2018 UT App 49

THE UTAH COURT OF APPEALS

FUR BREEDERS AGRICULTURAL COOPERATIVE,

Petitioner,

v.

DEPARTMENT OF WORKFORCE SERVICES,

Respondent.

Opinion

No. 20161064-CA

Filed March 29, 2018

Original Proceeding in this Court

R. Scott Rawlings, Attorney for Petitioner

Nathan R. White, Attorney for Respondent

JUDGE RYAN M. HARRIS authored this Opinion, in which JUDGES

MICHELE M. CHRISTIANSEN and JILL M. POHLMAN concurred.

HARRIS, Judge:

¶1 Fur Breeders Agricultural Cooperative (FBAC) 

occasionally hires off-duty police officers to provide a security 

presence at its facilities, and pays those officers an hourly wage 

for their services. The Utah Department of Workforce Services 

(DWS) considers these officers to be employees of FBAC, and 

has charged FBAC with making unemployment insurance 

contributions related to its payments to the officers. FBAC 

disagrees with that determination, and maintains that the 

officers are not its employees, and that it should not be required

to make unemployment insurance contributions related to its 

payments to the officers. A DWS hearing officer, an 

administrative law judge, and the DWS Board of Appeals (the 

Board) all determined that the officers were FBAC’s employees. 

FBAC seeks judicial review of the Board’s determination.
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¶2 Upon review, we conclude that the Board’s analysis was 

flawed, in that it improperly framed the relevant question. 

Instead of asking whether the off-duty officers were 

“independent” from FBAC, as the governing statute and 

regulation require, the Board engaged in an analysis geared 

toward ascertaining whether the officers were independent from 

anyone. In this opinion, we set aside the Board’s order, provide 

instruction as to the proper framing of the question, and direct

the Board to revisit the matter with the proper framework in 

mind.

BACKGROUND

¶3 FBAC is a business that manufactures and distributes 

animal feed to farmers who raise animals for their fur. On 

occasion, animal rights activist groups have been known to 

attempt to damage or destroy property belonging to businesses

like FBAC. In an effort to prevent such damage, FBAC 

sometimes hires off-duty police officers to provide security 

services and a “greater police presence” at its facilities. It finds

these officers through the Unified Police Department of Greater 

Salt Lake (UPD), a police department that serves many Salt Lake 

County cities and communities.

¶4 UPD has a voluntary “secondary employment program” 

through which it allows and coordinates after-hours off-duty 

work opportunities for its officers. Any UPD officer who wishes 

to engage in police or security services for private entities during 

off-duty hours must use UPD’s secondary employment 

program; UPD prohibits its officers from engaging in any such 

services outside the program. Any UPD officers who wish to 

engage in off-duty police work must sign up for the secondary 

employment program, and UPD then places those officers with 

an individual or entity who wishes to engage their services.
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¶5 On occasion, FBAC contacts UPD and asks to retain the 

services of several off-duty officers. Upon receiving such 

requests, UPD provides FBAC with the names of available 

officers, and FBAC engages the officers directly and pays them 

an hourly wage. All payments are made directly from FBAC to 

the individual officers. The officers remain employees of UPD, 

and perform services for FBAC (and others) only in their offduty hours. All of the officers who provided services to FBAC in

their off-duty hours during the relevant time period also 

provided similar occasional off-duty services to other companies 

during the same time period.

¶6 FBAC provides no training to the officers. FBAC also does

not provide the officers with any instructions as to how to 

perform their services, and does not require the officers to 

perform their services in any particular pace or sequence. In 

addition, FBAC does not furnish any equipment to the officers; 

all equipment used by the officers during their work for FBAC, 

including their uniforms, firearms, and police vehicles, was 

provided either by UPD or by the officers themselves.

