Document: 331 U.S. 704 67 S.Ct. 1463 91 L.Ed. 1757 UNITED STATESv.SILK et al. HARRISON v. GREYVAN LINES, Inc. Nos. 312 and 673. Argued March 10, 11, 1947. Decided June 16, Mr. Robert L. Stern, of Washington, D.C., for petitioner. Ralph F. Glenn, Topeka, Kan., respondent Silk. Wilbur E. Benoy, Columbus, Ohio, Greyvan Lines. Justice REED delivered the opinion Court. 1 We consider together above two cases. Both involve suits to recover sums exacted from businesses by Commissioner Internal Revenue as employment taxes on employers under Social Security Act.1 In both instances were collected assessments made administratively because he concluded persons here involved employees taxpayers. cases turn a determination whether workers that Act or they independent contractors. Writs certiorari granted, United States Silk, 329 702, 111 Harrison Lines, 709, 369, general importance in collection social security axes de ciding what are applicable standards Act. Varying have been applied federal courts.2 2 Respondent No. 312, Albert doing business Silk Coal Co., sued States, petitioner, alleged illegally assessed years 1936 through 1939 The levied an employer certain workmen some whom engaged unloading railway coal cars others making retail deliveries truck. 3 sells at city Kansas. His coalyard consists buildings, one office other gathering place workers, railroad tracks upon which carloads railroad, bins different types coal. pays those who work unloaders agreed price per ton unload cars. These men come yard when please assigned car put They furnish their own tools, wish will. One these testified worked regularly 'as man has eat' but there was also testimony floaters came only intermittently. 4 owns no trucks himself contracts with deliver uniform ton. This is paid trucker out receives customer. When order taken company office, bell rung rings building used truckers. truckers voluntarily adopted call list names up turn, top opportunity ordered. not instructed how do jobs, merely given ticket telling them where be charge not. Any damage caused company. District Court found could often did refuse make delivery without penalty. Further, court may go frequently leave premises permission. haul pleased. pay all expenses operating trucks, extra help necessary equipment except storage bins. No record kept time. after each trip, end day week, request. 5 Collector ruled during within meaning accordingly additional Titles VIII IX ofthe Subchapters A C Chapter 9 Code. filed claim refund denied. He then brought this action. Circuit Appeals3 thought contractors allowed recovery. 6 673, Inc., common carrier motor truck, Collecter Revenue, it similar provisions Silk's case parts 1937 first quarter 1942. From holding petitioner appealed. Appeals affirmed. chief question truckmen perform actual service carrying goods shipped public respondent. Appeals4 7 operates its trucking permit issued Interstate Commerce Commission 'grandfather clause' Motor Carrier 49 U.S.C.A. § 301 seq. 32 M.C.C. 719, 723. It throughout thirty-eight states Canada, largely household furniture. While principal Chicago, maintains agencies solicit many larger cities areas serves, move goods. As early 1930, before passage Act, system relations concerned, gives rise present issue. based required exclusively labor pick up, handle shipments, operation, fire, theft, collision insurance might specify, loss shipments indemnify any acts truckmen, servants employees, paint designation 'Greyvan Lines' collect money due shippers consignees, such moneys report delivering shipment, post bonds amount $1,000 cash deposits $250 pending final settlement accounts, personally drive times truck competent relief driver driving (except emergencies, substitute employed approval company), follow rules, regulations, instructions All bills lading shipment between shipper. company's covered directions load freight. If freight tendered obligation notify so complete contract name. remuneration, receive percentage tariff charged varying 50 52% bonus 3% satisfactory performance service. terminable time either party. take short course instruction methods contractual obligations haul. maintained staff dispatchers orders truckmen's movements, although routes used, intervals, reported positions. Cargo carried permits, certificats fran chises 'necessary operation vehicle Federal State Law' obtained expense. 8 shows following undisputed facts, contained findings. manual instructions, Local 711 International Brotherhood Teamsters, Chauffeurs, Stablemen Helpers America introduced evidence. suffices say purported regulate detail conduct duties, agreement Union provided truckman must member union, grievances would referred representatives union. official impractical attempt enforce it. understand union effect. had driven admittedly employees. Operations systems same manner. blanket policy proportionately. 1935 result long consideration President Congress evil burdens rest large numbers our people insecurities modern life, particularly old age unemployment. enacted effort coordinate forces government industry solving problems.5 method advance purposes provide periodic payments nature annuities elderly compensation periods Employment taxes, we considering, produce revenue participation program alleviation. Employers groups agricultural domestic none exceptions §§ 811 907. Taxes laid excises wages nonexempt 804 901; I.R.C. 1410, 1600. 