Tasters Ltd., Inc. v. Department of Employment Sec.

• Decision Date: 24 September 1993
• Docket Number: No. 920659-CA,920659-CA
• Citation: 863 P.2d 12
• Parties: TASTERS LTD., INC., Petitioner, v. DEPARTMENT OF EMPLOYMENT SECURITY, Respondent.
• Court: Utah Court of Appeals

Page 12

863 P.2d 12

TASTERS LTD., INC., Petitioner, v. DEPARTMENT OF EMPLOYMENT SECURITY, Respondent.

No. 920659-CA.

Court of Appeals of Utah.

Sept. 24, 1993.

Gary E. Doctorman and Richard M. Marsh, Salt Lake City, for petitioner.

Winston M. Faux and Emma R. Thomas, Salt Lake City, for respondent.

Before BILLINGS, GARFF and ORME, JJ.

OPINION

ORME, Judge:

Petitioner, Tasters Limited, Inc., seeks review of the decision of the Board of Review of the Industrial Commission determining Tasters' workers to be employees and not independent contractors for purposes of Utah's Employment Security Act (UESA), Utah Code Ann. §§ 35-4-1 to -26 (1988). The Board rendered its decision in response to an earlier remand by this court. Tasters Ltd. v. Department of Employment Sec., 819 P.2d 361 (Utah App.1991) (Tasters I ). We reverse.

FACTS

Tasters is in the business of providing workers, primarily at the request of food brokers and product manufacturers and their representatives (hereafter collectively referred to as "brokers"), for demonstrations of various products in grocery and department stores. Tasters maintains a list of approximately 2,000 individuals willing to perform demonstrations. ¹

These individuals contact Tasters, or vice versa, concerning the availability of demonstrations. ² If a demonstration is available, Tasters will inform the individual of the time, place, and type of demonstration that is requested by the particular broker. The demonstrator is then free to accept or reject the demonstration for any reason, personal or otherwise. No reprimand or disciplinary action is taken against an individual who declines a demonstration. ³

Upon acceptance of a particular demonstration, the demonstrator is solely responsible for its completion. Demonstrators are not, however, required to personally perform the demonstration. A demonstrator may choose to assign the demonstration to another individual. Tasters has no veto power over the choice of the replacement or even the practice of engaging a substitute. Indeed, Tasters frequently does not even have knowledge of the particular substitution. If the assigned demonstration is completed, by whomever and however, Tasters is obligated to pay the individual who originally accepted the demonstration.

When an individual accepts a demonstration, he or she ordinarily works according to the schedule, fixed by the broker, as communicated by Tasters. Demonstrators are, however, free to negotiate with the broker or store owner to change the time of the demonstration. Upon arrival at the store, the demonstrators are left unsupervised to perform the demonstration. There is no direct control over how a demonstration is conducted--the method and manner are left entirely to the discretion of the demonstrator. Tasters has, however, prepared and occasionally disseminated a one page list of fourteen "VERY IMPORTANT THINGS TO REMEMBER!!!" Nonetheless, Tasters provides no formalized training to the demonstrators. ⁴

Any equipment needed for a demonstration, such as a card table, electric frying pan, crock pot, tablecloth, apron, and related utensils, is provided and paid for by the individual demonstrator. To the minimal extent necessary, demonstrators must use their own phones and office space as Tasters does not provide them with any such facilities. Moreover, demonstrators are responsible for any theft, breakage of their equipment, or any damage they cause to the premises or customers of a store.

Demonstrators must complete a one-page report at the conclusion of the demonstration indicating which product was demonstrated, the amount of product sold during the demonstration, and any expenses the demonstrator incurred for disposable items such as toothpicks, napkins, and paper cups. Both the store manager and the demonstrator are required to sign this report and both may include any feedback they deem relevant. The report is then submitted to Tasters for resubmission to the broker whose product was demonstrated. (Tasters does not use the report to evaluate the demonstrator's performance.) The report contains a list of charges, supported by receipts, of all the demonstrator's reimbursable expenses for disposable items. Reimbursement is made by the broker, not Tasters.

Once the demonstrator returns the report to Tasters, Tasters pays the individual the amount previously agreed upon for the demonstration. A demonstration which requires cooking or frying often pays more than a demonstration that only involves passing out ready-to-eat samples.

