Sep 23 2013, 5:33 am
FOR PUBLICATION
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:
JOEL C. WIENEKE GREGORY F. ZOELLER
Wieneke Law Office, LLC Attorney General of Indiana
Plainfield, Indiana
ELIZABETH ROGERS
Deputy Attorney General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
C. SUBAH PACKER, )
)
Appellant, )
)
vs. ) No. 93A02-1301-EX-83
)
THE INDIANA DEPARTMENT OF )
WORKFORCE DEVELOPMENT, )
)
Appellee. )
APPEAL FROM THE INDIANA DEPARTMENT OF WORKFORCE DEVELOPMENT
The Honorable Aija Funderburk, Administrative Law Judge
Case No. 12-11288
September 23, 2013
OPINION - FOR PUBLICATION
NAJAM, Judge
STATEMENT OF THE CASE
C. Subah Packer1 appeals the decision of the liability administrative law judge
(“LALJ”), following a hearing, determining that Packer owes unemployment insurance
for 2008, 2009, 2010, and 2011, plus interest and penalties. Packer raises a single issue
for review, namely, whether her employees at Boone Ridge Stables performed non-
agricultural work and, therefore, whether she owes unemployment insurance tax
contributions for the years audited.
We affirm.
FACTS AND PROCEDURAL HISTORY
At all relevant times, Packer operated Boone Ridge Stables, a farm with the
primary business of raising, feeding, caring for, training, and managing horses. Packer
keeps her own horses on the farm but also boards horses for others and teaches riding
lessons. Packer had employees who cared for the horses, conducted husbandry activities,
and maintained the farm, its equipment, and the barn. Packer “did not keep separate
records[] detailing time records and/or payments made to individuals for services
provided to boarded horses, riding horses, and horses owned by Packer.” Appellant’s
App. at 4.
In July 2011, Packer terminated one of her employees for absenteeism. In January
2012, that employee, who had worked for Packer for three years, applied for
unemployment insurance benefits. Because Packer had not reported any wages for that
1
The parties used the full names of individuals in their briefs, and there is no evidence in the
record that any party to this appeal made an “affirmative request pursuant to Administrative Rule
9(G)(1.2)” to exclude from public access the identities and information confidential under Indiana Code
Section 22-4-19-6 and the rule. Recker v. Review Board, 958 N.E.2d 1136, 1138 n.4 (Ind. 2011). Thus,
we use the parties’ names.
2
employee, the Department of Workforce Development initiated a “block claim
investigation.” Id. Based on that investigation, Shawn Shields from the Department’s
Employer Audits Section requested that the Department conduct an audit of Boone Ridge
Stables. The remaining facts, as determined by the LALJ, are as follows:
The Department sent a Compliance Audit Questionnaire to [Packer]
to gather additional information. The questionnaire was completed and
returned to the Department, stating that [Packer’s] business activity was
boarding, raising, and care of horses. On February 24, 2012, Andrew Cull,
Auditor, examined [Packer’s] records for 2008, 2009, 2010, and 2011 at
[Packer’s] accountant’s office.
In reviewing [Packer’s] records, Mr. Cull discovered that [Packer]
made payments to eleven individuals performing services in 2008, seven
individuals in 2009, four individuals in 2010, and six individuals in 2011.
See Department’s Ex. 6. [Packer] paid more than $1500 to individuals
performing services in at least one calendar quarter in each year of the audit
period. See Department’s Ex. 6.
Mr. Cull found that [Packer] raised some horses as agricultural labor
but that [she] also boarded other owners’ horses[] and gave riding lessons,
which was not considered agricultural labor. See Department’s Ex. 7. Mr.
Cull treated all payments to individuals, who provided services to [Packer],
as regular/non-agricultural labor. See Department’s Ex. 7.
On March 7, 2012, Mr. Cull issued a Notice of Audit Findings,
stating that [Packer] paid gross wages in the following amounts for the
audit period: $22,569.40 for 2008; $18,246.64 for 2009; $15,304.92 for
2010; and $15,992.66 for 2011. Mr. Cull determined that [Packer] was an
employer as defined by Indiana Code § 22-4-7-1. See Department’s Ex.
7. . . .
Id. Based on the audit determination that Packer was an employer as defined by the
Unemployment Compensation Act, the Department ordered her to pay unemployment
insurance for the audit years, plus interest and penalties.
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Packer protested the Notice of Audit Findings. On October 15, the LALJ held a
hearing, where Packer appeared and gave testimony. On December 20, the LALJ
affirmed the Department’s determination. Packer now appeals.
