Title: AFM Messenger Service, Inc. v. Department of Employment Security

State: illinois

Issuer: Illinois Supreme Court

Document:

Docket No. 89984-Agenda 25-March 2001.
AFM MESSENGER SERVICE, INC., Appellant, v. THE 
DEPARTMENT OF EMPLOYMENT SECURITY et al.,
Appellees.
Opinion filed September 20, 2001.
 
	JUSTICE FITZGERALD delivered the opinion of the court:
	In this appeal we consider whether delivery drivers for AFM
Messenger Service, Inc. (AFM), were "independent contractors"
within the meaning of section 212 of the Unemployment Insurance
Act (820 ILCS 405/212 (West 2000)). In two separate
administrative proceedings, the Department of Employment
Security (Department) determined that the drivers were employees
and not independent contractors. AFM was, therefore, liable for
unemployment insurance contributions. On administrative review,
the circuit court confirmed. The appellate court, in a consolidated
appeal, held that the agency decisions were not clearly erroneous
and affirmed. 315 Ill. App. 3d 308. We granted AFM's petition for
leave to appeal (see 177 Ill. 2d R. 315) and now affirm the
judgment of the appellate court.



BACKGROUND
1993 Agency Decision
	In June 1990, a former clerical worker for AFM filed a claim
for unemployment benefits, which triggered an audit of AFM by
the Department. Among the individuals included in the audit were
AFM's delivery drivers. The audit resulted in a determination and
assessment against AFM for over $12,000 in unpaid
unemployment insurance contributions for 1988 and 1989. AFM
filed a protest and petition for hearing. AFM contended, in
relevant part, that it was exempt from making unemployment
contributions in connection with the drivers' services and
compensation because the drivers were independent contractors
under section 212. On January 26, 1993, a hearing was held before
a representative of the Director of Employment Security
(Director).
	At the hearing, Susan Vitula, a co-owner of AFM, testified
that AFM is a small-package same-day delivery service, which has
been operating in the Chicago area since 1986. According to
Vitula, all drivers must sign a contract, which AFM supplies. The
brief, 10-line contract used by AFM during 1988 and 1989
provided that AFM and the named driver "agree to contract for the
rendition of personal services as an independent broker/operator"
and that "[i]t is understood [the driver] is acting as an independent
contractor subject to all the necessary laws, procedures, etc.,
related to an independent contractor, including, but not limited to,
Federal and State Income taxes on his net income and any Self
Employment, Unemployment, Minimum or any other taxes
normally paid by an independent contractor."
	Vitula also testified that, in accordance with the rules and
regulations of the Illinois Commerce Commission (ICC), all
drivers were required to enter into an equipment lease with AFM.
The form of the equipment lease was provided by the ICC, and the
required $25 ICC filing fee was paid by AFM. Pursuant to the
lease, the named driver agreed to lease his or her vehicle to AFM
for a period not to exceed three years. The lease also provided that
AFM would compensate the driver on a weekly basis. The
compensation would be computed as a percentage of the total
revenue derived from operation of the leased vehicle. Vitula
explained that the drivers were paid a "commission" based on the
price of each delivery they completed. Most drivers were paid a
50% commission when they started. In order to receive their
commissions, which were paid on Friday, drivers were required to
drop off or mail their delivery tickets to AFM. Finally, Vitula
testified that the drivers did not wear uniforms, and that when
AFM offered the drivers a company baseball cap, many of the
drivers declined.
	Two drivers also testified on behalf of AFM. According to
AFM's counsel, their testimony was representative of all AFM
drivers during the years 1988 and 1989. Brian Lhotka testified that
he learned about AFM through a friend, and in 1989 began making
deliveries for AFM's customers. Typically, Lhotka would call
AFM by 8 a.m. to let the dispatcher know that he was available for
work. AFM could also reach him at home. According to Lhotka,
he was not required to report to AFM every day, nor was he
required to work a specific number of days or a specific number of
hours per day. Lhotka, however, usually made himself available
for work Monday through Friday; he also made himself available
for night deliveries, when the rates were higher. AFM did not
assign a territory to Lhotka or limit the area in which he could
work. AFM imposed no time constraints in connection with the
deliveries, but Lhotka worked within the time constraints imposed
by AFM's customers. AFM did not specify what route Lhotka
should take to make the deliveries, and he was free to decline any
delivery. Lhotka further testified that AFM issued no rules or
regulations, conducted no training courses or meetings, and
required no uniform. When AFM offered him a baseball cap with
the AFM insignia, Lhotka declined.
	Lhotka signed the form contract that AFM supplied, under
which he was paid a 60% commission on deliveries. In order to get
paid, Lhotka would turn in his delivery tickets to the AFM office.
He usually did this when he was in the area and it was convenient
to do so. Lhotka would sometimes pick up his check from the
AFM office on Friday, or from the business next door to AFM
where the checks were left. Lhotka testified that he considered
himself an independent contractor and could terminate his services
for AFM at any time without reason. He received no paid vacation
time, no paid sick days, and no pension benefits from AFM. He
was not eligible for any compensation other than his commission,
and AFM did not deduct taxes from his commissions. Each year
he worked as a delivery driver, he received an Internal Revenue
Service Form 1099 (miscellaneous income) from AFM. As part of
his 1989 federal tax return, Lhotka filed a Schedule C (profit or
loss from business), showing approximately $20,000 of income
from his messenger service business. Lhotka testified that although
he had the right to work for other messenger service companies,
in 1989 he performed delivery work solely for AFM. Lhotka
further testified that his investment in his business consisted of the
vehicle he owned; the upkeep and maintenance on his vehicle, no
part of which AFM paid; and the maps he purchased. AFM
supplied Lhotka with a beeper and radio, for which he paid AFM
a use fee. Although he had the right to hire, at his own expense, an
assistant to help with deliveries, Lhotka never hired an assistant.