¶7 In July 2016, a DWS hearing officer determined that the 

officers were “employees” of FBAC, such that payments made 

by FBAC to the officers were subject to unemployment insurance 

contributions. FBAC appealed the hearing officer’s decision to an 

administrative law judge, who determined in October 2016 that 

the officers were FBAC’s employees. FBAC then appealed to the 

Board, which in December 2016 affirmed the administrative law 

judge’s determination. FBAC now seeks review in this court.

ISSUE AND STANDARD OF REVIEW

¶8 While FBAC purports to raise several issues in its appeal, 

this case can essentially be narrowed to one dispositive issue: 

whether the Board correctly framed the question before deciding 

that the officers were FBAC’s employees. We view this question-
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framing issue as one of statutory and regulatory interpretation, 

and therefore one to which we grant no deference to the Board. 

When an agency “has erroneously interpreted or applied the 

law,” “[t]he appellate court shall grant relief” from the decision 

reached by that agency. Utah Code Ann. § 63G-4-403(4)(d)

(LexisNexis 2016). We review whether an agency properly 

interpreted or applied the law for correctness. Petersen v. Utah 

Labor Comm’n, 2017 UT 87, ¶ 8.

1

ANALYSIS

¶9 Under Utah law, individuals performing services for 

wages “under any contract of hire” are considered to be 

employees unless they meet both parts of a two-part test: they 

must be both (1) “customarily engaged in an independently 

 

1. DWS argues that we should not review the threshold legal 

question for correctness, but should instead apply the same 

deference to the Board’s framing of the question that we 

typically apply to its ultimate “determinations.” See, e.g.,

Evolocity, Inc. v. Department of Workforce Services, 2015 UT App 61, 

¶ 6, 347 P.3d 406 (noting that “[w]e do not reweigh the evidence 

or substitute our decision for that of [an agency board] but 

instead will uphold its determinations if they are supported by 

the record evidence”); Tasters Ltd. v. Department of Emp’t Sec., 863 

P.2d 12, 19 (Utah Ct. App. 1993) (noting that we defer to the 

“intermediate conclusions” and “ultimate determination[s]” of 

an agency board if they are not “irrational” or “unreasonable”). 

DWS cited no case law supporting that proposition, and we are 

aware of none. To the contrary, when the Board bases a 

determination on its “interpretation of the applicable statutes,” 

this “presents a question of law that we review for correctness.” 

Carlos v. Department of Workforce Services, 2013 UT App 279, ¶ 5, 

316 P.3d 957.
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established trade, occupation, profession, or business of the same 

nature as that involved in the contract of hire for services”; and 

(2) “will continue to be free from control or direction over the 

means of performance of those services, both under the 

individual’s contract of hire and in fact.” Utah Code Ann. § 35A4-204(3) (LexisNexis 2015). The administrative law judge 

determined that, while FBAC would prevail on the second 

element of the test because it had not provided the officers with 

any control or direction, FBAC could not make the showing 

required under the first element of the statutory test because the 

officers’ “main occupation or profession was as a police officer 

working for the UPD and it has not been demonstrated [that] 

they were customarily engaged in an independently established 

business.” The Board affirmed the determination of the 

administrative law judge, also resting its conclusion on the first 

element of the test, concluding that “the officers are not 

independently established in their own business.”

¶10 In interpreting the governing statute, the Board properly 

looked to regulatory guidance in the Utah Administrative Code. 

See Utah Admin. Code R994-204-303. There, several factors have 

been developed to aid in the determination of whether a worker 

is an “employee” under the two-part statutory test. Id. R994-204-

303(1)(b). The regulation specifically notes that the question is 

governed by the two-part statutory test, id. R994-204-303 

(“whether the worker is independently established in a like 

trade, occupation, profession or business and is free from control 

and direction”), and that the “factors listed” in the regulation 

“are intended only as aids” in applying the statutory test, id.