'Wages' means remuneration otherwise. 811, 907; 1426(a), 1607(b). 'Employment' 'any service, whatever nature, performed * employee his employer, cetera.' 811(b), 907(c); 1426(b), 1607(c). corollary coverage whose basis tax sections legislation, rights benefit depend receipt sections. 53 Stat. 1360, 202, 209(a), (b), (g), 205(c), (1), 42 402, 409(a, b, g), 405(c)(1). See Board Nierotko, 327 358, 66 637, 90 718, 162 A.L.R. 1445. relationship emphasizes underlying purpose legislation—the protection beneficiaries hardships existence. Helvering Davis, supra, page 640, 57 908, 81 1307, 109 1319. definition occurs 907(a) 1607(h). Compare, employment, 1532(d), amended P.L. 572, 79th Cong., 2d Sess., 1. Nothing helpful determining scope attention legislative history amendments thereto. 10 Since clear exemptions, as, example, broad categories 1384, 1393, cover whole field every enterprise, read exemptions mind. very specificity however, generality definitions6 indicates terms 'employment' 'employee,' construed accomplish legislation. legislation attack recognized evils national economy, constricted interpretation phrasing courts comport purpose. Such continuance, considerable degree, difficulties remedy devised invite adroit schemes avoid immediate expense benefits sought legislation.7 considerations heretofore guided construction Buckstaff Bath House Co. McKinley, 308 60 279, 84 322; 11 Of course, does mean render Compare Metcalf & Eddy Mitchell, 269 514, 520, 46 172, 173, 70 384. Obviously private contractor undertakes build fixed cost-plus new plant specifications thus served nor distributor market risk product another, producer agrees manufacture another ordinarily cannot said employer-employee relationship. Production distribution segments business. frustrated Government collects instead way around. 12 problem differentiating agent difficulty multiplied importance. matter arose administration National Labor Relations 29 151 seq., pointed legal fix responsibility servants, agents reduced certainty 'some simple, easily test.' word said, art, content context "in light mischief corrected attained." that, since elimination disputes industrial strife, 'employees' included economic reality. aim inequality bargaining power controversies over wages, hours working condiions. r ejected test "technical concepts pertinent employer's third servants." control, exercised not, manner performing industry. Restatement Law, Agency, 220. approved statement "the primary applicability statutory effectuation declared comprehend securing individual guaranteed afforded Act." Hearst Publications, 322 111, 120, 123, 124, 128, 131, 64 851, 855, 856, 857, 859, 860, 88 1170. 13 Application should rule case. This, free determine regard taxpayer 'employer' 'employee.' There indication intended change normal relationships organization services portion production distribution. Few completely integrated can themselves raw material, distribute finished ultimate consumer assistance drawn situation part surroundings enforced. Where process hands contractors, ones taxes. 14 long-standing regulations Treasury Agency (H. Doc. 595, Sess.) recognize exist portions set margin.8 Certainly industry's right control 'work shall done' factor worker contractor. points circumstances presented. shown assessments. Other administrative determinations called attention.9 15 So far refer effect contracts, think law challenged successfully. Contracts, however 'skillfully devised,' Lucas Earl, 281 115, 241, 74 731, permitted shift liability definitely statutes.10 16 Probably quite impossible extract statute thumb define limits employer-employer will find degrees opportunities profit loss, investment facilities, permanency relation skill claimed important decision. controlling complete. assistants standpoint integral retailing transporting Their energy, care judgment conserve increase earnings directors businesses. On hand, hire assistants, expenses, minor exceptions, initiative, energy success. 17 lower determined inferences facts concerning real dispute. excerpts opinions below show reasons conclusions.11 18 Giving full concurrence contrary result, agree contractors.12 picks shovels. gain lose simple tools. That significant. trade brings Act.13 group aid. position exercise supervision tasks. Unloaders held tort cases.14 19 cases, too, driver-owners wagons employees15 accident workmen's laws. But decisions arrangements much management here, beindependen t contractors.16 small businessmen. trucks. helpers. instance single business, distinction, though important, controlling. total situation, including undertaken, exercised, sound management, marks 20 affirmed reversed part. 21 22 BLACK, DOUGLAS MURPHY view principles law, stated agree, require reversal judgments entirety. 23 RUTLEDGE. 24 I join Court's insofar disposition application 25 borderline cases.1 true, think, even if socalled 'common control' conclusive,2 seem regarded it.3 more true broader factual approach holds applied. 