	Lhotka also signed the required ICC lease with AFM.
Pursuant to ICC regulations, Lhotka displayed two signs in his
vehicle windows indicating that the vehicle was leased to AFM.
When picking up packages and making deliveries, Lhotka
indicated to the customer that he was with AFM.
	 Angelo Cisneros testified that he was a driver for AFM
beginning in 1988. He learned about AFM through his brother,
who also drove for AFM. Cisneros' testimony was generally
consistent with Lhotka's testimony. Cisneros signed a contract
with AFM, under which he was paid a 60% commission, and an
ICC equipment lease. He considered himself an independent
contractor. Cisneros testified that he was not required to report to
AFM at any particular day or time, and that he was free to make
his services available to AFM whenever he chose. Typically,
services with AFM were initiated when AFM paged him, but
Cisneros was free to refuse the pickup or delivery. According to
Cisneros, AFM did not assign him a territory or limit the area in
which he could work. AFM did not provide any rules or
regulations. AFM did not require a uniform, and although AFM
gave him a company baseball cap, he was not required to wear it.
Cisneros displayed the required signs in his vehicle, indicating that
it was leased to AFM, and he sometimes identified himself with
AFM when making a pickup. AFM did not have the right to
appoint or approve a helper for Cisneros.
	On his income tax return, Cisneros reported that he was self-employed. Cisneros testified that his investment in his business
was his automobile, on which he paid the insurance, gas, repairs
and maintenance, without reimbursement from AFM. Cisneros
had his own beeper, but rented a radio from AFM. During 1988
and 1989, Cisneros testified that he also worked for his father,
although the income was probably too small to report. In 1990,
Cisneros' entire income was from AFM. Although Cisneros
worked for other messenger companies, he only worked for one
company at a time.
	Following the hearing, the Director's representative
determined that AFM had failed to sustain its burden of proof that
the drivers were independent contractors under section 212.
According to the representative, AFM had not established that the
drivers were free from AFM's control and direction, as required
under section 212(A); that the drivers' services were performed
outside of the usual course or places of AFM's business, as
required under section 212(B); and that the drivers were engaged
in independently established businesses, as required under section
212(C). See 820 ILCS 405/212 (West 2000). The representative
concluded that AFM was liable for unpaid unemployment
insurance contributions. Significantly, the representative accepted
AFM's argument that any payments to the drivers should be
allocated two-thirds to rental of the drivers' vehicles, and one-third
to wages. This allocation reduced AFM's liability from
approximately $12,800 to approximately $6,400.
	Over AFM's objection, the Director adopted the decision of
the representative. On administrative review, the circuit court of
Cook County confirmed the Director's decision as neither against
the manifest weight of the evidence nor contrary to law.



1996 Agency Decision
	In August and September 1994, Mark Przybylinski delivered
packages for AFM's customers. In early 1996, in connection with
a prior claim for unemployment benefits made by Przybylinski, a
claims adjudicator for the Department found that the wages paid
to him by AFM could not be used to establish benefit credit.
Przybylinski appealed this finding and a hearing before a referee
was held on February 21, 1996.
	At the hearing, Przybylinski testified that he learned about
driving opportunities with AFM through a newspaper
advertisement in the employment section. Prior to performing
deliveries for AFM, the company asked him to spend four hours
with another driver to learn the operation. During his brief
association with AFM, he was required to call in daily to the AFM
dispatcher, even when he was sick. AFM also gave Przybylinski
a pager, so that AFM could contact him with changes in delivery
instructions or advise him of additional items for pickup.
	Przybylinski admitted that he signed a contract with AFM
under which he would be considered an independent contractor.
The contract that Przybylinski signed in 1994 was not the same
contract used by AFM during 1988 and 1989. The 1994 contract
stated in relevant part:
			"AFM *** is engaged in the general messenger service
in the City of Chicago *** and desires to contract with
Mark Przybylinski, hereinafter referred to as 'Contractor,'
to deliver various items placed with AFM by its
customers.
* * *
			AFM agrees that it will advise Contractor of various
items for delivery and said delivery shall be evidenced in
the form of a ticket specifying the place to which, and the
person or party to whom, such items are to be delivered.
Contractor shall be free to accept or reject the item or
items. In the event contractor elects to accept for delivery
any item or items, then it is mutually agreed by and
between the parties that the delivery of such items or
items as [sic] shall be accepted in accordance with the
following terms and provisions.
			1. Contractor agrees to furnish a vehicle *** and *** a
driver and all gasoline, oil, lubricants, tires and other
accessories to such vehicle, and to perform all repairs and
maintenance thereto. *** AFM shall not be responsible or
liable to Contractor for any of the expense or cost of
operation, maintenance, or repairs of such vehicle.
			2. AFM will furnish to its customers delivery tickets
with respect to each item to be accepted and delivered by
Contractor. *** Contractor will be supplied with a
statement by AFM each week which will identify each
delivery completed by the Contractor, and the commission
earned by the Contractor computed and based on the
information contained in each delivery ticket.
			3. It is hereby declared to be the express intention of
each of the parties that the relationship created between
them by this contract is that of employer-independent
contractor. *** Contractor shall have the right to hire a
person to assist Contractor in the delivery of any item or
items. Contractor shall have all control, direction, and
supervision with respect to the physical details of the
work to be performed and the manner in which the work
is performed. AFM shall not have the right to exercise any
control, direction or supervision over Contractor except to
prescribe the destination for the delivery of the item or
items to be transported by Contractor, and Contractor
shall be bound by delivery instructions from the customer.
Contractor shall receive as compensation an agreed
percentage of the fees paid by the customer to AFM.
			4. *** Contractor further agrees to secure *** public
liability and property damage insurance *** and to furnish
AFM a copy of the policy ***.
