Stearns-Hotzfield v. Farmers Ins. Exchange
| Decision Date | 08 January 1985 |
| Docket Number | STEARNS-HOTZFIEL,R,No. C4-84-1399,C4-84-1399 |
| Parties | Marie C.espondent, v. FARMERS INSURANCE EXCHANGE, Relator, Commissioner of Economic Security, Respondent. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
An insurance company paying benefits to a handicapped person who employs homemaker services is not an "agency" for the purposes of paying unemployment tax and for compliance with the administrative reporting requirements pursuant to Minn.Stat. Sec. 268.04, subd. 9 (1982).
The Commissioner of Economic Security has inherent power to vacate and amend a prior erroneous decision within the appeal period for the original opinion.
Marie C. Stearns-Hotzfield, pro se.
Eric J. Magnuson, Minneapolis, for relator.
Paul N. Heckt, Sp. Asst. Atty. Gen., St. Paul, for respondent.
Heard, considered, and decided by WOZNIAK, P.J., and LANSING and LESLIE, JJ.
Farmers Insurance Exchange (Farmers) appeals from a decision of the Commissioner of Economic Security determining it to be an employer and responsible for the payment of unemployment taxes and for compliance with the administrative reporting requirements. We reverse.
This employer liability action arises out of a claim for unemployment benefits by claimant-respondent Marie C. Stearns-Hotzfield. In September of 1981, claimant was hired by Colleen Roder to provide in-home nursing care to Roder, a Minnesota resident whose involvement in a Michigan automobile accident rendered her a quadriplegic. Roder was insured by Farmers, which does business in Minnesota. Under Michigan law, Farmers was obligated to pay for all home care services provided to Roder by the claimant. Mich.Comp.Laws Ann. Sec. 500.3107(a).
The facts surrounding the claim are essentially undisputed. Roder hired claimant and her hours and day-to-day activities were determined by Roder. At the end of each week, claimant would have Roder sign her timesheet and claimant would then submit the timesheet to Farmers which sent the claimant her paycheck. There is no evidence in the record that Farmers did any act other than direct payment of claimant's wages. At oral argument, Farmers admitted liability for the payment of the unemployment tax if Roder submitted the claim under the policy coverage.
In mid-February 1983, claimant notified Roder that she intended to leave her job for personal reasons and she later filed a claim for unemployment compensation benefits.
On April 20, 1983, an Unemployment Compensation Tax Specialist issued a letter of determination informing Farmers that, pursuant to Minn.Stat. Sec. 268.04, subd. 9 (1982) and department rules, Farmers was engaged in an employer-employee relationship with the claimant and was required to file quarterly tax reports. Farmers appealed. Following an evidentiary hearing, a Department Employer Liability Referee affirmed the determination of the UC Tax Specialist. On appeal by Farmers, a Commissioner's representative vacated the facts and decision of the referee and remanded the matter for the taking of further evidence.
Following a second evidentiary hearing, a Department Employer Liability Referee once again affirmed the determination of the Tax Specialist that Farmers was an employer for unemployment tax and benefit purposes. On appeal by Farmers, a Commissioner's representative modified the decision of the Employer Liability Referee, finding that Roder, and not Farmers, was the employer for unemployment tax and benefit purposes. On July 10, 1984, before the expiration of the 30-day appeal period, the chief of the Commissioner's representatives issued an order vacating the June 11, 1984, decision of the Commissioner's representative. The new basis for vacating the decision was that the decision was contrary to Minn.Stat. Sec. 268.04, subd. 9 (1982) and 8 MCAR Sec. 4.3104(C)(1) (renumbered as Minn.Rules Sec. 3315.3400, subp. 10). In finding that Farmers was the employing unit for unemployment tax and benefit purposes, the Chief Commissioner's Representative noted that, in the case of "homeworkers," it is solely the provision of funds to hire the worker that is decisive in establishing an employer-employee relationship, and not the day-to-day direction and control of the services to be performed. The Chief Commissioner's Representative further found that the law was so amended and the rules so drafted because the party receiving the services is seldom financially able to support the tax necessary to provide the benefits arising from the employment.
1. For unemployment tax and benefit purposes, was Farmers Insurance Exchange the employing unit of a health care homeworker within the meaning of Minn.Stat. Sec. 268.04, subd. 9 (1982)?
