Standard Oil of Conn., Inc. v. Adm'r

• Decision Date: 15 March 2016
• Docket Number: SC19493
• Court: Connecticut Supreme Court
• Parties: STANDARD OIL OF CONNECTICUT, INC. v. ADMINISTRATOR, UNEMPLOYMENT COMPENSATION ACT

STANDARD OIL OF CONNECTICUT, INC. v. ADMINISTRATOR, UNEMPLOYMENT COMPENSATION ACT

SC19493

Supreme Court of Connecticut

March 15, 2016

DISSENT

ROGERS, C. J., with whom PALMER and McDONALD, Js., join, dissenting. I respectfully dissent from the majority opinion because I believe that its interpretation of the test set forth in General Statutes § 31-222 (a) (1) (B) (ii) for determining whether an employer-employee relationship existed (ABC test) effectively rewrites that test and fails to give one part of it the full significance that clearly is required. In so doing, the majority lowers the high, legislatively set bar that an enterprise must surmount in order to avoid making contributions to the state's unemployment compensation fund (fund) pursuant to General Statutes § 31-225.

More particularly, I disagree with the majority's determination that the trial court and the Employment Security Appeals Division, Board of Review (board), improperly concluded that the plaintiff, Standard Oil of Connecticut, Inc., was required to make contributions to the fund because it failed to prove all three parts of the ABC test as is necessary for a putative employer to be exempt from such contributions. My review of the record and the applicable law, considered with reference to the remedial purpose of the Unemployment Compensation Act (act); General Statutes § 31-222 et seq.; leads me to conclude that the plaintiff clearly failed to prove either subpart of part B of that test. See General Statutes § 31-222 (a) (1) (B) (ii) (II). Because the failure to prove any part of the ABC test is dispositive, I do not reach the question of whether the plaintiff also failed to prove part A of the test.¹

The defendant, the administrator of the act, determined, and the board and trial court agreed, that the relationship between the plaintiff and the technicians and installers at issue was one of employment, as contemplated by § 31-222 (a) (1), thereby making the plaintiff liable for contributions to the fund pursuant to the act. Our review of that determination is largely deferential. In regard to factual findings, "[r]eview of an administrative agency decision requires a court to determine whether there is substantial evidence in the administrative record to support the agency's findings of basic fact and whether the conclusions drawn from those facts are reasonable. . . . Neither this court nor the trial court may retry the case or substitute its own judgment for that of the administrative agency on the weight of the evidence or questions of fact." (Internal quotation marks omitted.) JSF Promotions, Inc. v. Administrator, Unemployment Compensation Act, 265 Conn. 413, 417, 828 A.2d 609 (2003). Rather, "[a]n agency's factual and discretionary determinations are to be accorded considerable weight by the courts."² (Internal quotation marks omitted.) Id., 417-18.

At the same time, however, if "the issue is one of law, the court has the broader responsibility of determining whether the administrative action resulted from an incorrect application of the law to the facts found or could not reasonably or logically have followed from such facts. Although the court may not substitute its own conclusions for those of the administrative board, it retains the ultimate obligation to determine whether the administrative action was unreasonable, arbitrary, illegal or an abuse of discretion." (Internal quotation marks omitted.) Mattatuck Museum-Mattatuck Historical Society v. Administrator, Unemployment Compensation Act, 238 Conn. 273, 276, 679 A.2d 347 (1996).

The present matter requires an interpretation of § 31222 (a) (1) (B) (ii) (II), part B of the ABC test, which has not been subject to much judicial or agency examination. In regard to issues of statutory construction, "[g]enerally, [o]ur review of an agency's decision on questions of law is limited by the traditional deference that we have accorded to that agency's interpretation of the acts it is charged with enforcing." (Internal quotation marks omitted.) Church Homes, Inc. v. Administrator, Unemployment Compensation Act, 250 Conn. 297, 303, 735 A.2d 805 (1999). Nevertheless, "[i]t is well settled . . . that we do not defer to the board's construction of a statute—a question of law—when, as in the present case, the [provision] at issue previously ha[s] not been subjected to judicial scrutiny or when the board's interpretation has not been time tested." (Internal quotation marks omitted.) JSF Promotions, Inc. v. Administrator, Unemployment Compensation Act, supra, 265 Conn. 418. In such a case, our review of the interpretation of that provision is plenary. Id.

