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Company v. Indiana Department of Workforce Development

Court of Appeals of Indiana

October 31, 2017

Company, Appellant,
v.
Indiana Department of Workforce Development, Appellee.

         Appeal from the Indiana Department of Workforce Development-Unemployment Insurance Appeals Case No. 97920 Hon. Suzanne E. Manning, Liability Administrative Law Judge

          Attorneys for Appellant Andrew B. Murphy Faegre Baker Daniels LLP Minneapolis, Minnesota Angela N. Johnson Faegre Baker Daniels LLP South Bend, Indiana Paul D. Borghesani Law Office of Paul D. Borghesani Elkhart, Indiana

          Attorneys for Appellee Curtis T. Hill, Jr. Attorney General of Indiana Abigail R. Recker Deputy Attorney General Indianapolis, Indiana

          BRADFORD, JUDGE.

         Case Summary

         [¶1] Appellant Company appeals from the determination that Claimant was an employee during the time she worked as a driver for Company, for purposes of Indiana's unemployment compensation system, as enacted in Indiana Code article 22-4 ("the Act"). Company's business is the provision of driveaway services, focusing on the delivery of recreational vehicles ("RVs") to dealerships on behalf of manufacturers. To that end, Company uses drivers it classifies as independent contractors, one of whom was Claimant during parts of 2014 and 2015. After no longer working for Company, Claimant applied for unemployment benefits in 2015, and Appellee the Indiana Department of Workforce Development ("DWD") concluded that Claimant had been an employee of Company for purposes of the Act. The Company filed a tax protest, and after a hearing, a Liability Administrative Law Judge ("LALJ") agreed that Claimant had been an employee. Company contends that (1) the LALJ erroneously determined that Claimant had been an employee and (2) operation of the Act is preempted by the Federal Aviation Administration and Authorization Act ("FAAAA"). Because we disagree, we affirm.

         Facts and Procedural History

         [¶2] Company is in the business of pairing drivers with manufacturers who require driveaway services, focusing on arranging the transportation of RVs to dealerships. Claimant is a professional driver who has held a commercial driver's license since 1997. On April 8, 2014, Claimant entered into a contract with Company to deliver RVs ("the Contract"), which provides, in part, as follows:

WHEREAS, Carrier does not employ and/or retain any individuals to provide driveaway services for the movement of motor vehicles over the road, outsourcing this responsibility to self-employed third parties with the required knowledge and skills as well as license to drive/operate commercial motor vehicles.
WHEREAS, the Contractor is a self-employed individual engaged in the business of providing over the road driving services, as a sole proprietor and independent contractor, to various motor carriers and/or manufacturing companies for the pickup, driving and/or operation of commercial motor vehicles and delivery including the maintenance, inspection and/or minor repair while the commercial motor vehicle is in the care, custody, and control of Contractor, on a trip to trip basis, (the "Services") pursuant to Contracts and/or Agreements with the described companies; and
WHEREAS, the Carrier and Contractor desire to enter into this Agreement to utilize and provide, respectively, the Services on a trip to trip arrangement, in an Independent Contractor relationship and nothing in this Agreement shall be construed as inconsistent with such status.

Ex. Vol. IV p. 23. Claimant performed work for Company from April 1, 2014, through March 13, 2015.

         [¶3] On March 19, 2015, Company was notified by DWD that Claimant had filed for unemployment benefits with the Missouri Department of Labor & Industrial Relations. On May 20, 2015, DWD issued a "Determination of Wage Investigation" in which it concluded that Company had misclassified Claimant's wages. DWD concluded that Claimant had been an employee of Company-not an independent contractor-and that Company was therefore liable for the payment of unemployment insurance tax for Claimant's tenure. On June 8, 2015, Company filed an unemployment insurance tax protest with DWD.

         [¶4] On March 1, 2017, the LALJ heard evidence during a telephonic hearing on Company's tax protest. On March 7, 2017, the LALJ issued its decision on Company's appeal, which included, among others, the following findings of fact:

The employer is a registered motor carrier with the Department of Transportation (DOT). The employer's DOT number is 273286. The employer's business is transportation of property, including recreational vehicles (also known as RVs) in interstate and intrastate commerce. The employer purchases driving services with manufacturers. The employer does not employ any individual to provide delivery of RV[]s. Department's Exhibit 5. Rather, the employer contracts with individuals, such as the claimant, to provide delivery service. In addition, the employer has a broker's license to subcontract with other motor carriers to provide delivery of RVs.

Ex. Vol. IV pp. 80-81. The LALJ concluded that, pursuant to the test detailed in Indiana Code section 22-4-8-1 of the Act, Claimant had been an employee of Company starting in 2014 and was therefore entitled to receive unemployment benefits related to her work. The LALJ concluded, in part, that

the employer failed to establish that the claimant was performing work that was outside of the usual course of the employer's business. The employer's business is transportation of property, specifically RVs, in interstate and intrastate commerce. The employer does not employ[] any persons to do this work; rather, the employer chooses to use contractors, such as the claimant, to provide this service. The employer has a broker's license with the DOT to contract with a different motor carrier to provide the service. The employer could not perform the transportation of the property without contractors or subcontracting the work to another motor carrier. The claimant's work was within the usual course of the employer's business.
The Liability Administrative Law Judge concludes the services provided by the claimant constitute employment for purposes of unemployment insurance law. The employer's protest is DENIED. The Determination of Wage Investigation is AFFIRMED.

Ex. Vol. IV p. 83.

         Discussion and Decision

         I. Whether the LALJ's Conclusion that Claimant was an Employee is Reasonable

         [¶5] While most of the facts related to this question are essentially undisputed, the Company does dispute the LALJ's conclusion ...


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