Title: Q.D.-A., Inc. v. Indiana Department of Workforce Development
Citation: N/A
Docket Number: 19S-EX-43
State: Indiana
Issuer: Indiana Supreme Court
Date: January 23, 2019

I N  T H E  
Indiana Supreme Court 
Supreme Court Case No. 19S-EX-43 
Q.D.-A., Inc. 
Appellant 
–v– 
Indiana Department of Workforce Development 
Appellee 
Argued: September 13, 2018 | Decided: January 23, 2019 
Appeal from the Indiana Department of Workforce Development, 
Unemployment Insurance Appeals, 
No. 93484 
 The Honorable Suzanne E. Manning, Liability Administrative Law Judge 
On Petition to Transfer from the Indiana Court of Appeals,  
No. 93A02-1703-EX-556 
Opinion by Justice Massa 
Chief Justice Rush and Justices David and Goff concur. 
Justice Slaughter concurs in result. 
 
FILED
C L E R K
Indiana Supreme Court
Court of Appeals
and Tax Court
Jan 23 2019, 2:29 pm
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Massa, Justice. 
Q.D.-A. matches drivers with customers who need large vehicles 
driven to them. Because Q.D.-A. classified these drivers as independent 
contractors, it did not pay unemployment taxes for them under the 
Indiana Unemployment Compensation Act. The Act presumes a worker is 
an employee unless the employer can show three things: (A) the worker is 
free from the employer’s control and direction, (B) the worker performs a 
service outside the usual course of the employer’s business, and (C) the 
worker receives a commission or operates an independently established 
trade, occupation, or profession. 
After a driver for Q.D.-A. filed for unemployment benefits under the 
Act, the Department of Workforce Development told the company that it 
had misclassified him as an independent contractor. But because Q.D.-A. 
proved the Act’s three-part test, we hold that he was an independent 
contractor. 
Facts and Procedural History 
Q.D.-A. is a business that connects drivers with customers who need 
too-large-to-tow vehicles driven to them. Consistent with its typical 
practice, Q.D.-A. contracted with a Driver to pair him with customers 
needing this drive-away service. Under this contract—which explicitly 
called him an independent contractor—Driver could choose his own 
hours and the routes he believed were safest and most direct, contract 
with Q.D.-A.’s competitors, decline any work offered by Q.D.-A., 
negotiate his pay for each trip, and hire other drivers to complete his 
deliveries if they were qualified under federal regulations. Because  
Q.D.-A. believed these terms made Driver an independent contractor 
instead of an employee, it did not pay unemployment taxes for him. 
After parting ways with Q.D.-A., Driver filed for unemployment 
benefits with the Department of Workforce Development. Because 
Q.D.-A. did not pay unemployment taxes for Driver, the Department 
investigated to determine whether Q.D.-A. should have classified Driver 
as an employee. After examining their contract and speaking with Driver 
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and representatives from Q.D.-A., the Department analyzed their 
relationship under the statutory “ABC Test.”  
To prevail under this test, Q.D.-A. needed to show that (A) Driver was 
free from its control and direction, (B) Driver performed his work outside 
the company’s usual course of business, and (C) Driver was customarily 
engaged in an independently established trade or business of the work 
performed. See Ind. Code § 22-4-8-1(b). After looking at all the evidence, 
the Department determined that Q.D.-A. failed to prove any of those three 
prongs. According to the Department, Driver was an employee. 
Q.D.-A. protested. At a hearing before a Liability Administrative Law 
Judge (or LALJ), the Department’s sole witness, the investigator who 
classified Driver as an employee, acknowledged that 
• She knew nothing about Q.D.-A.’s two-day orientation or 
internal policies, 
• She believed Q.D.-A. showed control over Driver when it 
required him to follow state and federal regulations, 
• Driver’s unilateral ability to choose how to do his job could 
be considered the “opposite” of control, 
• It would be “very odd” for an employer to allow an 
employee to hire someone else to do his job, and 
• Q.D.-A. acted as a “middleman” between drivers and 
customers. 
Tr. Vol. 2, pp. 19, 22–23, 29, 31, 32, 40. 
