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

• Decision Date: 17 October 1991
• Docket Number: No. 900451-CA,900451-CA
• Citation: 819 P.2d 361
• Parties: TASTERS LTD., INC., Petitioner, v. DEPARTMENT OF EMPLOYMENT SECURITY, Respondent.
• Court: Utah Court of Appeals

Page 361

819 P.2d 361

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

No. 900451-CA.

Court of Appeals of Utah.

Oct. 17, 1991.

Gary E. Doctorman (argued), Richard M. Marsh, Parsons, Behle & Latimer, Salt Lake City, for petitioner.

K. Allan Zabel, Emma R. Thomas (argued), Special Asst. Attys. Gen., Dept. of Employment Security, Salt Lake City, for respondent.

Before GARFF, GREENWOOD and JACKSON, JJ.

AMENDED OPINION ¹

JACKSON, Judge:

Petitioner, Tasters Limited, Inc., seeks review of a final decision of the Board of Review of the Industrial Commission finding that product demonstrators are employees for purposes of the Utah Employment Security Act. We reverse and remand.

FACTS

Tasters is in the business of providing workers to demonstrate various products in grocery and department stores. Tasters maintains a list of approximately 2000 individuals who are demonstrators. Demonstrators are contacted by Tasters regarding the availability of demonstrations. Demonstrators may accept or reject any given demonstration. Once a demonstrator accepts a particular assignment, he or she is responsible for that demonstration and must complete the assignment or obtain a replacement. Tasters provides no formalized training but provides each demonstrator with a two-page instruction sheet outlining how the demonstrations are to be carried out. The instructions address how the demonstration should be conducted, what breaks the demonstrator may take, how the product should be displayed, and what attire should be worn. While orientation and other training sessions are occasionally held, attendance is not required.

Demonstrators are paid by the job, and provide their own equipment. On several In 1989, Tasters sought a ruling from the Utah Department of Employment Security to determine whether demonstrators were to be considered employees or independent contractors of Tasters, based on recent changes in Utah Code Ann. § 35-4-22(j)(5) (Supp.1989). ² The Department found that under the Utah Employment Security Act (the Act), demonstrators were employees of Tasters, and not independent contractors. Tasters appealed to an Industrial Commission Administrative Law Judge (ALJ), who affirmed the Department's ruling. Tasters then appealed to the Board of Review, which affirmed the ALJ's decision. This petition followed.

occasions, however, Tasters has provided demonstrators with microwave ovens. Demonstrators are reimbursed for incidental expenses such as toothpicks or paper products used in conjunction with a demonstration. Demonstrators must fill out a one-page report upon completion of a demonstration, indicating what product was demonstrated, how much of the product was sold during the demonstration, and any expenses incurred. In addition, demonstrators may include the responses of customers, and add their own comments on the report form. Store managers may provide feedback to Tasters on the report form.

In its decision, the Board categorized the twenty factors set forth in section 35-4-22(j)(5) into four general categories. The Board then identified which of the factors were relevant to the present case, and determined whether the evidence with respect to those factors established "the freedom and control necessary to support a finding of independent contractor status."

Tasters argues four issues before this court: (1) that the Board improperly interpreted the statute by categorizing the twenty factors into four broad groupings, and by giving more weight to some factors and less weight to others; (2) that the Board failed to analyze all of the factors set forth in the statute; (3) that the Board failed to make certain findings of fact when the uncontroverted evidence supports those findings; and (4) that the Board incorrectly determined demonstrators to be employees and not independent contractors. In addition, Tasters urges this court to review the record and make our own findings of fact based on Tasters's version of the evidence.

STANDARD OF REVIEW

The Board's application of section 35-4-22(j)(5) to its factual findings involves a mixed question of law and fact. McGuire v. Department of Employment Sec., 768 P.2d 985, 987 (Utah App.1989) (citations omitted). In reviewing an agency's determination of mixed questions of fact and law, we have stated that "we will not disturb the Board's application of its factual findings to the law unless its determination exceeds the bounds of reasonableness and rationality." Pro-Benefit Staffing v. Board of Review, 775 P.2d 439, 442 (Utah App.1989). Although the Utah Supreme Court has also followed this approach in numerous cases, ³ that court recently conducted an in-depth analysis of the standard of review required under Utah Code Ann. § 63-46b-16(4) (1989) of the Utah Administrative Procedures Act (UAPA), and concluded that the Pro-Benefit Staffing approach was inconsistent with the analysis that should be applied. Morton Int'l v. Auditing Div. of the Utah State Tax Comm'n, 814 P.2d 581, 586-88 (Utah 1991).