DISCUSSION AND DECISION
Packer appeals the determination by the LALJ that she owes unemployment
insurance taxes, plus interest and penalties, for the years 2008 through 2011. Indiana
Code Section 22-4-32-9(a) provides that “[a]ny decision of the liability administrative
law judge shall be conclusive and binding as to all questions of fact.” When the LALJ’s
decision is challenged as contrary to law, we are limited to a two-part inquiry into the
sufficiency of the facts found to sustain the decision and the sufficiency of the evidence
to sustain the findings of fact. Bloomington Area Arts Council v. Dep’t of Workforce
Dev., Unemployment Ins. Appeals, 821 N.E.2d 843, 849 (Ind. Ct. App. 2005). Basic
facts are reviewed for substantial evidence, conclusions of law for their correctness, and
ultimate facts to determine whether the LALJ’s finding is a reasonable one. Id. Ultimate
facts are conclusions or inferences from the basic facts. Id.
Packer contends that she is not liable for unemployment compensation tax “as a
matter of law” because the nature of her employees’ labor was strictly agricultural.
Appellant’s Brief at 5. In essence, Packer challenges the determinations that some of the
horses at the stable are not agricultural commodities, that any part of her employees’
work is non-agricultural, and, therefore, that all of their wages are subject to taxation
under the Act. We consider each point in turn.
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The purpose of Indiana’s Unemployment Compensation Act, Indiana Code article
22-4 (“the Act”), is to “provide for payment of benefits to persons unemployed through
no fault of their own.” Ind. Code § 22-4-1-1 (2007); Indiana State Univ. v. LaFief, 888
N.E.2d 184, 186 (Ind. 2008). Unemployment compensation in Indiana is financed by a
tax on Indiana employers. But not all types of employment are eligible for
unemployment compensation benefits. In Indiana Code chapter 22-4-8, our legislature
defined the types of employment that are covered for unemployment insurance benefits
and, by the same token, which employers must pay unemployment insurance taxes. The
same statutes “affect[] a claimant’s eligibility as well as a putative employer’s liability.”
NOW Courier, Inc. v. Review Bd. of the Ind. Dep’t of Workforce Dev., 871 N.E.2d 384,
389 (Ind. Ct. App. 2007). Thus, those who satisfy the definition of “employers” under
the Act must make contributions, or money payments, to the unemployment insurance
benefit fund if their engagement of workers satisfies the definition of “employment”
under the Act. See Ind. Code § 22-4-2-4.
Indiana Code Section 22-4-8-2(l) defines employment as follows:
(1) Service performed after December 31, 1977, by an individual in
agricultural labor (as defined in section 3(c) [Indiana Code Section 22-4-8-
3(c)] of this chapter) when the service is performed for an employing unit
which:
(A) during any calendar quarter in either the current or
preceding calendar year paid cash remuneration of twenty
thousand dollars ($20,000) or more to individuals employed
in agricultural labor; or
(B) for some portion of a day in each of twenty (20) different
calendar weeks, whether or not the weeks were consecutive,
in either the current or the preceding calendar year, employed
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in agricultural labor ten (10) or more individuals, regardless
of whether they were employed at the same time.
But “employment” shall not include the following:
“Agricultural labor” as provided in section 2(l)(1) [IC 22-4-8-2(l)(1)] of
this chapter shall include only services performed:
(A) on a farm, in the employ of any person, in connection
with cultivating the soil or in connection with raising or
harvesting any agricultural or horticultural commodity,
including the raising, shearing, feeding, caring for, training,
and management of livestock, bees, poultry, and furbearing
animals and wildlife;
(B) in the employ of the owner or tenant or other operator of a
farm, in connection with the operation, management,
conservation, improvement, or maintenance of such farm and
its tools and equipment, or in salvaging timber or clearing
land of brush and other debris left by a hurricane, if the major
part of such service is performed on a farm . . . .
Ind. Code § 22-4-8-3(3) (emphasis added). And “employer” is defined in relevant part as
follows:
“[E]mployer” means any employing unit which for some
portion of a day, but not necessarily simultaneously, in each
of twenty (20) different weeks, whether or not such weeks are
or were consecutive within either the current or the preceding
year, has or had in employment, and/or has incurred liability
for wages payable to, one (1) or more individuals
(irrespective of whether the same individual or individuals are
or were employed in each such day) or any employing unit
which in any calendar quarter in either the current or
preceding calendar year paid for service in employment
wages of one thousand five hundred dollars ($1,500) or more,
except as provided in [Indiana Code Section] 22-4-7-2(h), (e),
and (i).
Ind. Code § 22-4-7-1.
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Here, the LALJ found, and Packer does not deny, that she paid in total the
following amounts to workers on her farm during the audited years: $22,569.40 for
2008; $18,246.64 for 2009; $15,304.92 for 2010; and $15,992.66 for 2011. Thus, Packer
does not challenge the determination that she meets the definition of an “employer” under
Section 22-4-7-1. But Packer contends that each of her employees worked in
“agricultural labor,” as defined by Section 22-4-8-3(3), because they cared for
agricultural commodities (i.e., her horses) and, therefore, are not covered, and she is
exempt from tax liability for unemployment insurance benefits. Further, she points out
that she, and none of her employees, gave riding lessons.