2. May the representative of the Commissioner of Economic Security vacate a decision previously issued and substitute an amended decision reversing the original decision?
Farmers was determined to be an "employing unit" pursuant to Minn.Stat. Sec. 268.04, subd. 9, and held to be responsible for paying unemployment taxes and complying with reporting requirements.
An employer cannot be held liable for employment taxes and be required to comply with reporting requirements unless it can be shown that the employer had the right to control the terms and conditions of claimant's employment. Minn.Stat. Sec. 268.04, subd. 12 (Supp.1983). In making that determination, the department considers at least 14 separate criteria. See Minn.Rules Sec. 3315.1000, et seq. If the employer does not exercise the necessary degree of control, the claimant is considered to be an independent contractor and not entitled to unemployment compensation benefits. Minn.Stat. Sec. 268.04, subd. 12 (Supp.1983).
During the hearing process, this analysis was applied to all decisions (prior to the vacation by the Chief Commissioner's Representative) and, in the final determination, Roder was determined to be responsible for paying the unemployment taxes and for complying with the reporting requirements.
However, the order vacating this final determination alleged new statutory grounds. In 1982, the legislature created a special exception to the traditional "control" analysis used to determine whether an employment relationship existed by passing the so-called "homeworker" amendment. This amendment added the following sentence to the definition of an "employing unit" found in Minn.Stat. Sec. 268.04, subd. 9 (1980):
For the purposes of sections 268.03 to 268.24 any agency providing or authorizing the hiring of homeworkers, personal care attendants, or other individuals performing similar services in the private home of an individual is the employing unit of the homeworker, attendant or similar worker whether the agency pays the employee directly or provides funds to the recipient of the services to pay for the services.
Minn.Laws 1982, 1st Sp.Sess., ch. 1 Sec. 1, codified as Minn.Stat. Sec. 268.04, subd. 9 (1982) (emphasis added). The corresponding rule promulgated by the Department of Economic Security provides:
Any agency providing or authorizing the hiring of homeworkers or personal care attendants in the private home of an individual is the employer of those individuals performing the services and the services are not considered domestic if the recipient would not receive the care unless provided or funded for by the agency. It is immaterial whether the agency pays the homeworker or attendant directly or if the agency provides the funds to the recipient.
8 MCAR Sec. 4.3104(C)(1) (renumbered as 1983 Minn.Rules Sec. 3315.3400, subp. 10) (emphasis added).
The question of whether Farmers is covered under the "homeworker" amendment to Minn.Stat. Sec. 268.04, subd. 9, is a question of law upon which this court is free to exercise its independent judgment. Smith v. Employers' Overload Company, 314 N.W.2d 220 (Minn.1981). The court's function, guided by ordinary rules of construction, is to ascertain the legislative intent and to give effect to it. Nordling v. Ford Motor Co., 231 Minn. 68, 77, 42 N.W.2d 576, 582 (1950).
In recognizing that handicapped persons are often unable to meet the financial burden of paying unemployment taxes or are unable or incapable of complying with the reporting requirements, this special exception was crafted from the traditional "control" analysis provided in Minn.Rules Sec. 3315.1000, et seq. The amendment evinces a legislative intent to shift the financial and reporting burden from the handicapped person to the agency which provides the funds to pay the homeworker.
The legislature also provided that it does not matter whether the agency pays the employee directly or simply provides the funds to the recipient of the services to pay for those services.
In vacating the decision of the Commissioner's Representative, the Chief Commissioner's Representative found that this case was governed by Minn.Stat. Sec. 268.04, subd. 9 (1982) and 8 MCAR 4.3104(C)(1), noting:
In this instance, it is the providing of funds to hire the worker that is decisive in establishing the employer/employee relationship, for tax and benefit purposes, not the day-to-day direction and control of the work done. The law was so amended to provide for such workers, and the rule was so drafted because the party receiving the services is seldom financially able to support the tax necessary to provide the benefits arising from the employment.
Farmers argues correctly that the amendment was intended to shift the burden only to governmental agencies.
Legislative history indicates that the intent of the legislature was to apply the statute solely to state or local government agencies.
The "homeworker" amendment originated in hearings on S.F. 203, an unemployment compensation bill that never passed. On February 11, 1982, the bill was presented to the Unemployment Insurance Subcommittee at a meeting that was open for public testimony.
During testimony, a member of the Legal Services...
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