On the other hand, Q.D.-A.’s director of administration and dispatch 
supervisor both testified that 
• Q.D.-A. provided neither direction to Driver on how he 
should perform his job nor evaluation of his performance, 
• Q.D.-A. permitted Driver to outsource his work to other 
drivers, 
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• Driver could negotiate his pay for each trip and could work 
for more than one drive-away company, 
• Driver paid for all incidental expenses (like lodging, meals, 
tolls, and fuel) and provided all equipment (like any 
vehicle he towed to drive back home, hitch equipment, tow 
bars, 
light 
connectors, 
safety 
triangles, 
and 
fire 
extinguishers), 
• Driver could refuse any jobs offered to him with no 
repercussions and could call in at his convenience to see if 
any jobs were available,  
• The primary purpose of the orientation and internal 
policies is “to go over the regulations brought on by the 
federal government,” 
• Q.D.-A. only employs individuals to “pair the customer 
with the contractor,” 
• Although Q.D.-A. registered as a motor carrier with  
the federal government and has a Department of 
Transportation (DOT) number, it is “very common” in  
the industry for “contractors [to] contract with a motor 
carrier or the middle man who has the DOT number,” 
• All drive-away companies must comply with federal 
regulations, and 
• Driver was personally liable to follow federal regulations. 
Tr. Vol. 2, pp. 42–53, 66–67, 70, 74, 76, 80, 85. 
After the hearing, the LALJ affirmed the Department’s classification, 
concluding that even though Q.D.-A. had established that Driver ran an 
independently established business, it had failed to prove the two other 
prongs. First, the LALJ reasoned, Q.D.-A. controlled Driver because it 
provided “a two-day orientation to its independent contractors,” trained 
them on federal regulations and employer policies, and required them to 
perform a driving test. Ex. Vol. 4, p.102. And second, the LALJ opined, 
Driver performed work within Q.D.-A.’s usual course of business because 
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Q.D.-A. “is a provider of one-way transportation of commodities” and 
“[t]he independent contractors provide those services to the clients on 
behalf of the employer.” Id. 
Q.D.-A. appealed, and a divided panel of our Court of Appeals 
reversed, holding that Q.D.-A. satisfied the ABC Test. Q. D.-A., Inc. v. 
Indiana Dep’t of Workforce Dev., 96 N.E.3d 620, 627 (Ind. Ct. App. 2018), 
vacated. First, the majority determined, Q.D.-A.’s “one-time orientation 
session” and “incorporation of federal regulations” into its policies did 
“not demonstrate the kind of ongoing control over work methods needed 
to show control and direction.” Id. at 626. Second, Q.D.-A. and Driver 
offered “complementary” yet distinct services because, the majority 
reasoned, Q.D.-A. “functions as an intermediary or middleman” when it 
employs people to pair customers and drivers. Id. at 627. And third, the 
majority noted, neither party disputed the LALJ’s finding that Driver 
“was customarily engaged in an independently established trade, 
occupation, profession, or business of transporting commodities.” Id. 
The dissent pointed to another Court of Appeals opinion seemingly in 
conflict with the panel’s decision here. Id. at 627–29. See Company v. Indiana 
Dep’t of Workforce Dev., 86 N.E.3d 204, 209 (Ind. Ct. App. 2017) (holding 
that an LALJ’s conclusion that a drive-away driver was an employee of a 
company was reasonable). Since we agree that “[t]he Court of Appeals has 
entered a decision in conflict with another decision of the Court of 
Appeals on the same important issue,” Ind. Appellate Rule 57(H)(1), we 
grant the Department’s petition to transfer. In resolving this conflict in 
decisions, we also reverse the LALJ. 
Standard of Review 
Under the Unemployment Compensation Act, “[a]ny decision of the 
liability administrative law judge shall be conclusive and binding as to all 
questions of fact.” I.C. § 22-4-32-9(a) (2018). But when challenged as 
contrary to law, we review the LALJ’s decision for the “sufficiency of the 
facts found to sustain the decision” and the “sufficiency of the evidence to 
sustain the finding of facts.” I.C. § 22-4-32-12 (1990). Under this standard, 
we review an LALJ’s (1) findings of basic fact to ensure “substantial 
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evidence” supports those findings, (2) conclusions of law for correctness, 
and (3) inferences or conclusions from basic facts, often called “mixed 
questions of law and fact,” for reasonableness. McClain v. Review Bd. of 
Indiana Dep't of Workforce Dev., 693 N.E.2d 1314, 1317–18 (Ind. 1998). 