26 views adopting balance close cast favor rather than against coverage, fulfill statute's beneficent objects. narrow, doubtful goes, indeed recognizes, defeat Act's pro tanto. 27 perhaps harmony practice, considering functions district courts, us undertake drawing conclusion generally Having applied, function sufficiently discharged seeing observed. And done, conclusion, matters properly ours. 28 Here Courts applying so-called criterion. clearly wrong, ruling. action basis, error remanding causes concerned. IX, 636 639, 1001 1101 repealed Code, chap. 9, subchap. C, Int. Rev. 1400 1600 Texas Higgins, Cir., 118 F.2d 636; Jones Goodson, 121 176; Deecy Products Welch, 124 592, 139 916; American Oil Fly, 135 491, 147 824; Glenn Beard, 141 376; Magruder Yellow Cab 324, 152 516; Mutual Trucking 655; Standard 148 51, 53; McGowan Lazeroff, 512; Wholesale 154 745; Vogue, 145 609, 612; Aberdeen Aerie, 24, 655, 658; Grace Magruder, App.D.C., 679, 680—681; Nevins, Rothensies, 189. 155 356. 156 412. Message President, January 17, 1935, Report Committee Economic Security, H.Doc.No.81, 74th 1st Sess.; S.Rep.No.628, 1s S. Rep.No.734, 76th H.Rep.No.615, H.Rep.No.728, Sess. Steward Machine 548, 883, 1279, 1293; 619, 904, Int.Rev.Code, 1607(c), 'The term prior 1, 1940, defined section date, December 31, 1939, person employing him, irrespective citizenship residence either, except—.' 639 643, 1011(b), 1107(b). suggest avoidance appears records. Regulation 90, promulgated Title Art. 205: 'Generally exists direct performs services, accomplished details accomplished. is, subject done done. discharge indicating possessing employer. factors characteristic furnishing tools work, services. general, direction accomplishing contractor, employee. 'If exists, description parties anything immaterial. Thus, individuals fact stand other, consequence designated partner, coadventurer, agent, measurement, mthod, d esignation immaterial, exists. 'Individuals Generally, physicians, lawyers, dentists, veterinarians, subcontractors, stenographers, auctioneers, trade, profession, offer public, employees.' C.F.R. 400.205. 91, 401.3. citation imply disapproval results. regulation agency. 51. note 2. Gregory Helvering, 293 465, 55 266, 79 596, 97 1355; Griffiths 355, 277, 319; Higgins Smith, 473, 406; Clifford, 309 331, 554, 788. 356, 358—359: 'But while appellee work. evidence ever haulers give sales willing it, let choose route going returning. delivery. 'We materially him haulers. response cross examination, testify superintendent told do, considered testimony, answer meant unloaded into bin. fail establish reasonable measure workrs n ecessary question.' Lines Harrison, 412, 414—416. After stating trial court's finding appellate noted: 'Appellant contends failed asserts reservation helpers operations which, agreed, question. *' (Continued p. 717) discussed concluded: 'While manual, strictly enforced, Company justify disregarding prepared until April, period November, 1937, March, 1942, tightening controls adoption distribution; never rules therein provided; officer three longer employ, adhered to.' discussion helper problem, appears: '* liable exerts knowledge. element goes prevent arising Company. indicate relationship, most vital missing many, any, use operations. Cf. 679. I.R.C., A, 1426(b): except— '(3) Casual business; *'. Swift Alston, 48 Ga.App. 649, 173 S.E. 741; Holmes Tennessee Coal. Iron Railroad La.Ann. 1465, So. 403; Muncie Foundry Thompson, Ind.App. 157, 123 N.E. 196; R.I. P.R. Bennett, 36 Okl. 128 P. 705, 678; Murray's Case, 130 Me. 181, A. 352, 75 720; Decatur R. Light Industrial Board, 276 Ill. 472, 114 915; Benjamin Davidson-Gulfport Fertilizer 169 Miss. 162, 839. Western Express Smeltzer, 94, 112 74; Bonfils, 78 Colo. 306, 241 735; Coppes Bros. Zook Pontius, 76 298, 131 845; Burruss B. M. C. Logging 38 N.M. 254, 31 P.2d 263; Bradley Republic Creosoting Mich. 177, 274 N.W. 754; Rouse Town Bird Island, Minn. 367, 211 327; Hammond, 77 414, 236 1006; Kirk Yarmouth Lime Insurance 137 73, A.2d 184; Showers Lund, Neb. 56, 242 258; Burt Davis-Wood Lumber 157 La. 102 87; Dunn Reeves Yards 150 282, 184 1027; Waters Pioneer Fuel 52 474, 52, Am.St.Rep. 564; Warner Fullerton-Powell Hardwood 231 328, 204 107; Frost Blue Ridge Timber Corp., 158 Tenn. 18, S.W.2d 860; Lee Mark H. Brown La.App. 294, 697. Singer Manufacturing Rahn, 132 518, 175, 33 440. stated, referring 655: 'It bar.' see 3. tort, test, injuries negligently inflicted property truckers, respectively, connection Indeed indicated, particularly, bore name, addition degree For point Silent Automatic Sales Corp. Stayton, 45 471 (applying Missouri law); Falstaff Brewing 101 Nebraska Young Wilky 54 F.Supp. 912, 764 Pennsylvania law). state Blashfield, Cyclopedia Automobile Law Practice, Perm.Ed., 1941, 6056. statute, employee, narowly status imposing vicarious formal findings conclusions appear record. 'Statement Court' recites focus concludes not; hence, relation. Appeals, recognizing necessity liberal treats control. influenced (Reg. 205) Bureau 3). concludes: necessary' create 359. filed. accepting findings, 'change controls' 'if *.' 415. However, conclusive: (may) operations.' 416. Apparently absence expressly reserved feature became criterion used.

Category: 11