Court Opinion

ID: 9579476
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:55:36.694177+00
Date Added: 2024-06-11T13:35:32.983210
License: Public Domain

SABERS, Justice
(dissenting).
I respectfully dissent. The majority incorrectly concludes that Pearson and Caron were independent contractors. In Miller Liquid Feeds v. S.D. Dept. of Labor, we stated:
This case is distinguishable from South Dakota Department of Labor v. Tri State Insulation Co., 315 N.W.2d 315 (S.D.1982), where we held that certain salesmen were independent contractors and not employees. Those salesmen were unsupervised and were not required to report to the company. They were not assigned an es*237tablished territory and were free to perform the same sales services simultaneously for competitors.
Miller Liquid Feeds v. S.D. Dept. of Labor, 340 N.W.2d 185, 187 (S.D.1983) (emphasis added). Here, Pearson and Caron were assigned to “an established territory.” Id. They were not “free to perform the same sales services simultaneously for competitors.” Id. In fact, they signed a non-compete agreement prohibiting them from selling competitors’ products during the time they were Midland salesmen and for two years after termination.
The majority’s opinion is contrary to SDCL 61-1-11(2) and established precedent. The majority in effect overrules Miller, 340 N.W.2d 185. The majority’s reliance on Tri State Insulation, 315 N.W.2d 315 (S.D.1982), is misplaced. The salesmen in Tri State Insulation were “free to perform simultaneously the same sales services for other companies, including Tri State’s competitors.” Tri State Insulation 315 N.W.2d at 316. Pearson and Caron could not sell for Midland’s competitors because of the non-compete agreement. SDCL 61-1-11(2) provides in part: “The individual [an independent contractor] is customarily engaged in an independently established trade, occupation, profession or business.” (Emphasis added).
This court has adopted a test for the “independently established trade, business, or occupation:
1.[a]n enterprise independently established;
2. [a]n enterprise created and existing separate and apart from the relationship with the particular employer;
3. [a]n enterprise that will survive the termination of that relationship; and,
4. [a]n enterprise in which the individual possess a proprietary interest to the extent that it can be operated without hinderance [sic] from any other individual.”
Davis v. Frizzell, 504 N.W.2d 330, 331-32 (S.D.1993) (citing Appeal of Hendrickson’s Health Care Service, 462 N.W.2d 655, 659 (S.D.1990)). Pearson and Caron are prohibited from selling atlases for any other company for two years after termination. The job with Midland is their only employment, so they are not engaged in an “independently established” trade. See Hendrickson’s, 462 N.W.2d at 659. Midland required the two-year non-compete agreement so that Pearson and Caron could not be what the majority claims they are: independent contractors. Pearson and Caron were “employees” entitled to unemployment benefits.
In my view, the majority is simply rewriting SDCL 61-1-11 which distinguishes Employee from Independent Contractor as follows:
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.
The findings of fact and conclusions of law clearly establish that these individuals are not “customarily engaged in an independently established trade, occupation or business.”
We should affirm the administrative law judge and the circuit court judge that these two persons were employees under SDCL 61-1-11 and not independent contractors. Hendrickson, 462 N.W.2d at 659.