Court Opinion

ID: 2733768
Source: CourtListenerOpinion
Date Created: 2014-09-17 18:03:11.773976+00
Date Added: 2024-06-11T10:03:24.553043
License: Public Domain

2014 Ark. App. 483

                ARKANSAS COURT OF APPEALS
                                    DIVISION III
                                    No. E-13-1242

                                             Opinion Delivered: September 17, 2014

SCI, INC.
                             APPELLANT APPEAL FROM THE ARKANSAS
                                       BOARD OF REVIEW,
V.                                     No. 2013-BR0001-EC

DIRECTOR, DEPARTMENT OF
WORKFORCE SERVICES           AFFIRMED
                    APPELLEE

                            WAYMOND M. BROWN, Judge

      Appellant appeals from the Arkansas Board of Review’s (Board) decision finding

that it is a covered employer for unemployment insurance tax purposes. On appeal,

appellant argues that (1) there was not substantial evidence to support the Board

conclusion that the worker was not free from appellant’s control and direction in

connection with the services performed by the worker, and (2) the Board erred in finding

that the relationship between appellant and the claimant constituted covered employment.

We affirm.

      At some point in time, Sarah Miller filed a claim for unemployment benefits. In a

letter dated April 12, 2012, the Department of Workforce Services (Department) advised

appellant of the Department’s determination that Miller, and any other similarly situated

person, was appellant’s employee for unemployment insurance purposes. Accordingly, the

Department advised appellant that it was subject to unemployment taxes. Appellant
                                      2014 Ark. App. 483

responded in a letter dated April 30, 2012, disagreeing with the Department’s

determination and timely requesting a determination of coverage with respect to itself.

           On November 15, 2012, the Agency Administrative Review Office conducted a

telephone hearing on behalf of the Director of the Department. Testifying for appellant,

Peter Fidopiastis, appellant’s legal counsel, described appellant’s services as “back-office

support to logistics companies” in which it ensures that the “owner/operator, is paid

appropriately, has access to certain benefits through [their] third-party vendor

relationships,”1 and ensures that the “relationship between the independent contractor and

the person they are providing delivery services to runs smoothly.” He testified that Miller,

an owner/operator, delivered for Corporate Transit of America (CTA), one of appellant’s

clients.

           Speaking generally, Fidopiastis’s testimony was that appellant did not arrange for

deliveries, did not have facilities as most of its work was completed by telephone and/or

computer, and did not have employees or locations in Arkansas. If an owner/operator

didn’t comply with a client’s requests—whether for specific contractual requirements such

as a background check or specific day-to-day requirements such as an identification badge

or t-shirt—the owner/operator “just wouldn’t be able to work” for that client. However,

the owner/operator could still work for another of appellant’s clients. There was a ten-day

notice-of-termination-of-employment requirement contained in appellant’s ninety-day

1
 Fidopiastis stated that these benefits included the ability to obtain things like car rental,
occupational accident insurance, background checks, and tax escrow services from third-
party vendors at preferential prices. He asserted that these services were optional.
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                                       2014 Ark. App. 483

revolving contract with its owner/operators, of which a violation by either party could

result in a breach of contract lawsuit.

          As to Miller specifically, Fidopiastis’s testimony was that appellant had no

communication with Miller on a daily or weekly basis, did not have exclusive use of

Miller’s delivery services, and did not set Miller’s daily schedule. Appellant did not

negotiate with Miller for the price of her services as Miller negotiated her own service

prices with CTA. Miller would not be paid for her services unless she invoiced appellant’s

client. Appellant would only go after its client for payment of administrative fees, never

Miller.

          Though he asserted that appellant did not physically advertise in Arkansas, he did

state that appellant had a relationship with courierboard.com, which advertised for it, and

such advertising “probably would be shown in Arkansas.”2 He acknowledged that Miller

was provided a badge with appellant’s name on it. Finally, he asserted that appellant would

be able to operate without couriers.

          Testifying for the Department, Debbie Carter, DWS Program Operations

Manager, testified that the Department stood by its April 12, 2012 letter. In that letter the

Department determined (1) that Miller was not free from appellant’s control and direction,

(2) that the service Miller provided was not performed outside the usual course of

appellant’s business nor was it performed outside all the places of business of appellant’s

enterprise, and (3) that Miller was not customarily engaged in an independently established

trade, occupation, profession, or business of the same nature as that involved in the service

2
    Miller stated in paperwork that she learned of the job with appellant on Craigslist.
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                                     2014 Ark. App. 483

performed. Accordingly, the Department found that Miller was an employee for

unemployment insurance purposes and that remuneration paid to her constituted wages

for services.

         The Department’s director issued a decision on February 27, 2013, affirming the

Department’s decision determining that appellant’s relationship to Miller constituted

employment for unemployment insurance tax purposes. On March 7, 2013, via letter,

appellant timely appealed to the Board. The Board applied factors set forth in Arkansas

Code Annotated section 11-10-210(e), which provides:

         (e) Service performed by an individual for wages shall be deemed to be
         employment subject to this chapter irrespective of whether the common law
         relationship of master and servant exists, unless and until it is shown to the
         satisfaction of the director that:

                (1) Such individual has been and will continue to be free from control and
                direction in connection with the performance of the service, both under his
                or her contract for the performance of service and in fact;

                (2) The service is performed either outside the usual course of the business
                for which the service is performed or is performed outside all the places of
                business of the enterprise for which the service is performed; and

                (3) The individual is customarily engaged in an independently established
                trade, occupation, profession, or business of the same nature as that involved
                in the service performed.3

The Board affirmed the Department via an opinion issued November 18, 2013, finding

that Miller was not free from appellant’s control and direction, both under her contract

and in fact, pursuant to Arkansas Code Annotated section 11-10-210(e)(1). It did not

address the remaining factors. It is from this opinion that appellant timely appeals.