In 1989, Tasters sought a ruling from the Utah Department of Employment Security as to the status of its demonstrators under UESA, and Tasters' corresponding responsibility, if any, to make contributions to the unemployment compensation funds, as a result of then-recent changes in the statutory test for determining whether a worker is an employee or an independent contractor. See Utah Code Ann. § 35-4-22(j)(5) (Supp.1989). ⁵ On August 31, 1989, the Department issued a formal determination that Tasters' demonstrators were employees, not independent contractors. ⁶ Tasters appealed to an Administrative Law Judge, who affirmed the Department's determination. Consequently, Tasters filed an appeal of the ALJ's decision with the Board of Review. On July 10, 1990, the Board entered its first decision affirming the determination that demonstrators were employees of Tasters. Tasters then filed a petition for writ of review with this court, which culminated in Tasters I. The Board relied on the twenty factors, (A)-(T), set forth in Utah Code Ann. § 35-4-22(j)(5) (Supp.1989), ⁷ to determine the status of Tasters' demonstrators. However, because "[n]o findings were made [by the Board] as to why some of the factors were insignificant, while others were considered significant," this court reversed the Board's determination and remanded the action for additional findings of fact. Tasters I, 819 P.2d at 367.

Upon remand, the Board changed its classification of eleven of the twenty factors, apparently as a consequence of its further consideration as ordered by this court. ⁸ Nonetheless, on September 9, 1992, the Board finalized its second decision, again concluding that "Tasters demonstrators are not independent contractors within the meaning of § 35-4-22[ (j)(5) ] of the Utah Employment Security Act."

Tasters has now petitioned this court for review of the Board's second decision. Tasters presents three key claims on appeal (1) that the Board's findings of fact are not supported by substantial evidence; (2) that the Board exceeded the scope of its legislative authority by improperly interpreting and expanding key factors in the statute; and (3) that the Board incorrectly determined that demonstrators are employees and not independent contractors. ⁹

STANDARDS OF REVIEW

Our review of the Board's decision is governed by the applicable provisions of the Utah Administrative Procedures Act (UAPA), Utah Code Ann. § 63-46b-16(4) (1989). The cited section governs judicial review of formal adjudicative proceedings. Under this section, varying standards of review are applicable to agency decisions depending on the nature of the challenge to such decisions. UAPA requires this court to grant relief to a petitioner if, inter alia,

(b) the agency has acted beyond the jurisdiction conferred by any statute;

. . . . .

(d) the agency has erroneously interpreted or applied the law;

. . . . .

(g) the agency action is based upon a determination of fact, made or implied by the agency, that is not supported by substantial evidence when viewed in light of the whole record before the court; [or]

(h) the agency action is:

(i) an abuse of the discretion delegated to the agency by statute[.]

Utah Code Ann. § 63-46b-16(4) (1989).

A. Factual Findings

Tasters first challenges the correctness of the Board's findings of fact. Tasters claims that the Board's findings of fact are not supported by substantial evidence as required under section 63-46b-16(4)(g). Under UAPA, an agency's factual findings will be affirmed "only if they are 'supported by substantial evidence when viewed in light of the whole record before the court.' " Grace Drilling Co. v. Board of Review, 776 P.2d 63, 67 (Utah App.1989) (quoting Utah Code Ann. § 63-46b-16(4)(g) (1988)). See Department of the Air Force v. Swider, 824 P.2d 448, 451 (Utah App.1991).

In First National Bank of Boston v. County Board of Equalization, 799 P.2d 1163 (Utah 1990), the Utah Supreme Court stated that " '[s]ubstantial evidence' is that quantum and quality of relevant evidence that is adequate to convince a reasonable mind to support a conclusion." Id. at 1165. The Court also stated that appellate courts, when applying the substantial evidence test under UAPA, are required to consider not only the evidence supporting the Board's findings but also the evidence negating them. Id. See Swider, 824 P.2d at 451; Grace Drilling, 776 P.2d at 68. Additionally, it is important to note that the substantial evidence test mandates that the party challenging the Board's factual findings must marshall all of the evidence supporting the Board's findings and show that despite the supporting facts and all reasonable inferences that can be drawn therefrom, the findings are not supported by substantial evidence given the record as a whole. Grace Drilling, 776 P.2d at 68. See Swider, 824 P.2d at 451; Heinecke v. Department of Commerce, 810 P.2d 459, 464 (Utah App.1991); Sampson v. Richins, 770 P.2d 998, 1002 (Utah App.), cert. denied, 776 P.2d 916 (Utah 1989).

B. Legal Conclusions

Tasters' second claim is that the Board erred in its interpretation and application of section 35-4-22(j)(5) in two closely related respects. First, Tasters asserts that the Board exceeded its legislatively delegated authority by improperly interpreting and applying key factors set forth in the statute. Second, Tasters argues that the Board erred in concluding that...