Since the LALJ’s conclusion of whether Driver met the ABC Test is a 
mixed question of law and fact, we review it for reasonableness. And 
because deciding whether a worker is an employee or independent 
contractor falls within the special competence of the Department, we show 
“greater deference” to the reasonableness of the Department’s 
determination. Id. at 1318. But even when showing this heightened 
deference, we will not blindly sustain the determination of the 
Department and will reverse “if the underlying facts are not supported by 
substantial evidence,” if “the logic of the inference is faulty,” or “if the 
agency proceeds under an incorrect view of the law.” Id. 
Discussion and Decision 
The Unemployment Compensation Act requires employers to pay 
unemployment taxes for employees but does not require them to pay 
those taxes for independent contractors. I.C. §§ 22-4-10-1(a), -4-2, -8-1. The 
Act’s ABC Test—so called because of its former statutory placement—
presumes a worker is an employee unless an employer can establish three 
prongs: 
(1) The individual has been and will continue to be free from 
control and direction in connection with the performance 
of such service, both under the individual’s contract of 
service and in fact. 
(2) The service is performed outside the usual course of the 
business for which the service is performed. 
(3) The individual: 
(A) is customarily engaged in an independently 
established trade, occupation, profession, 
or business of the same nature as that 
involved in the service performed; or 
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(B) is a sales agent who receives remuneration 
solely upon a commission basis and who is 
the master of the individual’s own time and 
effort. 
I.C. § 22-4-8-1(b). Finding that Q.D.-A. has established all three prongs, we 
hold that Driver was an independent contractor. 
A. Driver was not under Q.D.-A.’s control or 
direction. 
First, to show that Driver was an independent contractor, Q.D.-A. must 
demonstrate it lacked control and direction over Driver, both under 
contract and in fact. See I.C. § 22-4-8-1(b)(1).  
Under contract, Q.D.-A. and Driver “expressly understood and agreed” 
that Driver was an independent contractor. Ex. Vol. 3, p.16. This contract 
required Driver to provide all his own equipment and gave him ultimate 
control over how to complete his work. And the contract allowed Driver 
to provide drive-away services for any competitor and hire his own sub-
contractors to complete his deliveries. Under contract, Q.D.-A. lacked 
control over Driver. 
To show that it lacked control over Driver in fact, Q.D.-A. must show 
that it did not control the “‘manner, method, and means’” in which he 
performed his services. Circle Health Partners, Inc. v. Unemployment Ins. 
Appeals of Indiana Dep’t of Workforce Dev., 47 N.E.3d 1239, 1243 (Ind. Ct. 
App. 2015) (quoting Alumiwall Corp. v. Indiana Emp’t Sec. Bd., 130 Ind. 
App. 535, 541, 167 N.E.2d 60, 62 (1960)). First, despite the Department 
arguing that Q.D.-A. controlled Driver because it required him to follow 
federal regulations, we agree with the United States Court of Appeals for 
the District of Columbia Circuit that “[g]overnment regulations constitute 
supervision not by the employer but by the state.” Local 777, Democratic 
Union Org. Comm., Seafarers Int’l Union of N. Am., AFL-CIO v. NLRB, 603 
F.2d 862, 875 (1978). The LALJ saw no evidence that the orientation or 
company policies went beyond echoing government regulations.  
Q.D.-A.’s Director of Administration testified that the purpose of the 
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orientation was “to go over the regulations brought on by the federal 
government” and the company policies merely reiterated “federal motor 
carrier regulations.” Tr. Vol. 2, pp. 45, 46. The Department’s sole witness, 
on the other hand, testified that she knew nothing about Q.D.-A.’s 
orientation or policies. Since Q.D.-A.’s orientation and policies merely 
relayed government regulations to Driver that he was already required to 
obey, Q.D.-A. did not control him by requiring him to follow them. 
Independent of this government-regulation analysis, we hold Q.D.-A.’s 
control over Driver insufficient to form an employer-employee 
relationship because requiring work to be completed “in a good and 
workmanlike manner . . . is inherent in all services performed by one for 
another.” Alumiwall, 130 Ind. App. at 541, 167 N.E.2d at 62. Q.D.-A. merely 
required Driver to complete his work in this competent manner by asking 
him to successfully complete the trips. 