It is well established that the act is remedial legislation that was intended "to protect those who are at risk of unemployment [and its tragic consequences] if their relationship with a particular employer is terminated"; id., 420; see also Daw's Critical Care Registry, Inc. v. Dept. of Labor, 42 Conn. Supp. 376, 411, 622 A.2d 622 (1992), aff'd, 225 Conn. 99, 622 A.2d 518 (1993); and, therefore, that the act should be liberally construed in favor of those whom it is intended to benefit. Daw's Critical Care Registry, Inc. v. Dept. of Labor, supra, 411. The legislature expressly has mandated that the act "be construed, interpreted and administered in such manner as to presume coverage, eligibility and nondis-qualification in doubtful cases." General Statutes § 31274 (c).

Pursuant to the act, the existence of an employment relationship triggers the responsibility of employers to make contributions that fund unemployment benefits. The act "defines employment in . . . § 31-222 (a) (1). In addition to codifying the common-law rules applicable to determine the existence of an employer-employee relationship, the act was amended in 1971 to includethe so-called 'ABC test,' now set forth in [subparts] 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); see also Public Acts 1971, No. 835, §§ 1 through 3. Because the ABC test defines employment more broadly than the common law, in Connecticut and other jurisdictions using that test, "service may be employment and one may be an employee [for purposes of the act] even if the common-law relationship of master and servant does not exist . . . ." Id.; see also L.A. McMahon Building Maintenance, Inc. v. Dept. of Employment Security, 32 N.E.3d 131, 141 (Ill. App. 2015); Athol Daily News v. Board of Review of the Division of Employment & Training, 439 Mass. 171, 177 n.10, 786 N.E.2d 365 (2003); Fleeman v. Nebraska Pork Partners, Docket No. S-08-0476, 2009 WL 6964983, *4 (Neb. January 22, 2009); Fleece on Earth v. Dept. of Employment & Training, 181 Vt. 458, 463, 923 A.2d 594 (2007).³

A business enterprise claiming exemption from payment of unemployment taxes pursuant to the ABC test has the burden of proving that it comes within that statutory exemption, which must be strictly construed. Daw's Critical Care Registry, Inc. v. Dept. of Labor, supra, 42 Conn. Supp. 389. "In order to demonstrate that [it] is not an employer and therefore has no liability for unemployment taxes under the act, a recipient of services must show that [it] has satisfied the criteria necessary to establish nonliability under all three prongs of the ABC test. . . . The test is conjunctive; all parts must be satisfied to exclude [a recipient of services] from the [a]ct." (Citations omitted; internal quotation marks omitted.) Latimer v. Administrator, Unemployment Compensation Act, 216 Conn. 237, 246-47, 579 A.2d 497 (1990). Stated otherwise, an enterprise's failure to establish any single part of the test is dispositive, and necessarily will result in a determination that the relationship at issue is one of employment.

Pursuant to the ABC test, an individual will not be considered an employee of an enterprise if the enterprise can prove that, "[A] 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 [B] 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 [C] 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) (I) (II) and (III)." (Emphasis in original; internal quotation marks omitted.) Mattatuck Museum-Mattatuck Historical Society v. Administrator, Unemployment Compensation Act, supra, 238 Conn. 277-78.

Part B of the ABC test is stated in the disjunctive. Consequently, an enterprise such as the plaintiff may satisfy part B by establishing either that the workers at issue performed services outside of the usual course of the enterprise's business, or that they performed services outside of all of the enterprise's places of business. See General Statutes § 31-222 (a) (1) (B) (ii) (II). In my view, the board and the trial court correctly concluded that the plaintiff had failed to satisfy either of these alternatives.

In regard to the first subpart of part B, to decide whether the work at issue was within an enterprise's "usual course of business," a court should examine the specific business activities in which the enterprise engages and determine which of those activities are performed "on a regular or continuous basis." Id., 279-80. If the activities performed by the workers at issue are "not performed [by the enterprise] on a regular or continuous basis, then the [enterprise] has satisfied [subpart one of part] B [by showing that] the activit[ies] [are] 'outside the usual course of the business' of the enterprise." Id., 280. An activity need not comprise the majority of an...