Opinion ID: 2679984
Heading Depth: 3
Heading Rank: 1

Heading: Part A: Control or Direction

Text: [¶24] The Commission found that Sinclair failed to meet its burden of showing that the workers were “free from control or direction over the performance of such services, both under [their] contract[s] of service and in fact.” See 26 M.R.S. § 1043(11)(E)(1). Although the Commission found that Sinclair “controlled the price and form of [its] contract[s] with clients,” it did not make any findings with respect to the workers’ contracts of service. The evidence in the record compels us to conclude that the workers were free from Sinclair’s direction and control with respect to their contractual relationship. Cf. Me. Auto Test Equip. 4 To clarify, we note that our opinion pertains to the following eighteen skilled workers listed in the Bureau’s determination: Dennis Donnell, Eddie Ellis, Frank Zimmerman, Jeffrey Long, Joel Reisman, Joseph Paganucci, Kevin Cobb, Les Mushero, Mark Rowly, Michael Becker Jr., Nathan B. Boyington, Noah Jordan, Paul Bean Jr., Ricky N. Sinclair Sr., Robert Card, Robert Latchaw, Rusty Poors, and Sonney (Bert) Sinclair. Although the Commission’s decision listed all of the disputed workers by their initials, with the exception of two—Joseph Paganucci and Frank Zimmerman—it stated that its decision applied to “all other individuals not listed in this opinion.” Because the evidence in the record is similar for Joseph Paganucci, Frank Zimmerman, and the other workers for which the Commission found an employment relationship, we discuss them together. 15 Co., 679 A.2d at 80-81. In Maine Auto Test Equipment Company, we affirmed the Commission’s finding that an employer exercised direction and control over the performance of its salespeople’s services where it restricted its salespeople from competing with the company after their employment, assigned them to specific geographic regions, reserved the right to give final approval to all sales, and provided sales leads to its employees. Id. [¶25] In contrast, Sinclair’s president testified that none of the workers worked exclusively for Sinclair during the years covered by the Bureau’s audit. Sinclair hired them on a job-by-job basis and they often worked for competing contractors in the area providing the same services. The workers would occasionally turn down an offer to work with Sinclair if they were unavailable for that job, and Sinclair’s president testified that the company would need to turn to “[its] employee base or somebody else” to complete its projects. In addition, Sinclair required the workers to provide their own insurance. [¶26] For most of the skilled workers, Sinclair provided the Bureau with copies of certifications that it had obtained from the Workers’ Compensation Board stating that those individuals were predetermined and presumed to be independent contractors for workers’ compensation purposes. See 39-A M.R.S. §§ 105(1), 105-A(1)(B) (2010). Sinclair also filed an Internal Revenue Service Form 1099 reporting nonemployee compensation for each worker to whom it made 16 payments in the years covered by the Bureau’s audit. See I.R.C. § 3121(d) (2006); I.R.C. § 3402 (Supp. 2011); Treas Reg. § 31.3121, Q&A (d)-1 & (d)-2 (as amended in 1980). Further, Sinclair’s president testified that the workers would occasionally bring employees or assistants with them to a job, and Sinclair was not involved in those arrangements. These facts demonstrate the lack of direction or control that exists in a contractual relationship between a business and an independent contractor. Cf. Contract Mgmt. Servs., Inc. v. La. Dep’t of Labor, 745 So.2d 194, 199 (La. Ct. App. 1999) (applying part A of the ABC test and vacating an agency determination that relied on facts that were “not indicia of control or direction over the performance of the services that [the individual] was providing under the contract” (emphasis omitted)). [¶27] Despite the evidence outlined above, the Commission found that Sinclair failed to demonstrate that the workers were free from Sinclair’s “control or direction over the performance of [their] services . . . in fact.” See 26 M.R.S. § 1043(11)(E)(1) (emphasis added). We conclude that the Commission’s determination is erroneous and not supported by the evidence in the record for three reasons. [¶28] First, the Commission’s conclusion was based, in part, on a finding that Sinclair “mandated the safety measures required for all job sites and communicated that if [its] safety guidelines or training was not adhered to, 17 termination was possible.” However, the Commission’s finding with regard to safety measures is not relevant to the finding of an employment relationship. Cf. Allied Res. for Corr. Health v. Me. Unemployment Ins. Comm’n, 680 A.2d 456, 458 (Me. 1996) (affirming the Commission’s determination that employees were subject to the employer’s direction or control where they were required to follow detailed policies of the employer and its clients). Sinclair’s president testified that he holds safety meetings and enforces safety measures for every worker because he believed that Sinclair was required to do so pursuant to the Occupational Safety and Health Administration regulations. See 29 U.S.C.A. § 654(a) (West 2012); 29 C.F.R. § 1926.21(b)(2) (2012) (requiring the employer to provide “instruct[ion] . . . in the recognition and avoidance of unsafe conditions” to every employee, meaning “every laborer . . . regardless of the contractual relationship which may be alleged to exist between the laborer . . . and the contractor . . . who engaged him,” 29 C.F.R. § 1926.32(j)-(k) (2012)). [¶29] If a business is required by law to comply with state or federal regulations, we do not require that business to face