E.P.M. Inc. v. Buckman
| Decision Date | 24 November 2009 |
| Docket Number | No. WD 70161.,No. WD 70164.,No. WD 70162.,No. WD 70163.,WD 70161.,WD 70162.,WD 70163.,WD 70164. |
| Citation | 300 S.W.3d 510 |
| Parties | E.P.M. INC., Appellant, v. John BUCKMAN, Respondent, Division of Employment Security, Respondent. |
| Court | Missouri Court of Appeals |
Larry R. Ruhlmann, for Respondent Division of Employment Security.
Before Division Two: VICTOR C. HOWARD, Presiding Judge, JOSEPH M. ELLIS, Judge and MARK D. PFEIFFER, Judge.
E.P.M., Inc. appeals from four decisions of the Labor and Industrial Relations Commission ("the Commission"), all of which involve whether manufacturer's representatives for E.P.M. are employees or independent contractors of the company. For the following reasons, the Commission's orders are affirmed.
On February 1, 2005, John Buckman became a manufacturer's representative for E.P.M., which manufactures and sells computerized temperature control systems. Buckman was assigned a territory covering areas of northern Missouri and southern Iowa. He was responsible for developing potential customers, performing sales calls, presenting engineering proposals, and customer service. Buckman was paid a fifteen percent commission on service work and sales in his territory. Though he was given a contract to execute, Buckman never signed that contract.
On November 10, 2006, E.P.M. announced it was terminating the contracts for all of its manufacturer's representatives and offered a new contract to them. Buckman refused to sign the new contract and ceased working for E.P.M. on that date. The other representatives did sign the new contract and continued in their posts.
When Buckman filed an application for unemployment benefits with the Division of Employment Security, E.P.M. challenged that claim, arguing that Buckman was an independent contractor and not an employee of E.P.M. and that Buckman had voluntarily quit his position with the company. Alternatively, E.P.M. claimed that Buckman was terminated for misconduct related to work for refusing to sign the new contract. Following a hearing, a deputy for the Division found the manufacturer's representatives for E.P.M. were employees of the company and that Buckman had been discharged by the company for reasons other than misconduct.
Because of its findings in Buckman's case, the Division investigated the employment status of other manufacturer's representatives for E.P.M. and found that they were also employees of the company. A deputy determined that the manufacturer's representatives were entitled to wage credits and that the unemployment insurance tax account of E.P.M. should be adjusted to reflect that fact. E.P.M. appealed the various deputy's decisions to the Appeals Tribunal which heard all of those appeals on June 26, 2008. After the Appeals Tribunal affirmed the deputy's determinations, E.P.M. appealed to the Commission. On September 3, 2008, the Commission issued orders affirming the decisions of the Appeals Tribunal and adopting them as its own. E.P.M. now appeals the four decisions to this Court.
Our review of the Commission's decisions is governed by § 288.210,1 which states in relevant part:
The findings of the commission as to facts, if supported by competent and substantial evidence and in the absence of fraud, shall be conclusive, and the jurisdiction of the appellate court shall be confined to questions of law. The court, on appeal, may modify, reverse, remand for rehearing, or set aside the decision of the commission on the following grounds and no other:
(1) That the commission acted without or in excess of its powers;
(2) That the decision was procured by fraud;
(3) That the facts found by the commission do not support the award; or
(4) That there was no sufficient competent evidence in the record to warrant the making of the award.
"We will affirm the Commission's decision if we find, upon a review of the whole record that `there is sufficient competent and substantial evidence to support the [Commission's decision].'" Higgins v. Missouri Div. of Employment Sec., 167 S.W.3d 275, 279 (Mo.App. W.D.2005) (quoting Hampton v. Big Boy Steel Erection, 121 S.W.3d 220, 223 (Mo. banc 2003)). "[W]e defer to the Commission on issues involving the credibility of witnesses and the weight to be given to their testimony." Martinez v. Nationwide Paper, 211 S.W.3d 111, 115 (Mo.App. S.D.2006) (internal quotation omitted). "However, we owe no deference to the Commission's conclusions of law or application of the law to the facts." Higgins, 167 S.W.3d at 279.
In its first point, E.P.M. contends that the Commission erred in finding that Buckman was an employee of E.P.M. rather than an independent contractor because that determination was not supported by sufficient competent evidence. E.P.M. further asserts that the facts found by the Commission do not support the award.
