No. 88-131

IN THE SUPREME COURT OF THE STATE OF MONTANA 1988

INTHEMATTER OF UNEMPLOYMENT INSURANCETAX CONTRIBUTION, PIONEER BASEBALL LEAGUE, Employer and Appellant,-vsJAMES FRIEDRICHS, Cla.imantand Respondent.

APPEAL FROM: District Court of the Thirteenth Judicial District, Inand for the County ofYellowstone, The Honorable Robert Holmstrom, Judgepresiding.
COUNSELOF RECORD:
ForAppellant: Richard J. Carstensen, Billings,Montana
For Respondent: Melanie A. Symons,Dept. ofLabor & Industry, Helena, Montana

Submittedon Briefs: July 8, 1988 Decided: August 23, 1988Mr. Justice R. C. McDonough delivered the Opinion of the Court.

Pioneer Baseball League (the League) appeals from the order of the District Court of the Thirteenth Judicial District, Yellowstone County. The order affirmed the decision of the Board of Labor Appeals that the $300 per month plus expense allowance paid to League umpires constitutes employment subject to the unemployment insurance law. We affirm. The League presents two issues for our review: 1. What is the burden of proof for determining whether servicesare subjectto the unemployment insurance law? 2. Is the compensationpaid to Leagueumpires subject to theunemployment insurance law? The League is a professional, minor-league baseball league with teams in Montana, Idaho, Utah and Canada. Its headquarters are in Billings, Montana. The League obtains umpires for its games from the National Association of Professional Baseball Leagues. The League and the umpires enter into aUniform Umpire Contractprovided by the National Association,which sets forththe termsof employment. James L. Friedrichsentered into such a contractwith the League on June 18, 1985. The contractprovided that Friedrichswould be employed to render skilled services as an umpire. He was paid $300 per month, with an allowance of $1,050.00 per month for travel, lodging and other expenses. The contract could be assigned by the League, or terminated 

### by the League at any time upon giving Friedrichs notice. The contract also provided that Friedrichs could not perform services as an umpire for any party other than the League unless he obtained the League's consent.In 1986 when he no longer worked for the League, Friedrichs filed an unemployment claim. In his total of claimed employment,he included time spent as an umpire for the League. Subsequentproceedings led to a January 6,1987, decision by a Labor Department Appeals Referee that the services rendered to the League by Friedrichs constituted employment subject to the unemployment insurance law. On March 7, 1987, the Board of Labor Appeals adopted the referee's decision, and on December 9, 1987, the District Court of the Thirteenth Judicial District affirmed the Board's decision. This appeal followed. The main issue in this appeal iswhether Friedrichswas
an "employee" of the League for purposes of unemployment insurance contributions. The standard of review in cases appealed from the Board of Labor Appeals is controlled by 5 39-51-2410(5), MCA,which states in relevantpart:
In any judicial proceeding under 39-51-2406 through 39-51-2410, the findings of the board as to the facts, if supported by evidence and in the absence of fraud, shall be conclusive and the jurisdiction of said court shall.be confined to questions of law.
The operation of this section has been discussed previously by this Court, most recently in Zimmer-Jackson Assoc. v. Dept. of Labor (Mont.1988),752 P.2d 1095, 1097,45 St.Rep. 679, 681:
When reviewing a decision of the Board of Labor Appeals, theDistrictCourt must treat the findings of the Board as conclusive if they are supportedby substantial evidence and are absent fraud. [citations] This Court is held to the same standard when reviewing a Roard of Labor Appeals decision. [citation1

# . The facts found by the Board were adopted as conclusive by the District Court, and are not disputed in this appeal. As

### it appears from the record that the Board's findings were supported by substantial evidence, "[wle must determine whether the District Court committed an abuse of discretion by affirming the Board's decision. [citation]

# ." Zimmer, 752

TheLeague first seeks definition of theburden ofproof required for a showing that theunemployment insurance law is inapplicable to a particular employment arrangement. The League has sought to show that Friedrichs was an independent contractor,and the Leaguewas therefore not required tomake unemployment insurance contributions based on his compensation. The League argues that S 

### 39-51-203(4)

## ,MCA, fails to give an adequate definition of employment that is subject to the law. However, the League's brief on this point misstates the applicable version of the statute. The events at issue here took place in 1985 and are governed by the version of the statute in forceat that time: EmploymentDefined...

(4)Service performedby an individual forwages is considered tobe employment subject to this chapter unless and until it is shown to the satisfactionof the departmentthat:

(a) such individual has been and will continue to be free from control or direction over the performance of such services, both under his contractand in fact;

(b)such service is either outside theusual course of thebusiness forwhich such service isperformed 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 customarily engaged in an independently established trade, occupation, profession, orbusiness. Section 39-51-203 (4)

### , MCA (1985)

# . This version of the statute ennunciates the "ABC"test for independent contractorstatus. Chapter 51, Part 2 of Title 39 was amended and rearranged in the 1987 version of the Code, and the wording of this section was changed to remove the ABC test. The League bases its vagueness argument on the 1987 version of the statute, which must he read in conjunction with other sections of the Code, and which is not applicable to this

case. The burden of proof under 

### fi 39-51-203(4)

## ,MCA (1985)

### , is set out in the statute itselfand amply discussed in cases from this Court applying the statute. 11. The League disagrees with the District Court'sholding that compensation paid to umpires is subject to the unemployment insurance law. According to the League, the court misapplied 

### fi 39-51-203(4), MCA (1985), to the undisputed facts of this case. The League argues that under the statute, its umpires are independent contractors not covered by the unemployment insurance law. In order to establish independent contractor status, all three parts of the ABC test set out abovemust be met. Zimmer, 752 P.2d at 1098, citing Standard Chem. Mfg. Co. v. Employment Sec. (1980), 185 Mont. 241, 605 P.2d 610; and Pat Griffin Co. v. Employment Security Com'n (1974!, 163 Mont. 529, 519 P.2d 147. The first, or "A" part of: the test requires that the individual in question "he free from control or direction

over the performance of such services." We have held this to be the most important of the three test elements. Zimmer, 752 P.2d at 1098, and cases cited. The record shows that under the contract between Friedrichs and the League, the League dictated Friedrichs's monthly compensationand expense allowance, without giving him the opportunity to negotiate those terms. TheLeague controlled his game assignments,and determined who his co-workers would be. Friedrichswas also forbidden from contracting with another employer withoutLeague permission, and the League reserved the right to terminate him at any time. This combination of facts provides ample evidence that Friedrichs was not free from control or directionby the League as tohow he performed his services. The League's arrangement with Friedrichs fails to meet the first element of the ABC test, and therefore fails the entire testunder ourholding in Zirnmer and its predecessors. Friedrichs was an employee of the League, and his remuneration was subject to the unemployment insurance law. We find no abuse of discretion in the District Court's decision to affirm the Board's ruling. We affirm the decision of theDistrictCourt.

Chief Justice 

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Justice