penalties for violating those regulations or to endanger the health or safety of its workers in order to avoid being characterized as an employer for unemployment insurance purposes. See 29 C.F.R. § 1903.15 (2012) (providing that penalties may be imposed for violations of applicable safety standards). Sinclair’s control over the safety of its 18 workers is very different from the type of detailed oversight that we cited in support of a finding of an employer’s direction or control in Allied Resources for Correctional Health, where the employer required employees to “submit to all rules, regulations and policies of [the employer] and its clients.” See 680 A.2d at 458 (emphasis added). [¶30] Second, although the Commission found that Sinclair was responsible for “fixing the problem” if the customer was not satisfied with the workers’ performance, the evidence in the record compels the opposite finding—that the workers bore the burden of “fixing the problem” if the customer was not satisfied. In the responses to the Bureau’s two-page questionnaires regarding the employment relationship with the disputed workers, to the question “Who pays for work the worker performs that must be done over?” the box next to “[t]he worker,” was marked, rather than the boxes next to “[t]he company,” “[t]he customer,” or “[o]ther.” Further, there is no evidence in the record that Sinclair bore the financial burden of redoing the work. For many services, such as heating, plumbing, electrical, or roofing, Sinclair did not have employees who could perform the same tasks. Sinclair could not have been responsible for “fixing the problem[s]” related to those services as the Commission found. Thus, the evidence in the record does not support the Commission’s finding. See Lewiston Daily Sun, 1999 ME 90, ¶ 7, 733 A.2d 344; Hasco Mfg. Co., 158 Me. at 414, 185 A.2d 442. 19 [¶31] Third, with respect to Sinclair’s direction of the workers, the Commission’s finding that Sinclair “controlled the nature and scope of the workers’ work” is not supported by the evidence in the record. See 26 M.R.S. § 1043(11)(E)(1). Although a finding that the employer controlled the manner in which services are performed weighs in favor of a determination that the individual was not free from the employer’s direction and control, see Carpet Remnant Warehouse, Inc. v. N.J. Dep’t of Labor, 593 A.2d 1177, 1185 (N.J. 1991), the “control” exercised by Sinclair at these projects is not the type of control that determines an employer-employee relationship. [¶32] We agree with the reasoning of the First Division of the Indiana Appellate Court in Alumiwall Corporation v. Indiana Employment Security Board, explaining why roofers and siding installers were independent contractors: the [workers] were free to perform the services when and in such manner as they saw fit. They provided their own tools and equipment, and could, if they so desired, hire helpers and determine the wage scale of such helpers. The only restriction was that they perform such services in a good and workmanlike manner. Such restriction is inherent in all services performed by one for another. To hold that such a restriction is the retention of direction and control over such service so as to exclude it from [part] (A) is against good reasoning and common sense. 167 N.E.2d 60, 62 (Ind. Ct. App. 1960); see also N. Am. Builders, Inc. v. Unemployment Comp. Div., Dep’t of Emp. Sec., 453 P.2d 142, 145 (Utah 1969). 20 [¶33] Here, Sinclair’s president testified that he would visit the jobsites “once or twice, depending on the length of it,” unless the project was the construction of an entire home, in which case he would visit “once a week.” Sinclair did not employ a foreman or on-site boss who supervised how services were performed. Cf. Steel Pier Amusement Co. v. Unemployment Comp. Comm’n, 127 N.J.L. 154, 157 (N.J. 1941) (finding that an employer failed to establish that the employees were free of its direction or control where it also employed someone who “was for all practical purposes, a foreman”). Instead, Sinclair created a list of the customer’s specifications and provided a copy to each of the workers. Although the Commission based its determination that the workers were not free of Sinclair’s control in part on its finding that Sinclair instructed the workers “to follow specifications in the contract, which explained the project in detail,” the contract to which the Commission refers was negotiated between Sinclair and the customer, outlining the customer’s preferences. Insofar as Sinclair acted as an intermediary, communicating the customer’s specifications to each of the workers, it did not exert direction and control over the performance of the skilled workers’ services. Cf. Carpet Remnant Warehouse, Inc., 593 A.2d at 1189 (“Specific factors indicative of control include whether the worker is required to work any set hours or jobs, whether the enterprise has the right to control the details and means by which the services are performed, and whether the services must be rendered 21 personally.”). The evidence in the record that is relevant to a finding of control or direction over the “performance of such services . . . in fact” is the testimony of Sinclair’s president that, after providing the worker with a copy of the customer’s specifications, the company did not give the workers any further instruction. [¶34] There is no competent evidence in the record to support the Commission’s finding that Sinclair exercised control or direction over the disputed workers. See Lewiston Daily Sun, 1999 ME 90, ¶ 7, 733 A.2d 344. Rather, all of the evidence in the record demonstrates that Sinclair met its burden with regard to part A of the ABC test. C.f. Me. Auto Test Equip. Co., 679 A.2d at 81.