Q.D.-A. gave no guidance to Driver on how he should perform his 
work and never evaluated or monitored him. See Twin States Pub. Co. v. 
Indiana Unemployment Ins. Bd., 678 N.E.2d 110, 114 (Ind. Ct. App. 1997) 
(holding that newspaper carriers were independent contractors when a 
publishing company required only that they “deliver the guides by 5:00 
p.m. on Tuesdays” and “place the guides in a dry place”), trans. denied. Cf. 
Circle Health, 47 N.E.3d at 1245 (holding that health professionals were 
employees when they were given, in precise order and exacting detail, 
“eighteen specific steps to complete”); Bloomington Area Arts Council v. 
Dep’t of Workforce Dev., Unemployment Ins. Appeals, 821 N.E.2d 843, 850–51 
(Ind. Ct. App. 2005) (holding that instructors were employees when an art 
education center monitored teacher performance and required them to 
adhere to center-specific policies in its instructor’s manual). 
Driver could refuse jobs with no repercussions, work for as many 
drive-away companies as he wanted, negotiate his per-trip pay, and call in 
at his own convenience for jobs. Cf. Circle Health, 47 N.E.3d at 1245 
(holding that health professionals were employees when they could not 
“conduct the screenings at times other than the hours scheduled for the 
screenings”); Bloomington Area Arts Council, 821 N.E.2d at 850–51 (holding 
that instructors were employees when an art education center decided if 
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and when to offer classes and expected teachers “to find and pay a 
substitute if one is necessary”). 
Driver also provided his own tools and equipment, paid for any 
incidental expenses, and could determine the payment and guidelines for 
any drivers he hired who qualified under federal regulations. See 
Alumiwall, 130 Ind. App. at 540–41, 167 N.E.2d at 62 (holding that siding 
installers were independent contractors when they “provided their own 
tools and equipment” and could “hire helpers and determine the wage 
scale of such helpers”). Cf. Circle Health, 47 N.E.3d at 1245 (holding that 
health professionals were employees when they could not “send others to 
complete the work”). 
In sum, Driver had total control over how—and even if—he completed 
his work. No evidence shows Q.D.-A., in fact, controlled Driver in a way 
that would make him an employee. Instead, as the Department’s 
investigator herself contemplated, all these facts show the “opposite” of 
control.  
Because all evidence showed that Driver, under contract and in fact, 
was free from Q.D.-A.’s direction and control, the LALJ’s contrary 
conclusion was unreasonable. 
B. Driver performed a service outside Q.D.-A.’s usual 
course of business. 
Second, for Q.D.-A. to establish that Driver was an independent 
contractor, it must show that he performed a service outside its usual 
course of business. See I.C. § 22-4-8-1(b)(2). With no Indiana case clearly 
defining “course of business,” we adopt the definition applied by two of 
our sister states under their respective ABC Tests: “if an enterprise 
undertakes an activity, not as an isolated instance but as a regular or 
continuous practice, the activity will constitute part of the enterprise’s 
usual course of business irrespective of its substantiality in relation to the 
other activities engaged in by the enterprise.” Appeal of Niadni, Inc., 93 
A.3d 728, 732 (N.H. 2014) (alterations removed) (quoting Mattatuck 
Museum v. Unemployment Comp., 679 A.2d 347, 351 (Conn. 1996)). In other 
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words, if a company regularly or continually performs an activity, no 
matter the scale, it is part of the company’s usual course of business. And 
if a company regularly or continually performs activities showing it is 
“engaged in various separate and independent kinds of businesses or 
occupations,” it may have more than one course of business. Scott v. 
Rhoads, 114 Ind. App. 150, 150, 51 N.E.2d 89, 91 (1943). 
Consistent with this definition, our Court of Appeals in Twin States 
held that the “delivery of shopping guides” by newspaper carriers was 
outside a publishing company’s usual course of business. 678 N.E.2d at 
114. There, the company did not regularly or continually deliver shopping 
guides. Instead, that task was left exclusively to the carriers. And in 
Bloomington Area Arts Council, the instruction of art classes was within an 
art education center’s usual course of business when it “regularly offer[ed] 
the art classes as part of its mission to provide access to the arts in the 
community.” 821 N.E.2d at 852. Unlike the publishing company and 
newspaper carriers in Twin States, both the art education center and the 
teachers regularly or continually performed the same activity—providing 
art classes to the public. 
