Title: Western Home Transport v. Dept of Labor

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

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IN THE SUPREME COURT OF THE STATE OF IDAHO 
Docket No. 40462 
 
 
WESTERN HOME TRANSPORT, INC., 
 
       Claimant-Appellant, 
 
v. 
 
IDAHO DEPARTMENT OF LABOR, 
 
       Respondent. 
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Boise, January 2014 Term 
 
2014 Opinion No.  19 
 
Filed: February 11, 2014 
 
Stephen W. Kenyon, Clerk 
       
 
 
 
 
Appeal from the Industrial Commission of the State of Idaho. 
 
The decision of the Commission is vacated and this case is remanded  
for further proceedings consistent with this Opinion. Costs on appeal  
are awarded to appellant. No attorney’s fees are awarded. 
 
 
David H. Leroy, Boise, attorney for appellant. 
 
 
Hon. Lawrence G. Wasden, Idaho Attorney General, Boise, attorney for 
 
Respondent.  Cheryl George argued. 
 
 
Holden, Kidwell, Hahn & Crapo, PLLC, Idaho Falls, amicus curiae. 
__________________________ 
 
W. JONES, Justice 
I.  NATURE OF THE CASE 
The Idaho Department of Labor (the Department) determined that Western Home 
Transport, Inc. (Western) owed $13,277.93 in unemployment insurance taxes and penalties 
because the owners/operators who hauled goods interstate for Western were engaged in covered 
employment under Idaho’s Employment Security Law. On appeal by Western, the Idaho 
Industrial Commission (the Commission) affirmed the Department’s decision. Western now 
appeals the Commission’s decision to this Court. The decision of the Commission is vacated and 
the case is remanded for further proceedings consistent with this opinion. 
II.  FACTUAL AND PROCEDURAL BACKGROUND 
 