"Whether an individual is an employee or independent contractor is a question of fact to be determined by a fact-finder." Ascoli v. Hinck, 256 S.W.3d 592, 595 (Mo.App. W.D.2008). Where a worker has received remuneration from an employer, there is a presumption of an employer-employee relationship, and to the extent it challenges that presumption, the burden of proof rests with the employer to show, under the common law right to control test, that the worker is an independent contractor. Bedford Falls Co. v. Division of Employment Sec., 998 S.W.2d 851, 856 (Mo.App. W.D.1999); see also Burns v. Labor & Indus. Relations Comm'n, 845 S.W.2d 553, 556 (Mo. banc 1993). The Division "determines whether a worker is an employee or an independent contractor pursuant to 8 CSR 10-4.150(1) and section 288.034.5." Haggard v. Division of Employment Sec., 238 S.W.3d 151, 156 (Mo. banc 2007). Section 288.034.5, RSMo. Cum.Supp.2006, provides:
Service performed by an individual for remuneration shall be deemed to be employment subject to [Missouri's employment security] law unless it is shown to the satisfaction of the division that such services were performed by an independent contractor. In determining the existence of the independent contractor relationship, the common law of agency right to control shall be applied. The common law of agency right to control test shall include but not be limited to: if the alleged employer retains the right to control the manner and means by which the results are to be accomplished, the individual who performs the service is an employee. If only the results are controlled, the individual performing the service is an independent contractor.
8 CSR 10-4.150(1) states that the division is to apply the common law rules applicable in determining the employer-employee relationship under the Internal Revenue Code, Section 3306(i). Higgins, 167 S.W.3d at 279. "In applying the provisions of the [I.R.C.], section 3306(i) the division shall consider the case law, Internal Revenue Service regulations and Internal Revenue Service letter rulings interpreting and applying that subsection." Id. (quoting 8 CSR 10-4.150). "As an aid to determining whether a worker is an employee or an independent contractor under the common law rules, the IRS has identified twenty factors to consider in determining whether sufficient control is present to establish an employer-employee relationship." K & D Auto Body, Inc. v. Division of Employment Sec., 171 S.W.3d 100, 105 (Mo.App. W.D.2005).
Those factors are: (1) instructions; (2) training; (3) integration; (4) services rendered personally; (5) hiring, supervising, and paying assistants; (6) continuing relationship; (7) set hours of work; (8) full time required; (9) doing work on employer's premises; (10) order or sequence set; (11) oral or written reports; (12) payment by hour, week, month (13) payment of business and/or traveling expenses; (14) furnishing of tools and materials; (15) significant investment; (16) realization of profit or loss; (17) working for more than one firm at a time; (18) making service available to general public; (19) right to discharge; and (20) right to terminate.
National Heritage Enters., Inc. v. Division of Employment Sec., 164 S.W.3d 160, 167 (Mo.App. W.D.2005). "Missouri courts routinely apply the twenty-factor test in determining the nature of the employment relationship for purposes of tax liability, and those factors have been consistently used as an aid for determining whether an individual is an employee or independent contractor under the common law rules." K & D Auto Body, Inc., 171 S.W.3d at 104 (internal quotation, citation, and punctuation omitted). "The factors are not intended to serve as a bright-line rule with no flexibility, but rather are indices of control to assist the employer in attempting, for tax purposes, to determine the common law employment status of its workers." Id. at 106 (internal quotation omitted). "The degree of importance attached to each factor varies depending on the type of work and individual circumstances, and the relevant factors should be considered in inquiring about employment status with no one factor being decisive." Klausner v. Brockman, 58 S.W.3d 671, 680 (Mo.App. W.D.2001).2 "Not every factor is applicable in every situation, and each case is decided on the basis of its own facts." K & D Auto Body, Inc., 171 S.W.3d at 106 (internal quotation omitted).
"There is no magic formula for determining how many factors must weigh in favor of an employee relationship." Haggard, 238 S.W.3d at 157. The issue for this Court to decide on appeal is whether there was substantial and competent evidence to support the Commission's finding that the manufacturer's representatives were E.P.M.'s employees. Id.
With regard to whether Buckman was an employee or an independent contractor, the Commission found:
Factors more indicative of an independent contractor relationship are the lack of set hours of work, no requirement that the worker perform...
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