In Morton Int'l, the Utah Supreme Court stated that

it is not the characterization of an issue as a mixed question of fact and law or Id. (citations omitted). The court concluded that "absent a grant of discretion, a correction-of-error standard is used in reviewing an agency's interpretation or application of a statutory term." Id. at 588. See also Mor-Flo Indus. v. Board of Review, 817 P.2d 328, 330 (Utah App.1991). The Morton court however, qualified this conclusion by indicating that this analysis will not significantly affect review of agencies' interpretations and applications of their own statutes because "where we would summarily grant an agency deference on the basis of its expertise, it is also appropriate to grant the agency deference on the basis of an explicit or implicit grant of discretion contained in the governing statute." Morton Int'l, 814 P.2d at 588 (emphasis added). Therefore, to determine the appropriate standard of review in this case, we must decide if section 35-4-22(j)(5) grants discretion to the Board to give effect to the statute.

the characterization of the issue as a question of general law that is dispositive of the determination of the appropriate level of judicial review. Rather, what has developed as the dispositive factor is whether the agency, by virtue of its experience or expertise, is in a better position than the courts to give effect to the regulatory objective to be achieved.

In utilizing statutory language such as "as determined by the commission," the legislature has explicitly granted discretion to some agencies. See id. & n. 41. Grants of discretion may also be implied from statutory language such as "equity and good conscience." Id. & n. 41. Similarly, in the statute at issue here, the legislature's use of the language "unless it is shown to the satisfaction of the commission," Utah Code Ann. § 35-4-22(j)(5) (Supp.1989), "if the [commission determines that the] weight of the evidence supports that finding," id., and "considered [by the commission] if applicable," id., indicates an explicit grant of discretion to the Board. ⁴

The Board is given latitude under the statutory language to weigh and analyze the applicability of each of the twenty factors to individual facts. The language in the statute bespeaks a legislative intent to delegate interpretation of that statute to the agency. Morton Int'l, 814 P.2d at 588-89. Given that the legislature granted discretion to the agency in interpreting section 35-4-22(j)(5), it is in a better position than the court to give effect to the legislative intent, and therefore, we will not disturb the Board's decision unless it is unreasonable. ⁵

As to Tasters' challenge to the Board's factual findings, agency decisions regarding basic facts have historically been considered conclusive if they were supported by the evidence. See McGuire, 768 P.2d at 987 (citation omitted). This test allowed appellate courts to review only that part of the record which supported the Board's findings. See Grace Drilling v. Board of Review, 776 P.2d 63, 68 n. 7 (Utah App.1989). Proceedings which were commenced after January 1, 1988, are governed by Utah Code Ann. § 63-46b-16(4) (1989) of UAPA, and "[w]e now review both sides of the record to determine whether the Board's findings are supported by substantial evidence." Id. "In undertaking such a review, this court will not substitute its judgment as between two reasonably conflicting views, even though we may have come to a different conclusion had the case come before us for de novo review." Id. at 68 (citations omitted).

ANALYSIS

A. Application of the Statute

Tasters first argues that the Board improperly interpreted the statute by utilizing an arbitrary categorization, and by giving more weight to some factors and less weight to others.

The statutory test at issue in this case is set forth in Utah Code Ann. § 35-4-22(j)(5) (Supp.1989). Prior to April 24, 1989, the statute utilized a two-part ("A-B") test to determine whether an individual was an independent contractor or an employee for purposes of the Act. That test required that the individual performing the services be "free from control or direction over the performance of those services" and be "customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service." Utah Code Ann. § 35-4-22(j)(5) (1988).

The A-B test was replaced in April 1989 with a test that relied upon twenty factors which the Internal Revenue Service had identified as significant in determining independent "On only one point as to the relative weight of the various tests is there an accepted rule of law: It is constantly said that the right to control the details of the work is the primary test." 1C A. Larson, The Law of Workmen's Compensation, § 43.30 at 8-10 (1990) [hereinafter Larson]. The Restatement (Secon...