Western is an Idaho corporation that facilitates the interstate transportation of oversized 
mobile homes from shippers to purchasers. Western does not own any equipment to transport the 
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homes. Instead, Western leases equipment from owner/operators. The owner/operators then use 
their own equipment to transport the homes for Western. All of Western’s owner/operators 
transport the homes with Western’s motor carrier authority through the U.S. Department of 
Transportation (DOT), hereinafter referred to as DOT authority. Under the terms of the lease, 
and required by federal law, Western has exclusive possession, use, and control of the 
owner/operators’ equipment. Truth-in-Leasing Regulations, 49 C.F.R. § 376.12(c)(1) (2012). 
Western pays the owner/operators a percentage of each haul. 
Due to an inquiry from the Department, a tax auditor with the Department audited 
Western’s records covering January 1, 2008, through December 31, 2010. The auditor issued 
Western a “Redetermination of Employer’s Unemployment Insurance Tax Liability” and 
concluded that the remuneration received by Western’s owner/operators during the audit period 
was wages for services performed in covered employment under Idaho’s Employment Security 
Law. Consequently, the Department imposed an unemployment insurance tax liability of 
$13,277.93 on Western for the audit period.  
Western timely appealed the Department’s redetermination. An appeals examiner held a 
hearing and subsequently affirmed the Department’s decision. Western then appealed to the 
Commission. After a de novo review of the record, the Commission affirmed the Department’s 
decision. Western appeals the Commission’s decision to this Court. We vacate and remand. 
III.  STANDARD OF REVIEW 
This Court exercises free review of the Commission’s legal conclusions. Giltner, Inc. v. 
Idaho Dep’t of Commerce & Labor, 145 Idaho 415, 418, 179 P.3d 1071, 1074 (2008).  
IV.  ANALYSIS 
 “Idaho’s Employment Security Law provides assistance for workers who face 
unemployment through no fault of their own.” Giltner, 145 Idaho at 419, 179 P.3d at 1075 
(citing I.C. § 72-1302). “Under the established system, ‘covered employers’ are required to 
contribute, by way of a tax on wages paid employees for services rendered in ‘covered 
employment,’ to the unemployment security fund.” John L. King, P.A. v. Dep’t of Emp’t, 110 
Idaho 312, 313, 715 P.2d 982, 983 (1986).  
Covered employment is “an expansive term” that “sweeps within its purview employees 
and independent contractors alike.” Software Assocs., Inc. v. Dep’t of Emp’t, 110 Idaho 315, 316, 
715 P.2d 985, 986 (1986). “‘Covered employment’ means an individual’s entire service 
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performed by him for wages or under any contract of hire, written or oral, express or implied, for 
a covered employer or covered employers.” I.C. § 72-1316(1). “Wages” include “[a]ll 
remuneration for personal services from whatever source, including commissions and bonuses 
and the cash value of all remuneration in any medium other than cash.” I.C. § 72-1328(1)(a). 
Unless the putative employer shows that an exemption applies, “[s]ervices performed by an 
individual for remuneration shall, for the purposes of the employment security law, be covered 
employment.” I.C. § 72-1316(4); Excell Constr., Inc. v. Dep’t of Labor, 141 Idaho 688, 694, 116 
P.3d 18, 24 (2005). 
The putative employer must satisfy a two-prong test in I.C. § 72-1316(4) “to merit an 
exemption from the presumption that services for remuneration are covered employment.” 
Giltner, 145 Idaho at 419, 179 P.3d at 1075. Under I.C. § 72-1316(4), the putative employer 
must show: “(a) That the worker has been and will continue to be free from control or direction 
in the performance of his work, both under his contract of service and in fact; and (b) That the 
worker is engaged in an independently established trade, occupation, profession, or business.” 
I.C. § 72-1316(4). The putative employer must demonstrate both prongs in I.C. § 72-1316(4) to 
overcome the presumption of covered employment. Giltner, 145 Idaho at 420, 179 P.3d at 1076. 
“[E]xemptions from coverage are narrowly construed.” John L. King, P.A., 110 Idaho at 313, 
715 P.2d at 983. 
This Court in Giltner issued a bright-line rule for the second prong in I.C. § 72-1316(4) 
specific to the interstate trucking industry. At issue in Giltner was whether the owner/operators 
used by a motor carrier to haul goods interstate were engaged in covered employment under 
Idaho’s Employment Security Law. 145 Idaho at 418, 179 P.3d 1074. The Court in Giltner 
recognized that owner/operators were “solely dependent” on the motor carrier’s “DOT authority 
to haul goods in interstate commerce” and then determined that “[t]herefore, as a matter of law, 
they could not be engaged in an independently established trade, occupation, profession or 
business.” Id. at 420, 179 P.3d at 1076. Due to this new bright-line rule, the Court concluded that 
the owner/operators were engaged in covered employment because the motor carrier could not 
satisfy the second prong in I.C. § 72-1316(4). Id.  
This rule from Giltner, which relied on the source of the owner/operator’s DOT authority 
to determine whether the owner/operator was engaged in an independently established trade, 
occupation, profession or business, had wide application in the trucking industry. Giltner 
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categorically determined any motor carrier that used owner/operators to haul goods with the 
motor carrier’s DOT authority would be unable to demonstrate that those owner/operators were 
engaged in an independently established trade, occupation, profession or business under the 
second prong in I.C. § 72-1316(4), unless the owner/operator had his own DOT authority. 
Giltner, 145 Idaho at 420 n.2, 179 P.3d at 1076 n.2; Hernandez v. Triple Ell Transport, Inc., 145 
Idaho 37, 175 P.3d 199 (2007). Unable to satisfy the second prong, a motor carrier with 
owner/operators hauling goods with the motor carrier’s DOT authority was effectively precluded 
from demonstrating that the owner/operators were exempt from covered employment—even if 
other material facts pertaining to the second prong supported a contrary conclusion. In the 