¶11 Importantly for present purposes, with regard to the first 

element of the statutory test, the regulation emphasizes that the 

“independence” question is to be answered by reference to the 

relationship between the worker and the “alleged employer.” See

id. R994-204-303(1)(a) (stating that “[a]n individual will be 

considered customarily engaged in an independently established 
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trade . . . if the individual is . . . regularly engaged in a trade . . . 

of the same nature as the service performed, and the trade . . . is 

established independently of the alleged employer” (emphasis 

added)); see also Evolocity, Inc. v. Department of Workforce Services, 

2015 UT App 61, ¶ 20, 347 P.3d 406 (stating that the “ultimate 

inquiry” is whether the worker had a business that “exists apart 

from a relationship with [the putative employer] and does not 

depend on a relationship with [the putative employer] for its 

continued existence”).

¶12 The regulation then lists seven factors that may, “if 

applicable,” aid in the determination of whether a worker is 

“customarily engaged in an independently established trade”:

(i) Separate Place of Business. The worker has a 

place of business separate from that of the 

employer.

(ii) Tools and Equipment. The worker has a 

substantial investment in the tools, equipment, or 

facilities customarily required to perform the 

services. However, “tools of the trade” used by 

certain trades or crafts do not necessarily 

demonstrate independence.

(iii) Other Clients. The worker regularly performs 

services of the same nature for other customers or 

clients and is not required to work exclusively for 

one employer.

(iv) Profit or Loss. The worker can realize a profit 

or risks a loss from expenses and debts incurred 

through an independently established business 

activity.

(v) Advertising. The worker advertises services in 

telephone directories, newspapers, magazines, the 
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Internet, or by other methods clearly 

demonstrating an effort to generate business.

(vi) Licenses. The worker has obtained any 

required and customary business, trade, or 

professional licenses.

(vii) Business Records and Tax Forms. The worker 

maintains records or documents that validate 

expenses, business asset valuation or income 

earned so he or she may file self-employment and 

other business tax forms with the Internal Revenue 

Service and other agencies.

Utah Admin. Code R994-204-303(1)(b)(i)–(vii). The administrative 

law judge and the Board both examined these factors, and

determined that the officers were not “independently 

established” and were therefore “employees” of FBAC.

¶13 In examining these factors, however, the Board appears to 

have overlooked the admonition of the regulation that the 

“independence” inquiry is governed by reference to the 

relationship between the worker and the “alleged employer,” 

rather than by reference to any relationship that the worker 

might have with any other individual or entity. After all, the 

question presented is whether FBAC (and not UPD or some 

other entity) should be required to make contributions to 

unemployment insurance related to the payments FBAC made 

to the officers for their security services, something FBAC is 

obligated to do only if the officers are its “employees.” In 

answering this question, it is relevant and important to examine 

the relationship between the officers and FBAC. By contrast, the 

officers’ relationship with UPD, or with any other entity for 

whom they might perform off-duty security services, is of only 

minimal or tangential relevance.
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¶14 Examination of two of the factors examined by the Board 

illustrates the point. One factor listed in the regulation is 

captioned “tools and equipment,” and invites the examiner to 

inquire about whether “[t]he worker has a substantial 

investment in the tools, equipment, or facilities customarily 

required to perform the services.” Id. R994-204-303(1)(b)(ii). In 

our view, and especially given that the basic question to be 

answered concerns the officers’ level of independence from 

FBAC (the “alleged employer”), this factor should be 

approached by examining whether and to what extent the 

alleged employer (here, FBAC) provided the tools and 

equipment that the officers needed in order to perform their 

services. As noted, there is no evidence that FBAC provided a 

single tool or piece of equipment to the officers. Instead, the

record demonstrates that the officers brought all of their 

equipment with them, including their uniforms, their police 

vehicles, and their firearms.

¶15 Under this factor, the central inquiry is whether, and to 

what extent, the alleged employer (FBAC) played a role in 

providing the officers with their tools and equipment. If FBAC 

did not provide tools or equipment, it becomes irrelevant

whether the officers obtained their tools through personal 

payments or through some other third-party source (e.g., from 

UPD). Yet in discussing this factor the Board focused entirely on 

whether UPD had provided the tools and equipment to the 

officers as opposed to whether the officers paid for that 

equipment personally. This was erroneous. The Board concluded 

that this factor “weighs in favor of employment,” but we cannot 

see how that is the case given the absence of evidence that FBAC 

provided any of the tools and equipment the officers used. 

