Q.D.-A., Inc. v. Indiana Department of Workforce Development, 012319 INSC, 19S-EX-43
|Opinion Judge:||MASSA, JUSTICE.|
|Party Name:||Q.D.-A., Inc. Appellant v. Indiana Department of Workforce Development Appellee|
|Attorney:||ATTORNEYS FOR APPELLANT Paul D. Borghesani Angela N. Johnson Andrew B. Murphy Alexander E. Preller Faegre Baker Daniels LLP Indianapolis, Indiana Minneapolis, Minnesota ATTORNEYS FOR APPELLEE Curtis T. Hill, Jr. Attorney General of Indiana Thomas M. Fisher Solicitor General Kian J. Hudson Patrici...|
|Judge Panel:||Rush, C.J., and David and Goff, JJ., concur. Slaughter, J., concurs in result.|
|Case Date:||January 23, 2019|
|Court:||Supreme Court of Indiana|
Argued: September 13, 2018
Appeal from the Indiana Department of Workforce Development, Unemployment Insurance Appeals, No. 93484 The Honorable Suzanne E. Manning, Liability Administrative Law Judge
On Petition to Transfer from the Indiana Court of Appeals, No. 93A02-1703-EX-556
ATTORNEYS FOR APPELLANT Paul D. Borghesani Angela N. Johnson Andrew B. Murphy Alexander E. Preller Faegre Baker Daniels LLP Indianapolis, Indiana Minneapolis, Minnesota
ATTORNEYS FOR APPELLEE Curtis T. Hill, Jr. Attorney General of Indiana Thomas M. Fisher Solicitor General Kian J. Hudson Patricia C. McMath Julia C. Payne Andrea E. Rahman Deputy Attorneys General Indianapolis, Indiana
Q.D.-A. matches drivers with customers who need large vehicles driven to them. Because Q.D.-A. classified these drivers as independent contractors, it did not pay unemployment taxes for them under the Indiana Unemployment Compensation Act. The Act presumes a worker is an employee unless the employer can show three things: (A) the worker is free from the employer's control and direction, (B) the worker performs a service outside the usual course of the employer's business, and (C) the worker receives a commission or operates an independently established trade, occupation, or profession.
After a driver for Q.D.-A. filed for unemployment benefits under the Act, the Department of Workforce Development told the company that it had misclassified him as an independent contractor. But because Q.D.-A. proved the Act's three-part test, we hold that he was an independent contractor.
Facts and Procedural History
Q.D.-A. is a business that connects drivers with customers who need too-large-to-tow vehicles driven to them. Consistent with its typical practice, Q.D.-A. contracted with a Driver to pair him with customers needing this drive-away service. Under this contract-which explicitly called him an independent contractor-Driver could choose his own hours and the routes he believed were safest and most direct, contract with Q.D.-A.'s competitors, decline any work offered by Q.D.-A., negotiate his pay for each trip, and hire other drivers to complete his deliveries if they were qualified under federal regulations. Because Q.D.-A. believed these terms made Driver an independent contractor instead of an employee, it did not pay unemployment taxes for him.
After parting ways with Q.D.-A., Driver filed for unemployment benefits with the Department of Workforce Development. Because Q.D.-A. did not pay unemployment taxes for Driver, the Department investigated to determine whether Q.D.-A. should have classified Driver as an employee. After examining their contract and speaking with Driver and representatives from Q.D.-A., the Department analyzed their relationship under the statutory "ABC Test."
To prevail under this test, Q.D.-A. needed to show that (A) Driver was free from its control and direction, (B) Driver performed his work outside the company's usual course of business, and (C) Driver was customarily engaged in an independently established trade or business of the work performed. See Ind. Code § 22-4-8-1(b). After looking at all the evidence, the Department determined that Q.D.-A. failed to prove any of those three prongs. According to the Department, Driver was an employee.
Q.D.-A. protested. At a hearing before a Liability Administrative Law Judge (or LALJ), the Department's sole witness, the investigator who classified Driver as an employee, acknowledged that • She knew nothing about Q.D.-A.'s two-day orientation or internal policies,
• She believed Q.D.-A. showed control over Driver when it required him to follow state and federal regulations,
• Driver's unilateral ability to choose how to do his job could be considered the "opposite" of control,
• It would be "very odd" for an employer to allow an employee to hire someone else to do his job, and
• Q.D.-A. acted as a "middleman" between drivers and customers.
Tr. Vol. 2, pp. 19, 22-23, 29, 31, 32, 40.
On the other hand, Q.D.-A.'s director of administration and dispatch supervisor both testified that • Q.D.-A. provided neither direction to Driver on how he should perform his job nor evaluation of his performance,
• Q.D.-A. permitted Driver to outsource his work to other drivers,
• Driver could negotiate his pay for each trip and could work for more than one drive-away company,
• Driver paid for all incidental expenses (like lodging, meals, tolls, and fuel) and provided all equipment (like any vehicle he towed to drive back home, hitch equipment, tow bars, light connectors, safety triangles, and fire extinguishers),
• Driver could refuse any jobs offered to him with no repercussions and could call in at his convenience to see if any jobs were available,
• The primary purpose of the orientation and internal policies is "to go over the regulations...
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