Case Title: HEALTH CARE ASSOCIATES, INC. v. OKLAHOMA EMPLOYMENT SECURITY COMMISSION

Citation: 

Docket Number: 92864

State: oklahoma

Court: Oklahoma Supreme Court

Date: 2001-06-12T00:00:00Z

Document:
HEALTH CARE ASSOCIATES, INC. v. OKLAHOMA EMPLOYMENT SECURITY COMMISSION  HEALTH CARE ASSOCIATES, INC. v. OKLAHOMA EMPLOYMENT SECURITY COMMISSION 2001 OK 50 26 P.3d 112 72 OBJ 1811 Case Number: 92864 Decided: 06/12/2001 Mandate Issued: 07/06/2001 Health Care Associates, Inc., Appellee v. Oklahoma Employment Security Commission, Appellant CERTIORARI TO COURT OF CIVIL APPEALS DIVISION III ¶0 Assessment Board of Oklahoma Employment Security Commission determined that certain nurses were employees and not independent contractors. District Court of Cleveland County, Honorable William C. Hetherington, Jr., reversed. Court of Civil Appeals, division III, reversed the district court. CERTIORARI PREVIOUSLY GRANTED; OPINION OF COURT OF CIVIL APPEALS VACATED; TRIAL COURT AFFIRMED. James Hasty Bellingham, Oklahoma City, Oklahoma, for Appellee. Margaret R. Dawkins, General Counsel, Oklahoma Employment Security Commission, Oklahoma City, Oklahoma, for Appellant. HODGES, J. [26 P.3d 113] ¶1 This matter raises the sole issue of whether certain nurses were "employees" rather than "independent contractors" for purposes of unemployment taxes. This Court holds that the nurses met the statutory requirements for independent contractor status. ¶2 Appellee, Health Care Associates, Inc. (HCA), places nurses on a part-time or temporary basis at hospitals and nursing homes. It requires nurses to be licensed, but otherwise exerts no supervisory control over them. HCA provides no benefits, insurance, healthcare, vacation pay, retirement, uniforms, equipment, or malpractice insurance. Continuing professional education and professional licenses are the responsibility of the individual nurse. Each nurse contracts separately with HCA. None of the nurses are required to accept any assignment to a particular facility. They may work as little or as much as they choose. All instructions concerning nursing duties are given by the healthcare facility based on the facility's internal policies and procedures. None of the HCA owners or staff have any nursing qualifications or expertise in nursing. ¶3 HCA considered the nurses to be independent contractors, rather than employees, and paid no unemployment taxes. Appellant, Oklahoma Employment Security Commission (Commission), assessed unemployment taxes against HCA. Its Assessment Board determined that the nurses were employees of HCA. ¶4 On appeal, the district court reversed that decision holding that the nurses were independent contractors under the Employment Security Act of 1980, Okla. Stat. tit. 40, §§ 1-101 through 9-104 (1991). The Court of Civil Appeals reversed the district court and this Court granted certiorari review. The issue of law presented is reviewed de novo. Kluver v. Weatherford Hosp. Auth., 859 P.2d 1081 , 1084 (Okla. 1993). Title 40, section 1-210 (14) of the Oklahoma Statutes provides: Notwithstanding any other provision of this subsection, services performed by an individual for wages or under any contract of hire shall be deemed to be employment subject to the Employment Security Act of 1980 unless and until it is shown to the satisfaction of the Commission that: (a) such individual has been and will continue to be free from control or direction over the performance of such services, both under the contract of hire and in fact; and (b) such individual is customarily engaged in an independently established trade, occupation, profession, or business; or [26 P.3d 114] (c) such service is outside the usual course of the business for which such service is performed and that such service is performed outside of all the places of business of the enterprise for which such service is performed. Thus, independent contractor status exists only when subpart "a" and "b" or "a" and "c" are met. ¶5 The Court of Civil Appeals agreed with the Commission in holding that subpart "b" had not been met because none of the HCA nurses had a proprietary interest in a nursing enterprise operated independently from HCA and thus, are not "customarily engaged in an independently established trade, occupation, profession, or business." The Commission opines that in order to meet the subpart "b" requirement each HCA nurse must maintain an independently established nurse's office or business with a business listing in the telephone directory and thus, a financial stake in an entity separate from HCA. ¶6 Brenner applied the same statutory test to a tailor who leased his shop to his former employees. There were no changes in the activities of the owner or the lessees. The tailor continued to take the orders and measure the customers while the lessees continued to make suits. The Court found that the "lessees were not interested in establishing independent businesses" and that "the reason for the reorganization of [the tailor's] business was to avoid [the unemployment] tax." Id. at 242. ¶7 Brenner's requirement of an independent business was applied to lessees whom the tailor claimed were individual proprietors. The only way in which the former employees could be considered to be independent contractors was by having an independently established business. By contrast, the nurses in this matter are established in an independent profession by virtue of their training and license to practice nursing. Subpart "b" does not require that these professionals each independently maintain an office. To so hold would transform the Legislature's use of the disjunctive in "trade, occupation, profession, or business" into a requirement that the nurses have both a profession and a business. ¶8 The Commission warns that this holding would classify all professionals as independent contractors. That argument, however, fails to recognize the subpart "a" requirement that "[s]uch individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of hire and in fact." Only those professionals who operate free from direction or control will meet the section 1-210 (14) test for independent contractor. An example of such an instance is found in Christesson Reporting Service v. Oklahoma Employment Security Commission, 903 P.2d 336 (Okla. Ct. Civ. App. 1995) (cert. denied Sept. 29, 1995). ¶9 In Christesson, ¶10 In this matter, HCA's relationship with the nurses similarly lacked direction and control. The freedom from control by HCA along with the fact that the nurses worked in an independently established profession demonstrates that HCA is a broker of the services of individual contractors. CERTIORARI PREVIOUSLY GRANTED; OPINION OF COURT OF CIVIL APPEALS VACATED; TRIAL COURT AFFIRMED. ¶11 Hargrave, C.J., Watt, V.C.J., Hodges, Lavender, Opala, Kauger, Summers, Winchester, JJ., concur. ¶12 Boudreau, J., dissents. FOOT