Court Opinion

ID: 3261013
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:32:14.439661+00
Date Added: 2024-06-11T09:25:27.587049
License: Public Domain

Representative David E. Roberts 3419 North Hills Blvd. North Little Rock, Arkansas 72116
Dear Representative Roberts:
This letter is in response to your request for an opinion regarding whether the people who sell memberships in the Better Business Bureau are independent contractors and, if so, whether they are exempt from unemployment insurance.
To qualify for an exemption from the Arkansas Employment Security Law on the basis of an independent contractor status, three clear statutory mandates must all be met according to Ark. Stat. Ann. 81-1103(i)(5)(a)(b)(c):
   Service performed by an individual for wages shall be deemed to be employment subject to this Act irrespective of whether the common-law relationship of master and servant exists, (emphasis added) unless and until it is shown to the satisfaction of the commissioner that —
      (a)  such individual has been and will continue to be free from control and direction in connection with the performance of such service, both under his contract for the performance of service and in fact; and
      (b)  such service is performed either outside the usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and
      (c)  such individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.
The people who sell Better Business Bureau memberships may very well meet the criteria of (a) and (b) but are unlikely to be able to meet the criterion of (c), except in extremely limited instances.  Further, the Court stated in Morris v. Everett, 7 Ark. App. 243,647 S.W.2d 476 (1983) in interpreting Ark. Stat. Ann. 81-1103(i)(5)(a)(b)(c) that, "By its passage of act 35, the 1971 General Assembly obviously intended to make it more difficult to claim an exemption under our Employment Security Act".  7 Ark. App. at 245.  Therefore, given the statutory mandates and difficult standards which must be met for an exemption from unemployment insurance liability for independent contractors, it appears that individuals who sell Better Business Bureau memberships are NOT independent contractors for purposes of the Arkansas Employment Security Act.  It then follows that there will be no unemployment insurance exemption for these individuals.
In your opinion request, the attachment you included made reference to Ark. Stat. Ann. 81-1103(i)(6)(N) which states that employment shall not include service performed by an individual for any person or employing unit, as an insurance agent, or as an insurance solicitor, if all such service performed by such individual for such person, or employing unit, is performed for remuneration solely by way of commission.  This section would not exempt Better Business Bureau membership salespersons from the provisions of the Arkansas Employment Security Act.  To qualify for such an exemption, the person must be an insurance solicitor, not merely a solicitor.  Therefore, Better Business Bureau salespersons, even if considered to be solicitors, are not insurance solicitors within the meaning of any exemption provision of 81-1103(i)(6)(N).
The foregoing opinion, which I hereby approve, was prepared by C. Kent Jolliff, Assistant Attorney General.
Sincerely,
Steve Clark Attorney General
SC:CKJ/RKH:pas