Opinion ID: 901065
Heading Depth: 1
Heading Rank: 4

Heading: Employees versus Independent Contractors Under SDCL 61-1-11.

Text: [¶ 15.] SDCL 61-1-11 lists the requirements necessary to establish entitlement to independent contractor status for purposes of unemployment insurance. The statute provides: Service performed by an individual for wages is employment subject to this title unless and until it is shown to the satisfaction of the department of labor that: (1) The individual has been and will continue to be free from control or direction over the performance of the service, both under his contract of service and in fact; and (2) The individual is customarily engaged in an independently established trade, occupation, profession or business. [¶ 16.] A two-part burden of proof applies to determine employee/independent contractor status under SDCL 61-1-11. Appeal of Hendrickson's Health Care Service, 462 N.W.2d 655, 658 (S.D.1990) (additional citations omitted). First, the Department of Labor has the burden to show that the alleged employees provide services for wages. [4] Id. Once the Department establishes this threshold showing, the burden shifts to the employer to prove: [T]hat the employee meets the elements outlined in both subdivisions (1) and (2) of SDCL 61-1-11, i.e., that the individual performing services is free from a certain degree of direction and control and that the individual is customarily engaged in an independently established trade or business. The burden is on the employer, to prove the employees are independent contractors under the elements of SDCL 61-1-11. Shoppers Guide v. Department of Labor, 1996 SD 92, ¶ 8, 551 N.W.2d 584, 586 (quoting Hendrickson, 462 N.W.2d at 658). Because we find that Moonlight failed to satisfy its burden of establishing the second requirementthat its sellers were engaged in an independent business under SDCL 61-1-11(2)we do not reach the freedom from control issue under SDCL 61-1-11(1).