We have not previously construed the definition of “agricultural commodities” in
the unemployment compensation context. But we have previously considered the
definition of “agricultural labor.” In Day v. Ryan, 560 N.E.2d 77, 81 (Ind. Ct. App.
1990), this court discussed the meaning of “agriculture” in a general sense: “In its usual
meaning, agriculture is a broader word than farming. It is the art or science of cultivating
the soil, including the planting of seed, the harvesting of crops, and the raising, feeding
and management of live stock or poultry.” (Citations and internal quotation marks
omitted). But in Day we recognized that “not all activities with an agricultural nexus are
themselves agricultural,” and we held that, “[e]ven though a stockyard is involved in
delivering a farm product to market, it is a separately organized activity and is therefore
not an agricultural pursuit.” Id. at 82-83. In reaching that conclusion, we followed In re
Boyer, 65 Ind. App. 408, 117 N.E. 507 (1917), where
an injured employee of a wheat[-]threshing business was not an agricultural
employee, but an industrial employee, eligible for workers’ compensation
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benefits. The [Boyer] court found wheat threshing to be “a business or
industrial pursuit in and of itself, entirely separate and independent of
farming [even though wheat threshing has] to do with getting the farm
product reading for consumption.
We also noted in Day that the United States Supreme Court has recognized the
fundamental distinction between an agricultural pursuit or function and a separately
organized, independent productive activity. In Farmers Reservoir v. & Irrigation Co. v.
McComb, 337 U.S. 755 (1949), the Court stated:
Functions which are necessary to the total economic process of supplying
an agricultural product become, in the process of economic development
and specialization, separate and independent productive functions operated
in conjunction with the agricultural function but no longer a part of it.
Thus, the question as to whether a particular type of activity is agricultural
is not determined by the necessity of the activity to agriculture nor by the
physical similarity to that done by farmers in other situations. The question
is whether the activity in the particular case is carried on as part of the
agricultural function or is separately organized as an independent
productive activity.
Id. at 82-83.
Here, at all relevant times, Packer operated a stable where she raised, managed,
and conducted husbandry services for horses. Her employees fed and cared for the
horses, turned them out to pasture, helped maintain the farm buildings and equipment,
and performed husbandry services. In general, such activity is agricultural labor. But the
employees also cared for boarded horses and horses used for riding lessons in addition to
tending Packer’s horses. The boarding of horses is not agricultural but, instead, is a
separately organized, independent productive activity. See id. Likewise, teaching riding
lessons constitutes instruction in a sport and, therefore, is not an agricultural pursuit. The
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Department conceded that some of the labor performed by Packer’s employees was
agricultural. Thus, except for the horses used for riding lessons, the Department did not
contend that the horses being raised by Ms. Packer for use on the farm are
not agriculturally used horses. So if it were not for the riding lessons and
the boarding of other people’s horses, we [the Department] would not have
made a determination that [the unemployment insurance claimant] had
covered wages.
Transcript at 16. But, when the employees cared for horses that were boarded or were
used for riding lessons, they were not engaged in agricultural labor. See id. at 83; In re
Boyer, 65 Ind. App. 408, 117 N.E. 507, 511-12 (1917).
The LALJ
conclude[d] that the employing unit employed agricultural labor by paying
individuals to raise and care for fur-bearing animals (i.e., horses) that were
owned by the employing unit as agricultural commodities. The Liability
Administrative Law Judge, however, also conclude[d] that the employing
unit also employed non-agricultural labor by paying individuals to raise and
care for horses that were used for riding lessons and horses that were
owned by others because those horses were not agricultural commodities.
Appellant’s App. at 5. And, again, employers are not subject to employment
compensation taxation for agricultural labor. Ind. Code § 22-4-8-3(3)(A).
It is an employer’s responsibility to maintain adequate employment records. But
Packer “did not maintain records to establish the amount of wages paid to individuals for
services performed in non-agricultural labor.” Appellant’s App. at 5. Thus, the LALJ
could not make an evidence-based determination of which employees and how many
hours were attributable to agricultural and non-agricultural labor, and the Department
could not calculate the amount of unemployment compensation taxes owed solely for
non-agricultural labor. Under that circumstance, the LALJ determined that Packer owed
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unemployment compensation taxes on the entire amount paid to her employees for the
years in question. To conclude otherwise would have allowed Packer to escape liability
for taxes owed for non-agricultural labor. We cannot say that the LALJ’s factual
determination is arbitrary, unreasonable, against the evidence, or contrary to law. As
such, we affirm the LALJ’s determination that Packer is liable for unemployment
insurance taxes for the audited years.
Affirmed.
MATHIAS, J., and BROWN, J., concur.
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