Opinion ID: 1576594
Heading Depth: 1
Heading Rank: 1

Heading: exclusive possession & control

Text: As required by Wisconsin Administrative Code Section PSC 60.03 and the Interstant [sic] Commerce Commission, the CARRIER [Star Line] and CONTRACTOR [owner-driver] agree that the motor vehicle equipment described in this `Equipment Agreement' when operated in connection with transportation under the CARRIERS license as a contract or common motor carrier shall be in the exclusive possession, control and use of the CARRIER during the term of this Agreement and the CARRIER hereby assumes full responsibility to the public, the shippers and all regulatory agencies having jurisdiction, for the operation of said motor vehicle equipment during the entire period of the Agreement. Star Line acknowledged having used the two differently entitled subcontracting agreements referred to, but claims its relationship, understanding and practice with the lessors did not vary in any degree during the entire period. The 1976 unsigned agreement, besides containing the provision relating to Exclusive Possession & Control had the following clauses: IV. RELATIONSHIP  It is the intention of the parties and acknowledged by the parties that neither the CONTRACTOR nor any of its employees shall be deemed to be agents, servants, or employees of the CARRIER for any purpose whatsoever but the CONTRACTOR is and shall be an independent contractor and is subject to the CARRIER merely as to the results to be accomplished and not as to the means and methods for accomplishing the results. Under Terms and Conditions of the 1976 agreement, the following was stated: ARTICLE 1.  The CONTRACTOR shall have exclusive responsibility and control to direct the operation of its equipment and its employees in all respects, including but not limited to such matters as establishing work rules, assignment of equipment to drivers, rejection of any loads, operation, lawful routes, points of service or repair of equipment, rest stops, parking and storage when not in use, etc., except that CONTRACTOR shall fully and efficiently perform the results required by this Agreement. The court of appeals cited Stafford Trucking, Inc. v. ILHR Dept., 102 Wis. 2d 256, 306 N.W.2d 79 (Ct. App. 1981) and stated that in Stafford that court decided that inclusion of Wis. Adm. Code Sec. PSC 60.03 (2), which is required in leases of this nature, established that the lessor unquestionably has the right and power to direct and control the owner-operators' conduct. It is immaterial whether the right or power to control is in fact exercised as long as the right to exercise such control exists. Id. at 263. We do not interpret the decision in Stafford as holding that the inclusion of the PSC clause is conclusive on the issue of employer control. In the Stafford case, the lease had additional clauses, besides the PSC clause which denoted control. Stafford reserved `the right to control the manner, means and details of, and by which the driver . . .' of the leased equipment performs the service, as well as the ends to be accomplished. Id. at 263. Also under the Stafford lease, it was stated that the drivers further agree that the trucks are `solely and exclusively under the possession, direction, and control' of Stafford. Id. at 263. Moreover, in Stafford, the court of appeals found that Stafford's practices also evidenced control over the owner-operators. Id. at 263. This court recognizes that the exception contained in sec. 108.02(3) (b) 1, Stats., requires freedom from control or direction, both under the contract and in fact and that the inclusion of sec. PSC 60.03 (2) alone, arguably constitutes contractual control. However, these types of clauses are intended solely to promote the safe operations of trucks and to ensure continuous financial responsibility so that truck-related losses do not go uncompensated. The clause protects both the highway-traveling public and the segment of the public directly using trucking services. See N.L.R.B. v. Deaton, Inc., 502 F.2d 1221, 1224-25 (5th Cir. 1974), cert. denied 422 U.S. 1047 (1975). The PSC clause was not designed to deny the application of the statutory exception contained in sec. 108.02 (3) (b) 1 and 2 and determine the employer-employee relationship. In reviewing questions of law: [T]his court does defer to a certain extent to the legal construction and application of a statute by the agency charged with enforcement of that statute. We are further guided by the rule of review under which, as to questions of law, we will not reverse a determination made by the enforcing agency where such interpretation is one among several reasonable interpretations that can be made, equally consistent with the purpose of the statute. (Footnotes omitted.) De Leeuw v. ILHR Dept., 71 Wis. 2d 446, 449, 238 N.W.2d 706 (1976). Since the PSC clause is required solely to promote safety and financial responsibility among carriers, we find that DILHR's interpretation of the clause establishing employer control is not an available one. It is the motor vehicle that must be under the possession, control and use of the authorized carrier so the carrier is chargeable with the full responsibility to the public, the shippers, [10] and all regulatory agencies having jurisdiction. There is no mention of responsibility to the operators or suggestion they are to be considered employees of the carrier. The drivers are not within the class receiving the protective benefit of PSC 60.03 (2). The result of the exclusive possession, control and use of the motor vehicle is for the carrier to assume complete responsibility to and for the protected classes, i.e., public, shippers and all regulatory agencies having jurisdiction. [1] Accordingly, we hold that the mere inclusion of sec. PSC 60.03 (2) does not alone establish the control and direction criteria necessary to qualify the owner-operators as employees as defined in sec. 108.02 (3) (b), Stats. In looking at the contractual terms and facts and circumstances of this case, we find other clauses in the 1975 contract that do establish the carrier's control over the owner-operators. Those provisions were referred to in the decision of the LIRC as follows: All persons driving the described vehicle while under the possession, control or use of Lessee shall be employees of the Lessee and under control of Lessee. (contract clause 3.) Lessor further agrees that he will personally drive the described equipment, or will furnish a substitute drive [sic] for such purpose such substitute drive [sic] to be subject to approval of Lessee as to fitness: it is understood that said drive [sic] shall be a direct employee of Lessee and under the direction and control of Lessee insofar as to the driving of said vehicle is concerned [sic], and Lessee, as the direct employer of said driver shall be responsible for the actions of said driver to any regulatory bodies controlling operation of the described equipment or any third parties affected by reason thereof . . . . (contract clause 6.) [2] These contractual provisions in the 1975 contract were