			5. *** The acceptance by Contractor of a delivery ticket
will constitute conclusive evidence that deliveries by
contractor shall be performed *** pursuant to the terms,
conditions and provisions of this agreement.
			6. This agreement may be terminated at any time by
AFM or Contractor. ***"
	Consistent with the provisions of the contract, Przybylinski
testified that he paid his own automobile expenses and was
required to maintain liability and property damage insurance. He
also testified that he could choose his own route when making
deliveries and could hire a helper at his own expense. He did not
know whether he could have rejected a delivery and did not know
whether he could have worked for another company at the same
time. Przybylinski did not remember signing an equipment lease,
but recalls placing a sign in the window of his vehicle to gain
access to loading docks. After two months, Przybylinski
voluntarily stopped making deliveries for AFM. He gave AFM a
week's notice and turned in his pager.
	Susan Vitula of AFM testified that prospective drivers would
initially spend time with an experienced driver to see if they really
wanted to do this type of work. Drivers were not required to
telephone AFM daily. Rather, those who wished to work on a
given day would call and advise the AFM dispatcher. If there was
a pickup in the driver's area, the dispatcher would give the driver
the details. Drivers were free to refuse a delivery with no penalty,
and were free to work for other companies. Drivers periodically
turned in their delivery tickets, either in person or by mail.
Payment to the drivers was based on an agreed percentage of the
delivery charges. Pursuant to ICC regulations, drivers were
required to sign equipment leases with AFM. AFM paid the ICC
filing fee. As to Przybylinski's affiliation with AFM, Vitula
testified that he never expressed dissatisfaction with the contract
or the job, and that he left without notice, advising the company by
telephone the same day that he took another job.
	On March 15, 1996, the referee issued his decision. The
referee concluded that AFM had failed to establish that
Przybylinski was an independent contractor under the three criteria
set forth in section 212. Accordingly, the wages paid to
Przybylinski by AFM could be used to establish benefit credit.
AFM appealed the referee's decision to the Board of Review
(Board). The Board affirmed the referee's decision. On
administrative review, the circuit court of Cook County confirmed
the Board's decision as neither against the manifest weight of the
evidence nor contrary to law.



Appellate Review
	The two cases were consolidated for appellate review. With
one justice dissenting, the appellate court affirmed the judgment
of the circuit court, which had confirmed the decisions of the
Director and Board, agreeing that AFM had failed to establish that
its drivers were independent contractors under section 212. 315 Ill.
App. 3d 308.(1) We granted AFM's petition for leave to appeal. See
177 Ill. 2d R. 315.



ANALYSIS
Standard of Review
	Before reaching the merits of this appeal, we must first
determine the applicable standard of review. Judicial review of a
decision of the Department is governed by the Administrative
Review Law (735 ILCS 5/3-101 et seq. (West 2000)). 820 ILCS
405/1100, 2205 (West 2000). Under the Administrative Review
Law, the scope of judicial review extends to all questions of law
and fact presented by the record before the court. 735 ILCS
5/3-110 (West 2000). The applicable standard of review, which
determines the degree of deference given to the agency's decision,
depends upon whether the question presented is one of fact, one of
law, or a mixed question of law and fact. City of Belvidere v.
Illinois State Labor Relations Board, 181 Ill. 2d 191, 204-05
(1998); Branson v. Department of Revenue, 168 Ill. 2d 247, 265
(1995).
	AFM maintains that the Department's decision presents a
question of law and is subject to de novo review. See Richard's
Tire Co. v. Zehnder, 295 Ill. App. 3d 48, 56-57 (1998). The
Department maintains, however, that this case presents a mixed
question of law and fact and that, pursuant to this court's decision
in City of Belvidere, the more deferential "clearly erroneous"
standard of review applies. We agree with the Department.
	A mixed question of law and fact is one "involv[ing] an
examination of the legal effect of a given set of facts." City of
Belvidere, 181 Ill. 2d  at 205. Stated another way, a mixed question
is one "in which the historical facts are admitted or established, the
rule of law is undisputed, and the issue is whether the facts satisfy
the statutory standard, or *** whether the rule of law as applied to
the established facts is or is not violated." Pullman-Standard v.
Swint, 456 U.S. 273, 289 n.19, 72 L. Ed. 2d 66, 80 n.19, 102 S. Ct. 1781, 1790 n.19 (1982); see also Lutheran Church of the Good
Shepherd v. Department of Revenue, 316 Ill. App. 3d 828, 831-32
(2000); Joel R. v. Board of Education of Mannheim School
District 83, 292 Ill. App. 3d 607, 612 (1997) (citing with approval
the Pullman-Standard definition of mixed questions).
	In City of Belvidere, this court reviewed an agency decision
which presented a mixed question of law and fact. There, the labor
relations board determined that the city had committed an unfair
labor practice when it refused to bargain with the firefighters
union over the city's decision to contract out paramedic services
to a private company. Under the Illinois Public Labor Relations
Act, to bargain collectively meant "to negotiate in good faith with
respect to wages, hours, and other conditions of employment." 5
ILCS 315/7 (West 1994). Thus, whether the city was obligated to
bargain over this matter turned on whether the city's decision to
contract out for paramedic services affected the "wages, hours and
other conditions" of the firefighters' employment. We determined
that the decision of the labor relations board was best considered
a mixed question of law and fact. We explained:
			"The Board's finding is, in part, factual because it
involves considering whether the facts in this case
support a finding that the City's decision affected
wages, hours and other conditions of employment.
Nevertheless, the Board's finding also concerns a
question of law because the phrase 'wages, hours and
other conditions of employment' is a legal term that
requires interpretation." City of Belvidere, 181 Ill. 2d  at
205.
	In the present case, the Department's decision also presents a
mixed question of law and fact. Its decision is, in part, factual
because it involves considering whether the facts support the
agency's finding that the AFM drivers are employees and not
independent contractors under section 212. Nevertheless, the
Department's decision also concerns a question of law because the
three statutory requirements for independent contractor status set
forth in section 212 (freedom from control and direction,
performance of services outside the usual course or places of
business, and establishment of an independent business) are
comprised of legal terms and concepts requiring interpretation.
	In City of Belvidere, we held that the standard of review
applicable to agency decisions that present a mixed question of
law and fact is the "clearly erroneous" standard. City of Belvidere,
181 Ill. 2d  at 205. We described this standard of review as lying
between the manifest weight of the evidence standard and a de
novo standard, so as to provide "some deference" to the agency's
decision. City of Belvidere, 181 Ill. 2d  at 205. We did not,
however, otherwise define this standard and did not explain where
on the continuum between the manifest weight standard and de
novo review the clearly erroneous standard lies. In applying this
standard, our appellate court, including the appellate court panel
in this case, has utilized the definition of "clearly erroneous"
adopted by the United States Supreme Court in the context of
Federal Rule of Civil Procedure 52(a) (Fed. R. Civ. P. 52(a)). See
Carpetland U.S.A., Inc. v. Department of Employment Security,
319 Ill. App. 3d 1068, 1073 (2000), appeal allowed, 195 Ill. 2d 576 (2001); Rogy's New Generation, Inc. v. Department of
Revenue, 318 Ill. App. 3d 765, 770 (2000); Board of Education of
Community Consolidated School District No. 59 v. State Board of
Education, 317 Ill. App. 3d 790, 796 (2000); Hormel Foods Corp.
v. Zehnder, 316 Ill. App. 3d 1200, 1205 (2000); Randolph Street
Gallery v. Zehnder, 315 Ill. App. 3d 1060, 1064 (2000); 315 Ill.
App. 3d at 312-13; Friends of Israel Defense Forces v.
Department of Revenue, 315 Ill. App. 3d 298, 303 (2000).
	Rule 52(a) provides in relevant part: "Findings of fact,
whether based on oral or documentary evidence, shall not be set
aside unless clearly erroneous, and due regard shall be given to the
opportunity of the trial court to judge of the credibility of the
witnesses." Fed. R. Civ. P. 52(a). In construing this rule, the
Supreme Court has held that "[a] finding is 'clearly erroneous'
when although there is evidence to support it, the reviewing court
on the entire evidence is left with the definite and firm conviction
that a mistake has been committed." United States v. United States
Gypsum Co., 333 U.S. 364, 395, 92 L. Ed. 746, 766, 68 S. Ct. 525,
542 (1948). See also Concrete Pipe & Products of California, Inc.
v. Construction Laborers Pension Trust, 508 U.S. 602, 622, 124 L. Ed. 2d 539, 563-64, 113 S. Ct. 2264, 2279 (1993) (quoting with
approval the United States Gypsum Co. definition of "clearly
erroneous").
	Review under the clearly erroneous standard of Rule 52(a) is
"significantly deferential." Concrete Pipe, 508 U.S.  at 623, 124 L. Ed. 2d  at 564, 113 S. Ct.  at 2280. The rationale for this deference
"is not limited to the superiority of the trial judge's position to
make determinations of credibility." Anderson v. City of Bessemer
City, 470 U.S. 564, 574, 84 L. Ed. 2d 518, 529, 105 S. Ct. 1504,
1512 (1985). Rather, deference is accorded based on the
"expertise" that comes with "experience" as the trial judge fulfills
his or her major role as fact finder. Anderson, 470 U.S.  at 574, 83 L. Ed. 2d  at 529, 105 S. Ct.  at 1512.
	We note that the deference accorded a trial judge's experience
and expertise under the federal rule is not unlike the deference
accorded decisions of our administrative agencies. Indeed, this
court has frequently acknowledged the wisdom of judicial
deference to an agency's experience and expertise. See
Abrahamson v. Illinois Department of Professional Regulation,
153 Ill. 2d 76, 97-98 (1992) (explaining that a significant reason
for giving substantial weight and deference to an agency's
interpretation of an ambiguous statute is that "agencies can make
informed judgments upon the issues, based on their experience and
expertise"); Greer v. Illinois Housing Development Authority, 122 Ill. 2d 462, 495-96 (1988) (noting that too much judicial
intervention in an administrative action may interfere with the
exercise of agency discretion and expertise); Massa v. Department
of Registration & Education, 116 Ill. 2d 376, 388 (1987)
(deferring to agency's expertise and experience and expressing a
reluctance to tamper with an agency decision revoking a
professional license); see also Office of the Cook County State's
Attorney v. Illinois Local Labor Relations Board, 166 Ill. 2d 296,
306 (1995) (requirement that a litigant exhaust administrative
remedies before seeking judicial review permits the agency to use
its special expertise in resolving the matter); Employers Mutual
Cos. v. Skilling, 163 Ill. 2d 284, 288 (1994) (under the doctrine of
primary jurisdiction, a matter should be referred to an
administrative agency when it has a specialized or technical
expertise that would help resolve the controversy); Central City
Education Ass'n v. Illinois Educational Labor Relations Board,
149 Ill. 2d 496, 523 (1992) (labor relations board is "uniquely
qualified" to answer certain questions involving collective
bargaining given its experience and understanding of the issues).
Even when we have reviewed an agency's interpretation of a
statute de novo, we have acknowledged that the agency's
interpretation was "relevant." Branson, 168 Ill. 2d  at 254. Further,
when we adopted the clearly erroneous standard of review for
mixed questions of law and fact, we again recognized the
experience and expertise of the agency and indicated that the
standard would be deferential to some degree. City of Belvidere,
181 Ill. 2d  at 205.
	Based on the foregoing, we conclude that the clearly
erroneous standard of review, adopted in City of Belvidere,
parallels in significant respects the clearly erroneous standard
under the federal rules, and that the Supreme Court's definition of
"clearly erroneous" provides a practical guide for the application
of this standard. Accordingly, we hold that when the decision of
an administrative agency presents a mixed question of law and
fact, the agency decision will be deemed "clearly erroneous" only
where the reviewing court, on the entire record, is "left with the
definite and firm conviction that a mistake has been committed."
United States Gypsum Co., 333 U.S.  at 395, 92 L. Ed.  at 766, 68 S. Ct.  at 542. That the clearly erroneous standard is largely
deferential does not mean, however, that a reviewing court must
blindly defer to the agency's decision. Indeed, in City of Belvidere,
we reversed the decision of the administrative agency.
	As a final matter, we note that this court has reviewed other
decisions of the Department which raised issues similar to those
present here under a manifest weight of the evidence standard. See
Jack Bradley, Inc. v. Department of Employment Security, 146 Ill. 2d 61, 73 (1991); Griffitts Construction Co. v. Department of
Labor, 76 Ill. 2d 99, 104 (1979); Gladstone Cab Co. v. Donnelly,
30 Ill. 2d 465, 474 (1964); Spahn v. Department of Labor, 25 Ill. 2d 482, 490 (1962); Beth Weber, Inc. v. Murphy, 389 Ill. 60, 67
(1945); Murphy v. Daumit, 387 Ill. 406, 412 (1944). These cases,
however, predate City of Belvidere. Further, there is no indication
in these cases that a party raised the possibility that the
administrative decision under review may have presented a mixed
question of law and fact. Here, the Department addressed that
possibility. Cf. Branson, 168 Ill. 2d  at 266 (where the parties to an
administrative appeal did not address the possibility that the
agency's determination may be a mixed issue of law and fact, and
the parties assumed that a manifest weight of the evidence
standard applied, the parties' contentions would be reviewed
accordingly). We now consider the merits of this appeal.



Unemployment Insurance Act
	The Unemployment Insurance Act (Act) (820 ILCS 405/100
et seq. (West 2000)), adopted in 1937, provides economic relief to
those who are involuntarily unemployed, through the collection of
compulsory contributions from employers and the payment of
benefits to eligible unemployed persons. 820 ILCS 405/100 (West
2000); Carson Pirie Scott & Co. v. State of Illinois Department of
Employment Security, 131 Ill. 2d 23, 28 (1989); S. Bernstein, The
Illinois Unemployment Insurance Act, Ill. Ann. Stat., ch. 48, at
XIX-XXI (Smith-Hurd 1986). Liability for contributions and
eligibility for benefits is dependent, in part, on the existence of an
"employment" relationship. The determination of whether such a
relationship exists is not controlled by common law principles of
master and servant and independent contractor. Rather, we must
look to the statutory definitions, which are more inclusive than the
common law. Jack Bradley, 146 Ill. 2d  at 74; Griffitts
Construction, 76 Ill. 2d at 103-04; Spahn, 25 Ill. 2d  at 486;
Eutectic Welding Alloys Corp. v. Rauch, 1 Ill. 2d 328, 332 (1953).
Thus, a person who is regarded at common law as an independent
contractor may nonetheless be considered an employee under the
Act. See Jack Bradley, 146 Ill. 2d  at 74; Rozran v. Durkin, 381 Ill. 97, 101-04 (1942).
	Under the Act, "employment" is defined in relevant part as
"any service *** performed by an individual for an employing
unit." 820 ILCS 405/206 (West 2000). "Employing unit" includes
a "corporation," such as AFM, "which has or *** had in its
employ one or more individuals performing services for it within
this State." 820 ILCS 405/204 (West 2000). The expansive
definition of "employment" is circumscribed by section 212 of the
Act, which carves out an exemption for services performed by
"independent contractors." Section 212 provides:
			"Service performed by an individual for an employing
unit, whether or not such individual employs others in
connection with the performance of such services, shall be
deemed to be employment unless and until it is proven in
any proceeding where such issue is involved that-
			A. Such individual has been and will continue to be free
from control or direction over the performance of such
services, both under his contract of service and in fact;
and
			B. Such service is either outside the usual course of the
business for which such service is performed or that such
service is performed outside of all the places of business
of the enterprise for which such service is performed; and
			C. Such individual is engaged in an independently
established trade, occupation, profession, or business."
820 ILCS 405/212 (West 2000).
	Because the three conditions of section 212 are phrased in the
conjunctive, all three conditions must be satisfied for the
independent-contractor exemption to apply. Jack Bradley, 146 Ill. 2d  at 75; Griffitts Construction, 76 Ill. 2d  at 104; Eutectic Welding
Alloys, 1 Ill. 2d  at 332. In determining the existence of such an
exemption, the terminology used by the parties in describing their
relationship is not controlling, and there is a strict burden of proof
placed upon the party claiming the exemption. Jack Bradley, 146
Ill. 2d at 75-76; Griffitts Construction, 76 Ill. 2d  at 104; see also
820 ILCS 405/2200 (West 2000) (burden is on the party contesting
the determination and assessment of contributions by the Director
to prove that it is incorrect); 820 ILCS 405/2303 (West 2000) (on
judicial review of any decision of the Board or of any decision,
order, ruling, determination and assessment, statement of benefit
wages, statement of benefit charges, or rate determination made by
the Director, the burden is on the person seeking such review). In
addition, because the Act was passed with the public welfare in
mind, its provisions should be liberally construed in favor of
inclusion. Jack Bradley, 146 Ill. 2d  at 75; Griffitts Construction,
76 Ill. 2d  at 104; see also Ross v. Cummins, 7 Ill. 2d 595, 597
(1956) (exemption provisions of the Act are strictly construed
against the party claiming the exemption).
	The Department determined that AFM had failed to meet its
burden as to all three conditions of section 212. Because the
inability to satisfy any one condition will defeat an employer's
claim for an independent-contractor exemption, we find it
unnecessary to consider whether AFM satisfied all three
conditions. Instead, we focus on the third condition, which
requires that the drivers for AFM be "engaged in an independently
established trade, occupation, profession, or business." 820 ILCS
405/212(C) (West 2000). As discussed below, we conclude that
the Department's determination that AFM failed to satisfy this
condition is not clearly erroneous.
	In Murphy v. Daumit, 387 Ill. 406 (1944), we held that the Act
contemplated that an individual engaged in an independent
enterprise, under section 212(C), is one who "has a proprietary
interest in such business to the extent that he can operate same
without hindrance from any individual whatsoever and whose
business also is free from control." Daumit, 387 Ill.  at 417. Daumit
involved the status of salesmen who sold vacuum cleaners door-to-door for the Chicago distributor of a vacuum cleaner
manufacturer. The manufacturer set the price of the cleaners, and
the distributor set the credit terms. The time-payment contracts,
under which the cleaners were bought, were subject to the
approval of the distributor and were the distributor's property. The
salesmen received $25 on each sale, less any trade-in allowance.
The distributor did not set the salesmen's hours or territory and
paid no expenses. The distributor provided the salesmen several
days of personal training in how to handle sales, credit
arrangements and authorized statements, and conducted sales
meetings at his office once or twice a week. Salesmen reported on
the number of demonstrations they conducted. They were also
required to follow up on customer complaints and to report to the
distributor on how the matter was handled. If a salesman did not
show up for an unusual length of time, he was requested to turn in
his machine and terminate his relationship. Although the salesmen
could carry other lines of cleaners, there was no evidence that any
of them did so.
	On this record we concluded that the salesmen acted only as
the representative of the distributor, taking orders in the
distributor's name, subject to the distributor's approval and not for
themselves as independent contractors. Daumit, 387 Ill.  at 416.
The salesmen, in effect, "had no business to sell or give away."
Daumit, 387 Ill.  at 417. Their endeavor existed only by reason of
their employment by the distributor, which was subject to
termination, at which time the salesmen were unemployed.
Daumit, 387 Ill.  at 417.
	We applied our holding in Daumit most recently in Jack
Bradley, Inc. v. Department of Employment Security, 146 Ill. 2d 61
(1991). As part of its advertising and public relations business,
Jack Bradley provided food demonstrators for food vendors or
retailers. Through advertising and referrals, the company
maintained a list of over 200 food demonstrators. Approximately
20% of Jack Bradley's business was derived from the provision of
such demonstrators. Before being placed on the company's list of
available demonstrators, the individual signed a written contract
provided by the company which stated the hourly rate of pay, that
the individual was an independent contractor, and that the
individual had sole control over the manner and means of
performing the service.
	Typically, a food vendor or retailer would contact Jack
Bradley regarding a food demonstration that the vendor or retailer
wished to schedule. Jack Bradley took the details and contacted
demonstrators on its list to try to fill the job. A demonstrator could
refuse the job for whatever reason, without penalty. If a
demonstrator accepted the job, Jack Bradley forwarded a
confirmation slip and time sheet to the demonstrator. On the
scheduled date, the demonstrator would report to the designated
location, usually a supermarket. Supplies were provided by the
food vendor, the retailer, or the demonstrator. Jack Bradley
provided no training, but provided the demonstrators with any
food preparation and demonstration guides received from the
vendors. If the demonstrator's job was unsatisfactory, Jack
Bradley simply ceased calling that demonstrator. The store
manager signed the demonstrator's time sheet, which the
demonstrator submitted to Jack Bradley for payment.
Demonstrators were paid twice per month. Jack Bradley did not
deduct payroll taxes.
	We acknowledged our long-held view that the test for an
independently established business under section 212(C) is that the
employee's "business" be capable of operation without hindrance
from any other individual. Jack Bradley, 146 Ill. 2d  at 78, citing
Daumit, 387 Ill.  at 417.  That is, the employee's entrepreneurial
enterprise must enjoy a "degree of economic independence such
that the enterprise could survive any relationship with the
particular person contracting for services." Jack Bradley, 146 Ill. 2d  at 78, quoting with approval Sample & Sell, Inc. v. Labor &
Industrial Relations Comm'n, 764 S.W.2d 109, 112 (Mo. App.
1988). We concluded that the evidence revealed no proprietary
interest of the food demonstrators in any food or product
demonstration business, and that the evidence did not show that
the demonstrators were able to operate largely without the benefit
of a relationship with Jack Bradley or another "demo" company.
Jack Bradley, 146 Ill. 2d  at 80-81. The fact that the demonstrators
could work for other "demo" companies was not dispositive. Such
other relationships may simply have been like the demonstrators'
relationship with Jack Bradley-part-time employment. Jack
Bradley, 146 Ill. 2d  at 80. We noted, too, that Jack Bradley, rather
than each demonstrator, provided the written contract which the
parties signed, and that Jack Bradley, rather than each
demonstrator, determined the rate of payment. Jack Bradley, 146 Ill. 2d  at 80.
	Similarly, in the present case, the evidence did not
demonstrate that the drivers were able to operate their "delivery
businesses" without the benefit of a relationship with AFM, or
another messenger service company like AFM. AFM procured the
customers; AFM set the delivery prices; AFM provided the
delivery tickets to the customers; AFM made the delivery
assignments; AFM billed the customers; AFM set the commission
rate; AFM paid the drivers. AFM also retained the right, under the
parties' written agreement which AFM supplied, to terminate their
relationship at any time. Thus, a driver's "business" was not
established "independently" of AFM. Rather, a driver's business
existed only by reason of the driver's employment with AFM,
which was subject to termination, at which time the driver would
be unemployed.