3
    (Repl. 2012).

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                                    2014 Ark. App. 483

         We do not conduct a de novo review in appeals from the Board of Review. 4

Instead, we review the evidence and all reasonable inferences deducible from the evidence

in the light most favorable to the Board of Review’s findings.5 The Board of Review’s

findings of fact are conclusive if supported by substantial evidence, which is such relevant

evidence that a reasonable mind might accept as adequate to support a conclusion.6 If fair-

minded persons could reach the Board’s conclusions on the same evidence, we must

affirm its decision.7

         In order to establish the exemption set forth in section 11–10–210(e), an employer

must prove each of the three requirements in subsections (1)-(3).8 Three precedent

conditions must exist for these subsections to apply and they are: (1) that services were

performed; (2) by an individual; (3) for wages.9 If there is sufficient evidence to support

4
 Law Offices of Craig L. Cook v. Dir., 2013 Ark. App. 741, at 1, 431 S.W.3d 337, 338
(citing Snyder v. Dir., 81 Ark. App. 262, 101 S.W.3d 270 (2003)).
5
    Id., 2013 Ark. App. at 1–2, 431 S.W.3d at 338.
6
    Id., 2013 Ark. App. at 1, 431 S.W.3d at 338–39.
7
    Id., 431 S.W.3d at 339.
8
 Barb’s 3-D Demo Serv. v. Dir., Ark. Emp’t Sec. Dep’t, 69 Ark. App. 350, 354, 13 S.W.3d
206, 208 (2000) (citing Steinert v. Dir., 64 Ark. App. 122, 979 S.W.2d 908 (1998); Network
Design Eng’g, Inc. v. Dir., 52 Ark. App. 193, 917 S.W.2d 168 (1996); Morris v. Everett, 7
Ark. App. 243, 647 S.W.2d 476 (1983)).
9
 Home Care Prof’ls of Ark., Inc. v. Williams, 95 Ark. App. 194, 197–98, 235 S.W.3d 536,
540 (2006) (citing Palmer’s Boutique v. Ark. Emp’t Sec. Div., 265 Ark. 571, 580 S.W.2d
683 (1979); and McCain v. Crossett Lumber Co., 206 Ark. 51, 174 S.W.2d 114 (1943)).

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                                     2014 Ark. App. 483

the Board’s finding that any one of the three requirements in subsections (1)-(3) is not

met, the case must be affirmed.10

         The Board found that appellant failed to prove the first prong of the three-part

test—namely, that it failed to prove that it did not have control and direction over Miller’s

performance of her services. It did not address the remaining two prongs upon making this

finding since all three prongs must be proved in order to be exempted from being an

employer for unemployment insurance tax purposes. For this reason, and because we

affirm the Board, this court limits its review to Arkansas Code Annotated section 11-10-

210(e)(1).

         On appeal, appellant argues that there was no evidence to support the Board’s

conclusion that it controlled and directed the delivery services performed by Miller.

Under Arkansas Code Annotated section 11-10-210(e)(1), an individual performing

services for wages is deemed to be an employee, for purposes of unemployment insurance

taxes, unless

         [s]uch individual has been and will continue to be free from control and direction
         in connection with the performance of the service, both under his or her contract
         for the performance of service and in fact.

In support of its argument, appellant lists a number of terms from the Owner/Operator

Agreement between it and Miller. Appellant specifically notes that (1) Miller was required

to provide her own equipment, (2) appellant did not instruct or supervise Miller regarding

performance of her delivery, (3) Miller was permitted to perform delivery services for

other companies, (4) Miller was permitted to set her own hours and accept or reject any

10
     Barb’s 3-D Demo Serv., supra.
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                                     2014 Ark. App. 483

offered delivery opportunity, (5) Miller was responsible for her own expenses, (6) she

could use assistants or other replacements to perform the agreed upon delivery service, (7)

Miller was paid an amount she negotiated, and (8) she received a Form 1099 because she

was responsible for paying her own taxes. Appellant then separately addressed each of the

Board’s factors, listed below, in its finding that the appellant failed to prove that it did not

have control and direction over Miller. We find no merit in appellant’s argument.

       The Board highlighted the following contractual requirements that appellant placed

on its workers: (1) submit to a background test, (1) have a valid driver’s license, (3)

maintain a vehicle which appellant considered to be in “good operational condition,” (4)

carry both vehicle and workers’ compensation insurance, (5) provide equipment

compatible with the customer’s equipment, (6) report accidents to appellant as well as the

customer within a limited period of time, and (7) wear badges or other identification

bearing appellant’s name. We agree with the Board that, by making these requirements a

condition of being a courier affiliated with SCI and its clients, there was substantial

evidence that SCI maintained a great deal of control over Miller. Accordingly, we find

that the Board’s decision was supported by substantial evidence.

       Affirmed.

       GLADWIN, C.J., and WOOD, J., agree.

       Catlett Law Firm, PLC, by: Christian C. Michaels, for appellant.
       Phyllis A. Edwards, for appellee.

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