supplied Dernier with a "delivery list" which showed the name, address, and actual sale by day of all "single copy" accounts in Dernier's delivery area, which list remained the property of the World-Herald and was to be kept current by Dernier as a confidential document.

The agreement required Dernier to provide at his own expense a substitute of his choice to perform his contractual obligations in the event of his "illness, disability, or absence, or if for any other reason" he was "unable to perform" his responsibilities. Dernier also agreed to provide a work force adequate to perform his contractual obligations and agreed further that said work force would be under his direction and control, and any persons so engaged would be his "employees and/or contractors." Dernier had engaged three persons to help him.

While the agreement permitted Dernier to work for others, the arrangement could be terminated if Dernier failed to make deliveries of the World-Herald newspapers within specified times for weekly morning editions, weekly afternoon editions, and weekend editions. Although the agreement is not entirely clear, the evidence establishes that the times were 6:30 a.m., 5 p.m., and 6 a.m., respectively. Either party could terminate the agreement with or without cause upon 30 days' notice, and the World-Herald could terminate the agreement immediately without notice upon Dernier's commission of any wrongful act.

The agreement recited that Dernier was to be considered an independent contractor and that he was responsible for paying expenses and providing vehicles, employees, and insurance, and contained a mechanism for securing Dernier's performance.

Dernier was expected to increase his sales of newspapers by 3 percent per year, and the failure to do so was cause for termination of the agreement. The agreement was ultimately terminated on or about February 8, 1994, by the World-Herald for Dernier's failure to place advertisement material as required and for not selling enough newspapers. Dernier had earned approximately $40,000 per year under the agreement; the World-Herald did not make deductions from Dernier's compensation for federal, state, or Social Security taxes.

A Department of Labor claims deputy determined that Dernier was not entitled to unemployment insurance benefits, the department's appeal tribunal reversed the deputy's decision, and the district court reversed the decision of the appeal tribunal. Dernier then appealed to the Nebraska Court of Appeals. Pursuant to our power to regulate the caseload of the Court of Appeals, we, on our own motion, removed this case to our docket.

In an appeal from the appeal tribunal to the district court regarding unemployment benefits, the district court conducts a review de novo on the record; on review by the Court of Appeals or the Supreme Court, the judgment of the district court may be reversed, vacated, or modified for errors appearing on the record. When reviewing a judgment for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable. Law Offices of Ronald J. Palagi v. Dolan, 251 Neb. 457, 558 N.W.2d 303 (1997). However, when reviewing a question of law, an appellate court reaches a conclusion independent of the lower court's ruling. Zimmerman v. Douglas Cty. Hosp., 252 Neb. 583, 563 N.W.2d 349 (1997).

The Employment Security Law, Neb.Rev.Stat. §§ 48-601 through 48-671 (Reissue 1993), provides for the payment of unemployment compensation benefits to otherwise eligible individuals having qualified for such through prior employment, §§ 48-624 and 48-625. The act defines employment as any "service performed ......