Where the worker brings his own tools and equipment, and does 

not get them from the alleged employer, this factor should weigh 

against employment, regardless of whether the worker is 

fortunate enough to have some third-party benefactor, separate 
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from the alleged employer, who has provided all or part of the 

tools and equipment in question.

¶16 Another factor listed in the regulation is captioned 

“licenses,” and invites the examiner to inquire whether “[t]he 

worker has obtained any required and customary business, 

trade, or professional licenses.” Id. R994-204-303(1)(b)(vi). Here, 

the Board noted that the officers, as a prerequisite for working 

for UPD, had already become “duly trained and certified to be 

police officers,” and had received all of the licenses required for 

employment as law enforcement officers. However, the Board 

determined that because these licenses were required by UPD, 

and because the officers were prohibited from operating an 

independent business as security officers outside of UPD’s 

secondary employment program, “[i]t stands to reason that . . . 

police certification is not necessary or customary licensure for a 

business owner seeking to operate in this market.” Accordingly, 

because the officers had not obtained any licenses independently 

from UPD, the Board determined that this factor “weigh[ed] 

towards employment” by FBAC.

¶17 As with the “tools and equipment” factor, the Board here 

lost sight of the overarching question, which is whether the 

officers are “established independently of the alleged employer.” 

Id. R994-204-303(1)(a). The officers reported for work at FBAC 

already possessing any and all licensure and certification 

required to perform security services as police officers; there is 

certainly no evidence that the officers lacked any required

licensure or certification. The Board again here seems to have 

been unduly distracted by whether the officers obtained any 

licenses or certifications independently from UPD, which is 

irrelevant to the overarching inquiry.

¶18 The two factors we have discussed here are merely 

illustrative of how the Board’s improper framing of the question 

infected its analysis. We suspect that the manner in which the 

Board framed the question affected more than just these two 
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illustrative factors.2 But we do not intend, in this opinion, to 

separately analyze and re-weigh all of the factors. That is the 

task of the Board, to whose conclusions in that regard we usually 

defer, at least where the Board asks the operative question in the 

right way.

¶19 We therefore set aside the Board’s order, and direct the 

Board to reconsider the question of whether these officers were 

 

2. We note here the hypothetical scenario we discussed in Needle 

Inc. v. Department of Workforce Services, 2016 UT App 85, ¶ 29, 372 

P.3d 696. In that case, one of the parties raised the hypothetical

scenario of a full-time college professor hired by a litigant to 

provide one-time expert testimony during a lawsuit. Id. ¶ 28. 

Considering that situation, we noted that it would be illogical to 

consider the professor to be an “employee of the [litigant] that 

hired him to be an expert witness,” because “the college 

professor was already established in the independent business of 

being a professor with the relevant expertise.” Id. ¶ 29. However, 

if the logic applied by the Board in this case were applied to this 

hypothetical, we would be hard-pressed to avoid the conclusion 

that, because the professor employed as an expert witness did 

not provide his own equipment (instead having it furnished by 

his university), did not independently obtain licenses (instead 

having those licenses required by his university as prerequisites 

for professorship), and did not have an independently 

established place of business (instead working at the university),

the professor would qualify as an “employee” of the litigant who 

hired him. That conclusion would misapprehend the law, and 

would be highly illogical. We see little to distinguish the expertwitness college professor’s situation from the situation presented 

here, in which officers already established in the independent 

business of law enforcement, with the equipment, expertise, and 

licensure relevant to that position, are hired by a third party to 

provide occasional police presence.
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employees of FBAC, and this time to consider that question in 

light of the overarching statutory and regulatory command, 

which is whether the officers are established independently of 

the alleged employer (here, FBAC), and not whether the officers 

are established independently from any other party, including 

their usual full-time employer, UPD.