	The Missouri court of appeals applied essentially the same
analysis when it determined that certain baggage delivery drivers
were not independent contractors for purposes of the Missouri
Employment Security Act. See Koontz Aviation, Inc. v. Labor &
Industrial Relations Comm'n, 650 S.W.2d 331 (Mo. App. 1983).
In that case, Koontz Aviation entered into a contract with certain
airlines to deliver baggage to passengers when the baggage had not
been available for the passengers to pick up at the airport. To make
these deliveries, Koontz engaged a number of drivers who drove
their own vehicles and paid their own expenses. Koontz paid the
drivers 35% of the delivery charges, which were fixed by the
airline.
	The Missouri unemployment statute, like ours, provided a
three-part test for the independent-contractor exemption. The third
part of the test required that the individual be " 'customarily
engaged in an independently established trade, occupation,
profession or business.' " Koontz Aviation, 650 S.W.2d  at 332,
quoting Mo. Rev. Stat. §288.034.5 (1978). The Missouri court
concluded that Koontz Aviation failed to satisfy the requirements
of the statutory exemption. The court noted that the drivers
delivering baggage did so only by virtue of Koontz Aviation's
contract with the airlines, and that the drivers could not have
survived independent of their relationship with Koontz Aviation.
Koontz Aviation, 650 S.W.2d  at 334. See also RX Delivery
Service, Inc. v. Labor & Industrial Relations Comm'n, 677 S.W.2d 936 (Mo. App. 1984) (holding that drivers engaged by RX
Delivery Service to pick up and deliver packages for drug stores
and medical centers were not independently established in the drug
delivery business).
	Further support for our conclusion in the instant case is found
in this court's earlier decisions in Rozran v. Durkin, 381 Ill. 97
(1942), and Zelney v. Murphy, 387 Ill. 492 (1944). In Rozran, the
evidence indicated that the claimant, Sherman Kuehl, had an oral
agreement with Cannonball Bonded Messenger Service
(Cannonball) to make deliveries, for which he was paid 65% of the
gross receipts. Although not required to do so, Kuehl reported to
Cannonball early every morning. Kuehl was obligated to deliver
the packages assigned to him by the dispatcher and to make
pickups as ordered by the dispatcher, within certain definite time
limits. There was no set territory, but Kuehl's activities were often
confined to certain areas by the dispatcher. Kuehl was expected to
return to Cannonball's office as soon as possible after making the
required deliveries. Kuehl also collected C.O.D.'s on the packages
and followed the same procedures for receipts and accounts as the
ordinary employees of Cannonball. Kuehl provided his own truck,
paid his own expenses, and although free to work for other
companies, never did so. Kuehl's entire time was taken up
delivering packages for Cannonball. We concluded, inter alia, that
Cannonball failed to satisfy section 212(C) of the Act.
		"The very fact that Kuehl, upon being dismissed from the
company, was out of employment, indicates that he was
dependent upon his work for economic subsistence.
Although he was allowed to serve for others, it is a fact
that he never did so, nor did he have time to do so. His
sole employment was in the service of the Cannonball
company. His conduct was governed by the suggestion,
direction and will of that company. The prices he received
were those which Cannonball allowed to him, he having
no part in the determination of the rates for the services
rendered." Rozran, 381 Ill.  at 105.
	Here, too, the drivers' sole employment was in the service of
AFM. The drivers' conduct was controlled by the suggestion and
direction of AFM. The commissions the drivers received were
those AFM allowed, the drivers playing no part in the
determination of delivery rates.
	AFM notes, however, that the driver in Rozran, unlike the
AFM drivers, reported every day to the messenger service
company, was obligated to accept delivery assignments from the
dispatcher, and was expected to return to the office after making
a delivery. These factual differences do not impact our analysis
under section 212(C). Rather, such differences speak more directly
to the issues of whether AFM satisfied the requirements of section
212(A) (freedom from control), and section 212(B) (performance
of services outside the usual course or places of business). As
noted earlier, we find it unnecessary to decide these issues.
	Zelney, which involved drivers for Triangle Motorcycle
Package Service (Triangle), parallels Rozran. The two drivers
named in the appeal, Robert Robey and George Katana, worked
under an oral agreement, pursuant to which they provided their
own motorcycles and paid their own expenses. Other drivers were
engaged under written agreements. Triangle paid the drivers 75%
of the delivery receipts. Although there were no set hours, the
drivers reported for work at Triangle's office between eight and
nine in the morning. Triangle furnished the rate cards fixing the
fees to be charged by the drivers and, upon receiving a telephone
order from a customer, directed the drivers to go to certain
designated places to pick up the packages. To expedite delivery
and avoid duplication of efforts, the drivers sometimes brought the
packages back to Triangle's office. Later, when a call came in for
a pickup, the driver whose turn it was to answer the call would
take the packages that needed to be delivered to the same general
area. The owner's wife would also sort the delivery tickets
corresponding to the held packages and would assign to the driver
making the next pickup those deliveries going to the same area.
The drivers frequently delivered C.O.D. packages, turning in all of
the money to the company. Triangle billed the customer and
assumed the risk of noncollection. Although the drivers were at
liberty to work for other persons, they never did. Based on these
facts, which we found similar to the facts in Rozran, we held that
it was evident that the Triangle drivers were employees under the
Act and not independent contractors. Zelney, 387 Ill.  at 504.
