Cite as 2014 Ark. App. 504
ARKANSAS COURT OF APPEALS
DIVISION III
No. E-13-1226
Opinion Delivered September 24, 2014
JANA O’DELL
D/B/A PROFESSIONAL APPEAL FROM THE ARKANSAS
TRANSCRIPTION BOARD OF REVIEW
APPELLANT [NO. 2013-BR-002-EC ]
V.
DIRECTOR, DEPARTMENT OF
WORKFORCE SERVICES, AND
EMPLOYER CONTRIBUTIONS
UNIT
APPELLEES REVERSED AND REMANDED
RHONDA K. WOOD, Judge
Jana O’Dell, d/b/a Professional Transcription, appeals the Arkansas Board of
Review’s decision holding that O’Dell is responsible for paying unemployment taxes on
the typists she hires because she failed to satisfy the three-prong test in Arkansas Code
Annotated section 11-10-210(e). O’Dell contends that the Board’s findings are not
supported by substantial evidence. We reverse the Board’s decision.
The Arkansas Department of Workforce Services issued a Determination Letter of
Liability finding that Gina Polston and other similarly situated workers were employees of
O’Dell for employer tax-contribution purposes. O’Dell requested that the Department’s
director issue a “Determination of Coverage.” The director conducted a telephone
hearing and decided that Polston was an employee of O’Dell. O’Dell appealed that
Cite as 2014 Ark. App. 504
decision to the Arkansas Board of Review, which affirmed. O’Dell filed a timely notice of
appeal.
We consider the Board of Review’s findings of fact conclusive if they are
supported by substantial evidence and view the evidence in the light most favorable to the
Board’s findings. Baldor Elec. Co. v. Ark. Emp’t Sec. Dep’t, 71 Ark. App. 166, 27 S.W.3d
771 (2000). However, we conduct a de novo review when there are issues of statutory
construction. Ark. Comprehensive Health Ins. Pool v. Denton, 374 Ark. 162, 286 S.W.3d 698
(2008). Arkansas Code Annotated section 11-10-210(e) (Supp. 2005) provides that the
following three-prong test should be used to determine whether a worker is not an
employee for unemployment-benefit purposes:
(e) Services 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 such
service,both under his 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.
There is a presumption of employee status, and to overcome that presumption, the party
seeking the exemption must establish that all three subsections are satisfied. Morris v.
Everett, 7 Ark. App. 243, 647 S.W.2d 476 (1983). Thus, to establish that Polston and other
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workers were independent contractors, O’Dell was required to prove the existence of all
three factors.
The record showed that O’Dell provided medical-transcription services to
physicians for St. Vincent Hospital. The physicians provided tapes to O’Dell, who would
transcribe them. She also assigned tapes to other typists when she had more work than she
could complete alone. The typists picked up the tapes from O’Dell’s residence, transcribed
them, and returned their transcriptions on a thumb drive or floppy disk. O’Dell then
reviewed the transcripts, made necessary changes, printed them, and returned them to the
physicians.
The Board found that O’Dell failed to prove the first prong: namely, that Polston
and other typists were not free from her control. We disagree with the Board’s broad
interpretation of the statute. The sole evidence of control before the Board was that
O’Dell gave instructions to her typists regarding the format, font, and margins, and she
required them to return the completed work within 24−36 hours. Once the work was
returned, O’Dell would review it and make any revisions before forwarding the product
to St. Vincent. If any of the typists failed to adequately complete the work, O’Dell
retained termination rights and did not pay them. The Board’s broad interpretation results
in it becoming next to impossible for anyone to be free from control. The legislature
surely intended for independent contractors to exist in Arkansas or the statutory test would
not exist. Providing an independent contractor with basic guidelines and retaining the
right to discontinue using them in the future does not equate to control sufficient to create
an employer-employee relationship under the statute.
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Even had we agreed with the Board’s statutory interpretation, this was also not
substantial evidence of control under Ark. Code Ann. § 11-10-210(e)(1). 1 While we give
great deference to the Board’s findings of facts, the facts must equate to substantial
evidence that reasonable minds might accept as adequate to support a conclusion. We
simply do not agree there was evidence substantial enough for the Board to find that
O’Dell had failed to meet the burden of proving that the typists she hired were free from
her control and direction.
The Board additionally found that O’Dell failed to meet the second prong of the
three-part test by not proving that the typists’ services were “performed outside all the
places of business of the enterprise for which the service is performed.” 2 Ark. Code Ann. §
11-10-210(e)(2). Here, the Board incorrectly applied a supreme court case addressing this
issue: Mamo Transportation, Inc. v. Williams, 375 Ark. 97, 289 S.W.3d 79 (2008).
In Mamo, our supreme court stated “we hold that ‘place of business’ is the place
where the enterprise is performed. An enterprise’s place of business must be decided on a
case by case basis.” Id. at 103, 289 S.W.3d at 85. More specifically, the court compared
the facts in Mamo with the facts in Home Care Professionals of Arkansas, Inc. v. Williams, 95
Ark. App. 194, 235 S.W.3d 536 (2006). In Home Care, the enterprise contracted home-
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While we do not weigh the evidence in these cases, it is useful to note that the
Board also had the following uncontroverted evidence: (1) O’Dell did not control who
actually performed the typing (the typists often used others to complete the work); (2) the
typists could, and some did, work for other entities; (3) O’Dell did not train, supervise, or
provide equipment; and (4) O’Dell did not control the hours worked or the typists’
wardrobe.
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It is clear that O’Dell is in the business of transcription services and her typists
performed said services; therefore, our focus is on the second subsection of the second
prong.
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healthcare professionals to provide care in client’s homes. In Mamo, the enterprise
contracted trucks to provide transportation across the United States and Canada.
In both Home Care and Mamo, the enterprise in question necessarily entailed
providing a service that could be done only at a place of business outside the enterprise’s
actual physical office. Transportation takes place on the open road, and home healthcare
takes place in the clients’ homes. Thus, in both those cases, the employer failed the second
prong because the services were performed within the places of business of the enterprise:
that is, on the road and in the home.
The present case involves a business venture different from those in Mamo and
Home Care. O’Dell’s enterprise was to provide transcription services. She could and did
provide this service within her business office, her home. However, the key difference is
that the typists she contracted with did not provide the service at her place of business but
at their places of business or where they chose to complete the work. The service here did
not dictate alternative places of businesses as necessary to fulfill the purpose of the
enterprise. As a result, the Board of Review incorrectly applied Mamo and thus erred in
finding that she failed to prove the second prong.
In sum, to overcome the presumption of employment, the party seeking the
exception must prove the existence of all three subsections of Ark. Code Ann. § 11-10-
210(e). The Board of Review failed to address the third prong after erroneously ruling
that O’Dell had failed to meet the first and second prongs. We therefore reverse and
remand for the Board to consider whether she met the third prong.
Reversed and remanded.
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GLADWIN, C.J., and BROWN, J., agree.
R. David Lewis, for appellant.
Phyllis A. Edwards, for appellees.
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