present case the Commission strongly indicated the evidence supported the independence of the 
owner/operators, but it was bound by the per se rule of Giltner and therefore ruled the 
owner/operators were employees of Western as a matter of law. 
“When there is controlling precedent on questions of Idaho law ‘the rule of stare decisis 
dictates that we follow it, unless it is manifestly wrong, unless it has proven over time to be 
unjust or unwise, or unless overruling it is necessary to vindicate plain, obvious principles of law 
and remedy continued injustice.’” Greenough v. Farm Bureau Mut. Ins. Co. of Idaho, 142 Idaho 
589, 592, 130 P.3d 1127, 1130 (2006) (quoting Houghland Farms, Inc. v. Johnson, 119 Idaho 
72, 77, 803 P.2d 978, 983 (1990)). “While we are cognizant of the importance stare decisis plays 
in the judicial process, we are not hesitant to reverse ourselves when a doctrine, a defense, or a 
holding in a case has proven over time to be unjust or unwise.” State v. Maidwell, 137 Idaho 424, 
426, 50 P.3d 439, 441 (2002).  
Employing the single factor of the source of the owner/operator’s DOT authority has 
proven unjust, unwise, and incorrect because it fails to consider the nature of the 
owner/operator’s business, which serves a distinct market in the interstate trucking industry. The 
business or service provided by an owner/operator is not the transportation of goods for 
manufacturers or shippers; rather, it is the transportation of goods for motor carriers—a point 
never raised by either party or discussed in the Giltner decision. Many owner/operators are 
solely dependent on the motor carrier’s DOT authority, and this dependence is an intentional and 
fundamental part of the motor carrier-owner/operator relationship. The fact that an 
owner/operator may or may not have his own DOT authority is completely inconsequential and 
irrelevant for him to provide his services to a motor carrier, whereas it would be critical in 
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hauling for a manufacturer or shipper. In that case the owner/operator would use his own DOT 
authority. Moreover, federal law and regulations require that an owner/operator operates under 
the motor carrier’s DOT authority, even if the owner/operator has his own DOT authority. 49 
U.S.C. § 14102; 49 C.F.R. §§ 376.1–376.2, 376.11–376.12, 390.11. In other words, an 
owner/operator hauling goods for a motor carrier is prohibited by law from operating with his 
own DOT authority. In determining whether an owner/operator is engaged in an independently 
established trade, occupation, profession, or business, the focus has to be on the market served 
by the owner/operator. If the business served by the owner/operator is a manufacturer or shipper 
of goods, then the owner/operator must have his own DOT authority to operate in that market. 
That point was never raised or argued in the Giltner case. In serving the motor carrier market as 
a trucker, the owner/operator must use the motor carrier’s DOT authority. That federal 
requirement is no more an indication of control or lack of independence than the other types of 
federal regulations discussed in Giltner where it was recognized that those federal requirements 
do not affect whether one is an independent owner/operator. See Giltner, 145 Idaho at 419–20, 
179 P.3d at 1075–76. 
This Court now recognizes that Giltner’s bright-line rule improperly focused on the 
source of the owner/operator’s DOT authority as a single determinative factor, when in fact the 
source of an owner/operator’s DOT authority has no effect on the owner/operator’s service to the 
motor carrier market and neither the owner/operator nor the motor carrier has any control over 
the federal regulations governing DOT authority. Giltner’s determination that owner/operators 
“solely dependent” on a motor carrier’s “DOT authority to haul goods in interstate commerce” 
cannot “as a matter of law . . . be engaged in an independently established trade, occupation, 
profession or business” was clearly incorrect and Giltner’s holding on that point is overruled. 
145 Idaho at 420, 179 P.3d at 1076. The source of an owner/operator’s DOT or other federal or 
state authority to haul goods interstate for a motor carrier is not a relevant factor for the analysis 
of the second prong in I.C. § 72-1316(4). No other part of the Giltner decision is overruled. 
In this case the Commission determined that Western had demonstrated that its 
owner/operators were free from its control, thus meeting the first prong for the covered 
employment exemption in I.C. § 72-1316(4). This finding is not challenged on appeal. For the 
second prong, the Commission found that Western’s owner/operators used Western’s DOT 
authority to haul goods. Neither party challenges this factual finding. The Commission then 
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determined that Western failed to demonstrate that the owner/operators were engaged in an 
independently established trade, occupation, profession, or business under the second prong—
despite that significant evidence suggested otherwise—because the Commission was bound by 
Giltner. With Giltner now overruled in part, this Court remands this case to the Commission for 
further proceedings consistent with this opinion. On remand, the Commission should determine 
whether Western satisfied the second prong of the covered employment exemption test in I.C. § 
72-1316(4) without considering DOT authority as a factor. 
 
The Department seeks an award of attorney fees pursuant to I.C. § 12-117. As the non-
prevailing party, the Department is not entitled to an award of attorney fees. Western seeks an 
award of attorney fees and costs pursuant to Idaho Appellate Rule (I.A.R.) 41. Western has not 
cited any statutory provision authorizing such award. I.A.R. 41 does not provide the Court with 
the authority to award attorney fees. Gilman v. Davis, 138 Idaho 599, 603, 67 P.3d 78, 82 (2003). 
I.A.R. 41 simply “specifies the procedure for requesting an award of attorney fees on appeal.” Id.  
V.  CONCLUSION 
The decision of the Commission is vacated and this case is remanded for further 
proceedings consistent with this opinion. We award Appellant costs, but not attorney fees, on 
appeal. 
Chief Justice BURDICK, Justices EISMANN, J. JONES and HORTON, concur.