	AFM maintains that the messenger service industry has
changed in the almost 60 years since Rozran and Zelney were
decided, noting the industry's present day use of vehicle leases, as
required by the ICC, as well as the industry's use of independent
contractor agreements. We agree that the industry is subject to
increased regulation, and that the drivers and messenger service
companies are perhaps more sophisticated in their dealings. We
fail to see, however, in what way these developments have so
changed the messenger service business that Rozran and Zelney
should no longer be considered good law. Cannonball and
Triangle provided small-package, same-day delivery service to
their customers through the use of a centralized dispatch and a
fleet of drivers. This is the same business in which AFM is
engaged, notwithstanding its use of ICC leases and independent
contractor agreements.  Moreover, as the Jack Bradley case
demonstrates, the nature of the analysis under section 212(C) has
not changed in the intervening years. Accordingly, we reject
AFM's argument that Rozran and Zelney are irrelevant to the
issues before this court.
	AFM also maintains that, under United Delivery Service, Ltd.
v. Didrickson, 276 Ill. App. 3d 584 (1995) (UDS), its drivers
should be deemed independent contractors. There, the record
indicated that each driver entered into an equipment lease with the
company for the use of the driver's automobile, as well as an
independent contractor agreement, providing that the driver would
receive 50% of delivery revenues. Drivers could earn additional
compensation by delivering the packages within 1½ hours. 
Drivers were compensated after returning customer-completed
delivery tickets to UDS. Drivers were not required, however, to
report to the UDS offices; all business could be transacted by mail.
Some drivers received their delivery assignments by calling UDS,
while others carried pagers and radios, which could be rented from
UDS. Drivers set their own schedules and were free to accept or
reject deliveries without repercussion. Drivers paid their own
expenses, including gas and tolls, and could hire their own helpers.
Drivers did not receive paid vacations or sick leave. Drivers could
work for other delivery companies, and some did. On this record,
the Department found that UDS was liable for unemployment
insurance contributions for wages paid to its delivery drivers. On
administrative review, the circuit court reversed the Department's
determination and the appellate court affirmed. AFM notes that
this court denied the Department's petition for leave to appeal
from the appellate court decision in UDS (United Delivery Service,
Ltd. v. Didrickson, 166 Ill. 2d 555 (1996)) and argues that, given
the similarity between the facts in UDS and those present here, the
same result should obtain.
	Although appellate court opinions may provide some
guidance, they are not binding on this court. People v. Anderson,
188 Ill. 2d 384, 390 (1999); Goldberg v. Davis, 151 Ill. 2d 267,
277 (1992). This is true even where this court has denied a petition
for leave to appeal. The denial of a petition for leave to appeal is
not tantamount to a decision by this court on the merits and carries
no connotation of approval or disapproval. People v. Ortiz, 196 Ill. 2d 236, 257 (2001).
	In any event, the UDS opinion does not persuade us that the
Department's decision in the present case is clearly erroneous. 
The UDS opinion failed to consider Rozran and Zelney, the only
published cases from this court involving the status of messenger
service drivers under section 212 of the Act, as well as the
principles set forth in Jack Bradley. In determining that the
requirement of section 212(C) had been met, the UDS opinion
states, "There is no reason why they [the drivers] could not have
performed the same services for other delivery agencies." UDS,
276 Ill. App. 3d at 589.  The appropriate inquiry under Jack
Bradley, however, is whether the drivers could have performed the
same services independent of a relationship with UDS or another
such messenger service company. See Jack Bradley, 146 Ill. 2d  at
80. Thus, to the extent UDS conflicts with our decision today, it is
hereby overruled. We express no opinion, however, as to the
analysis in UDS concerning sections 212(A) and (B) of the Act.
	Finally, AFM contends that it is exempt from the provisions
of the Act because the commission paid to its drivers constitutes
"rental income" under the ICC equipment leases, rather than
wages to employees. See 315 Ill. App. 3d at 319 (Hartman, J.,
dissenting).
	With respect to the Department's 1993 decision, the record
indicates that the Director's representative accepted AFM's
argument that payments to the drivers should be allocated two-thirds to rental of the drivers' vehicles and one-third to wages.
This allocation, and other adjustments, reduced AFM's liability
from approximately $12,800 to approximately $6,400. The
Director adopted the representative's decision, including the
modified allocation and assessment. AFM objected to the
modified assessment, maintaining that the assessment for 1989
was still overstated by approximately $480. In addressing this
issue in its initial circuit court brief, AFM expressed a "desire to
avoid a protracted controversy not involving a large sum of
money." Nonetheless, in its reply brief, AFM argued that the
drivers' compensation was merely rental income. During oral
argument in the circuit court, AFM stated that it was "willing to
accept" the assessment as revised by the Director's representative
and declined to make any argument on this matter, despite inquiry
by the circuit court. With regard to the Department's 1996
decision concerning Mark Przybylinski's claim for benefits, the
record indicates that AFM never argued before the Department or
the circuit court that the $726 paid to Przybylinski in 1994 should
be allocated to rental income, as opposed to wages. Based on this
record, we decline to address this issue on appeal. See McMath v.
Katholi, 191 Ill. 2d 251, 255 (2000) (party may not complain of
error to which the party consented, or where to do so is
inconsistent with the position taken by the party in an earlier
proceeding); Texaco-Cities Service Pipeline Co. v. McGaw, 182 Ill. 2d 262, 278 (1998) (issues and defenses not placed before the
administrative agency will not be considered for the first time on
administrative review); James J. Hafele & Associates v.
Department of Employment Security, 308 Ill. App. 3d 983, 987-88
(1999) (issue employer did not raise in the administrative hearing
or before the Board of Review of the Department of Employment
Security would be deemed waived).



CONCLUSION
	For the reasons discussed above, we conclude that the
Department's decision is not clearly erroneous and, therefore,
affirm the judgment of the appellate court.



Affirmed.
	JUSTICE FREEMAN took no part in the consideration or
decision of this case.
	 
1.      1For ease of discussion we will refer to the 1993 decision of the
Director and the 1996 decision of the Board collectively as the
Department's decision.