sufficient to make unavailable to lessee (Star Line) the exception contained in sec. 108.02 (3) (b) 1, Stats., since they provided Star Line control or direction over the owner-operator under the contract, and it was not necessary therefore to consider the factual relationship between the lessee and lessor. Therefore, the Labor and Industry Review Commission's determination that the owner-operators were employees of Star Line for purposes of unemployment compensation contributions by Star Line is affirmed for the period covered by the 1975 contract. The 1976 contracts have different provisions than the 1975 contracts. Clauses 3 and 6 of the 1975 agreement do not appear in the 1976 contracts. The commission determined the owner-operators were not free of control or direction for performance of services, both under contract and in fact. Since we find no contractual control or direction, we must examine whether there was control or direction in fact. Sec. 102.23 (6), Stats., [11] reads as follows: (6) If the commission's order or award depends on any fact found by the commission, the court shall not substitute its judgment for that of the commission as to the weight or credibility of the evidence on any finding of fact. The court may, however, set aside the commission's order or award and remand the case to the commission if the commission's order or award depends on any material and controverted finding of fact that is not supported by credible and substantial evidence.  (Emphasis added.) The relevant evidence that was before the commission as to the performance of services in fact evidencing lack of control was: (1) The drivers were considered skilled operators who owned their own truck equipment. (2) The drivers assumed responsibility for their vehicle maintenance, insurance and trip expenses. (3) The drivers sometimes refused to haul loads offered by Star Line. (4) The drivers sometimes engaged helpers to assist them in performing services for Star Line. (5) Star Line could complain to the drivers and/or terminate the equipment lease agreement. Star Line never exercised this termination right during the period involved. (6) During the contract period, several contractor-lessors terminated the relationship in response to Star Line's complaints concerning vehicles being unavailable due to their use for other authority holders or traffic and weight violations during performance of the hauling contracts. (7) The lessors were free to, and did on occasion, reject hauling contracts from Star Line. (8) The means of performance, namely, which piece of equipment and which driver would be used as well as the starting, completion and elapsed time, the loading, the routes used and number of stops, were within the control and under the supervision of the lessor's drivers. As opposed to this evidence of lack of control in fact by Star Line over the drivers, DILHR argues the record showed: (1) Star Line expected the drivers to haul loads for which Star Line had contracted with a customer and would pressure a reluctant driver to accept a load. Comment: However, pressure applied without a demonstrable result is not exercising control. (2) Star Line attempted by contract to restrict the drivers from seeking other employment. Comment: The attempt to convince the drivers to obey the contract cannot be said to be exercising control over them. (3) Petitioner has the right to terminate the services of a driver at any time, with notice, for any reason, including misconduct. Comment: However, there is no evidence in the record of any terminations. (4) Although the drivers owned their trucks, they operated them with Star Line's decal displayed on the door and under ICC authority and PSC permits held by Star Line. Comment: This was required to identify the hauling authority under which it was being made. [12] [3] The evidence which DILHR relied on does not demonstrate that Star Line in fact controlled the drivers as spelled out in the statutory exception. The findings of fact of the commission were not supported by credible and substantial evidence. [4] Star Line states that one of the issues is whether the contribution base used for payroll in the unemployment compensation audit was properly established at 30% of the rental payment to represent the driver services. However, at the initial hearing before the examiner, the parties stipulated the appropriateness of that figure. DILHR's counsel stated the figures were acceptable and not attackable and Star Line's counsel agreed. The liability figures of the audit were agreed to and the only issue was whether the drivers designated as contractors were independent agents and therefore not employees subject to payroll contributions. The figures were not disputed and therefore no challenging evidence was presented which requires this court to review. Nor does this record require the resubmission of the case to the commission for further determination since there was no reservation of this issue in the record. By the Court.  The decision of the court of appeals is affirmed in part and reversed in part. BEILFUSS, C.J., took no part. SHIRLEY S. ABRAHAMSON, J. (concurring in part and dissenting in part). I concur with the majority's holding that because the 1975 contract expressly grants Star Line control or direction over the performance of services of the owner-driver, the owner-driver is not excluded as an employee under sec. 108.02 (3) (b)1, Stats. 1979-80. Unlike the majority, I would hold that the 1976 contract which provides that Star Line has exclusive possession, control and use of the motor vehicle equipment expressly grants Star Line control or direction over the performance of services of the owner-driver and that the owner-driver is not excluded as an employee under sec. 108.02 (3) (b) 1, Stats. 1979-80. Sec. 108.02(3) (a), Stats. 1979-80, provides that any individual who is performing services for an employing unit is an employee except as provided in subsection (b). The majority apparently concludes that the owner-driver is performing services for an employing unit under sec. 108.02(3) (a) and that the issue in the case is whether the owner-driver falls within sec. 108.02(3) (b). I agree with the majority, supra at 277, that sec. 108.02 (3) (b)1, Stats. 1979-80, requires Star Line to show by satisfactory proof, Sears, Roebuck Co. v. DILHR, 90 Wis. 2d 736, 743, 280 N.W.2d 240 (1979), that pursuant to both the terms of the 1976 contract and in fact [1] that the owner-driver has been and will continue to be free from Star Line's control or direction over the performance of his or her services. [2] While I agree with the majority's statement of the applicable principle of law, I think the principle requires affirmance, rather than reversal, of the decision of the court of appeals. The majority errs in holding that the terms of the 1976 contract do not provide for control or direction by Star Line over the performance of the owner-drivers' services. The 1976 contract grants Star Line exclusive possession, control and use of the motor vehicle equipment. The contract reads as follows: