Case Name: BON APPETIT GOURMET FOODS, INC., Employer Account No.: 122639-8, Employer-Appellant, v. STATE of Idaho, DEPARTMENT OF EMPLOYMENT, Respondent
Court: Idaho Supreme Court
Jurisdiction: Idaho
Decision Date: 1989-08-31
Citations: 117 Idaho 1002
Docket Number: No. 17122
Parties: BON APPETIT GOURMET FOODS, INC., Employer Account No.: 122639-8, Employer-Appellant, v. STATE of Idaho, DEPARTMENT OF EMPLOYMENT, Respondent.
Judges: BISTLINE and JOHNSON, JJ. concur.
Reporter: Idaho Reports
Volume: 117
Pages: 1002–1009

Head Matter:
793 P.2d 675
BON APPETIT GOURMET FOODS, INC., Employer Account No.: 122639-8, Employer-Appellant, v. STATE of Idaho, DEPARTMENT OF EMPLOYMENT, Respondent.
No. 17122.
Supreme Court of Idaho.
Aug. 31, 1989.
Addendum on Rehearing June 14, 1990.
Law Offices of Kenneth O. Kreis, P.A., Boise, for appellant. Kenneth O. Kreis, argued.
Jim Jones, Atty. Gen., Laura B. Arment, Deputy Atty. Gen., Boise, for respondent. Laura B. Arment, argued.

Opinion:
SHEPARD, Justice.
This is an appeal by Bon Appetit from a decision of the Industrial Commission holding that certain independent contractors are nevertheless covered employees of Bon Appetit under the provisions of I.C. § 72-1316(d)(2), and hence Bon Appetit is required to pay tax for unemployment compensation. Bon Appetit appeals on the sole basis that the statute is unconstitutional both on its face and as applied in violation of the equal protection clauses of the fourteenth amendment to the United States Constitution and art. 1 § 2 of the Idaho Constitution. We agree and reverse.
The facts are not at issue, and are in effect stipulated. Bon Appetit operates a gourmet food business, and contracts with independent agents to market its products on a door-to-door basis. The contracts between Bon Appetit and its agents are not contested, and clearly delineate a principal-agent relationship. Following an audit of Bon Appetit by the Department of Employment, the Department held that the independent agents were nevertheless "covered employees" and hence Bon Appetit was required to pay unemployment compensation tax. An appeals examiner held that although the agents met requirements to be denominated independent contractors, nevertheless the above statute required their inclusion in covered employment. On appeal to the Industrial Commission it was held and concluded that the intent of the parties as expressed in the contracts, required a holding that the agents were independent contractors, but nevertheless that such independent agents fell within the I.C. § 72-1316(d)(2) definition of covered employment. This appeal results.
The pertinent provisions of I.C. § 72-1316(d) provide:
(d) Services performed by an individual for remuneration shall, for the purposes of the Employment Security Law, be covered employment:
(1) Unless it is shown: (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;
(2) Even though such individual meets the exemption of subsection (d)(1)(A) and (B) but performs services;
(A) As an agent-driver or commission-driver engaged in distributing meat products, vegetable products, fruit products, bakery products, beverages, or laundry or dry cleaning services for his principal;
Thus, under the statute otherwise independent contractors engaged in distributing meat, vegetables, fruit, bakery or beverage products, or conducting laundry or dry cleaning businesses are conclusively held to be "covered employees" and the principals to the principal-agency contract are required to pay "unemployment tax." We are cited to no statute which imposes "employee" status on those who are otherwise independent contractors in such well known fields as the door-to-door vending of cosmetics, magazine and other publications, vacuum cleaners, home cleaning products, or the solicitation of charitable contributions, to mention only a few examples. Clearly, otherwise independent agents who market food or beverage products, or laundry or dry cleaning services on a door-to-door basis, are singled out by the statute from all others in the business of marketing door-to-door. The Department of Employment offers no rationale for such categorization, and we find no rationale therefore expressed in any legislation.
As noted above, Bon Appetit asserts the denial of equal protection under both the fourteenth amendment to the United States Constitution, and art. 1 § 2 of the Idaho Constitution. An act of the legislature is presumed to be constitutional, but whether the act is reasonable or arbitrary or discriminatory is a question of law for determination by this Court. Weller v. Hopper, 85 Idaho 386, 379 P.2d 792 (1963). The principle underlying the equal protection clauses of both the Idaho and United States Constitutions is that all persons in like circumstances should receive the same benefits and burdens of the law. Sterling H. Nelson & Sons, Inc. v. Bender, 95 Idaho 813, 520 P.2d 860 (1974); State v. Breed, 111 Idaho 497, 725 P.2d 202 (Ct.App.1986). This Court has held that a classification for tax purposes is reviewed on the rational basis test. The rational basis test requires that a statutory classification be rationally related to a legitimate government objective. State v. Breed, id.; Packard v. Joint School District 171, 104 Idaho 604, 661 P.2d 770 (Ct.App.1983).
This Court, in the application of the rational basis test, utilized a two-step analysis in reviewing a classification made for tax purposes. Evans v. Idaho State Tax Commission, 95 Idaho 54, 501 P.2d 1054 (1972). That analysis requires first a determination of whether the statute reflects any reasonably conceivable public purpose. Secondly, it is a determination of whether the classification is reasonably related to that purpose. Evans v. Idaho State Tax Commission, id.
The statute in question here singles out those who contract with agents for the distribution of "meat products, vegetable products, fruit products, bakery products, beverages or laundry or dry cleaning services," and denominates them as employers who are required to pay unemployment compensation tax. Insofar as we are informed by the parties here, for all other purposes like parties are denominated independent contractors.
We are cited to and find no legislative statement of policy or public purpose for this particular classification. The respondent Department of Employment offers no explanation or justification for such legislative distinction. We are not cited nor have we discovered any reason or rationale stated or furnished in any portion of the Congressional enactments.
We have engaged in our own independent analysis to ascertain a legitimate basis for what on its face is a discriminatory tax. We find no such rational basis. We find the particular provisions of I.C. § 72-1316 to be unconstitutional on its face, and as applied, since it denies Bon Appetit equal protection of the laws in violation of the fourteenth amendment of the United States Constitution and art. 1 § 2 of the Idaho Constitution.
The cause is reversed and remanded to the Industrial Commission for the entry of appropriate orders.
BISTLINE and JOHNSON, JJ. concur.
SHEPARD, J. authored this opinion prior to his untimely death.