Here, the parties agree that Driver provided drive-away services. So, to 
determine whether he performed a service within Q.D.-A.’s usual course 
of business, we need only decide if Q.D.-A. also provided drive-away 
services. 
First, the Department argues that the way Q.D.-A. markets itself should 
factor into whether it provided drive-away services. But this marketing 
plays little, if any, direct role in analyzing the activities Q.D.-A. performs 
on a regular or continual basis. To be sure, advertising can reflect services 
a company offers to its customers. But we cannot uncritically rely on that 
advertising to fully reflect the activities a company regularly or 
continually performs. 
Second, the Department argues that Q.D.-A.’s registration with the 
DOT shows it provided drive-away services. But federal law compels this 
registration for any “broker” who arranges motor carrier transportation 
between parties. 49 U.S.C. § 13904(a) (2012). See also 49 U.S.C. § 13102(2) 
(2008) (defining “broker” as “a person, other than a motor carrier or an 
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employee or agent of a motor carrier, that as a principal or agent sells, 
offers for sale, negotiates for, or holds itself out by solicitation, 
advertisement, or otherwise as selling, providing, or arranging for, 
transportation by motor carrier for compensation”). As the Department’s 
witness agreed, independent contractors across the United States often 
operate under the DOT registration of general contractors. In line with this 
national practice, Driver operated under Q.D.-A.’s DOT broker 
registration as an independent contractor. Altogether, no evidence shows 
Q.D.-A. regularly or continually provided drive-away services. 
This conclusion, while consistent with Twin States and Bloomington Area 
Arts Council, directly conflicts with Company. In Company, a panel of our 
Court of Appeals held that transporting and delivering RVs was within 
the usual course of business of a company like Q.D.-A. 86 N.E.3d at 208. 
The Company panel—citing the company’s DOT registration, the word 
“transport” in its corporate name, and its competition with companies 
offering the same services using employees—“seriously doubt[ed]” that 
customers contacted the company to act as a “middle man.” Id. at 208–209. 
Instead, according to the panel’s “common-sense standpoint,” these 
customers would call the company to transport the RVs without caring 
how the company accomplished the task. Id. at 209. In other words, the 
panel supported its conclusion with speculative customer belief and facts 
not relevant to activities the company regularly or continually performed. 
By leaving the company’s activities unexamined, Company’s reasoning did 
not answer the statutory question of whether its usual course of business 
included delivering RVs. 
Because Q.D.-A. did not regularly or continually provide drive-away 
services, the LALJ unreasonably concluded that Driver performed a 
service within Q.D.-A.’s usual course of business. 
C. Driver ran an independently established business. 
Third and finally, neither party disputes the LALJ’s finding that  
Q.D.-A. “provided sufficient evidence to demonstrate that [Driver] was 
customarily engaged in an independently established trade, occupation, 
profession, or business of transporting commodities.” Ex. Vol. 4, p.102. See 
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I.C. § 22-4-8-1(b)(3). So we assume Q.D.-A. meets this prong of the ABC 
Test. 
Conclusion 
The LALJ unreasonably concluded that Driver was Q.D.-A.’s employee 
under the Unemployment Compensation Act when Driver (1) was not 
under Q.D.-A.’s control or direction, (2) performed a service outside Q.D.-
A.’s usual course of business, and (3) ran an independently established 
business. We reverse. 
Rush, C.J., and David and Goff, JJ., concur. 
Slaughter, J., concurs in result. 
A TT O R N E YS  F O R  AP P EL LA N T  
Paul D. Borghesani 
Angela N. Johnson 
Andrew B. Murphy 
Alexander E. Preller 
Faegre Baker Daniels LLP 
Indianapolis, Indiana 
Minneapolis, Minnesota 
A TT O R N E YS  F O R  AP P EL LE E 
Curtis T. Hill, Jr. 
Attorney General of Indiana 
Thomas M. Fisher 
Solicitor General 
Kian J. Hudson 
Patricia C. McMath 
Julia C. Payne 
Andrea E. Rahman 
Deputy Attorneys General 
Indianapolis, Indiana