Cite as 2014 Ark. App. 562
ARKANSAS COURT OF APPEALS
DIVISION I
No. E-13-1204
CLIFTON SERVICES, INC. Opinion Delivered October 22, 2014
APPELLANT
APPEAL FROM THE ARKANSAS
BOARD OF REVIEW
V. [NO. 2011-BR-5 EC]
DIRECTOR, DEPARTMENT OF
WORKFORCE SERVICES,
EMPLOYER CONTRIBUTIONS UNIT
APPELLEE AFFIRMED
PHILLIP T. WHITEAKER, Judge
This is an appeal from a determination by the Board of Review (“Board”) that
appellant Clifton Services, Inc., was the employer of Jerome Allen and thus subject to the
payment of unemployment-insurance taxes pursuant to Arkansas Code Annotated section
11-10-210(e) (Repl. 2012). Clifton Services raises two arguments on appeal. It first contends
that the Board erroneously determined that it was Allen’s employer. Second, it argues that
the Board and the Director of the Department of Workforce Services improperly relied on
an unpublished Board of Review decision in reaching their determinations. We find no error
and affirm.
The appellate courts will affirm the decision of the Board of Review if it is supported
by substantial evidence. Mamo Transp., Inc. v. Williams, 375 Ark. 97, 289 S.W.3d 79 (2008);
Cite as 2014 Ark. App. 562
W. Land Servs., Inc. v. Dir., 2012 Ark. App. 161. Substantial evidence is such relevant
evidence as reasonable minds might accept as adequate to support a conclusion. Mamo
Transp., supra. We view the evidence and all reasonable inferences deducible therefrom in
the light most favorable to the Board’s findings. Id. Even if the evidence could support a
different decision, our review is limited to whether the Board could have reasonably reached
its decision based on the evidence presented. Id.
The issue presented in this case involves a relationship between Clifton Services, truck
driver Jerome Allen, and a third business entity named Builder’s Transportation Co.
(“Builder’s”). Clifton Services, which is owned by Tommy Clifton, entered into a “lease
purchase contract” with Allen whereby Allen agreed to purchase a truck tractor from Clifton
Services. Under the terms of the contract, Allen would make 175 weekly lease payments of
$375 until the purchase price of $65,625 was paid, at which time Clifton Services would
transfer title of the truck to Allen. Allen was given possession of the truck, was responsible
for the upkeep and maintenance of the truck, and had the right to determine “the means of
performance to its lessee motor carrier,” including matters like travel routes and whether to
accept a dispatch. Allen would remain in possession of the truck so long as he did not default
on his payments. In the event of default, however, Clifton Services could repossess the truck.
Regarding payments and default, Allen agreed to “execute an assignment as to all
income derived from operation of the leased vehicle in favor of [Clifton Services]” and
agreed that Clifton Services could “deduct all lease payments,” as well as amounts sufficient
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to cover license fees and highway-use taxes, from the income that Allen earned by operating
the truck. The agreement also contained the following provision:
Purchaser [Allen] understands that the total earnings of the truck are covered
by a lease to a motor carrier. Purchaser may lease the truck to a motor carrier chosen
by Purchaser, but agrees to the requirement for an assignment of income to Seller to
protect Seller’s interest. In the event Purchaser leases the truck to a motor carrier
which will not accept assignment of the income, Seller reserves the right to terminate
this agreement upon the giving of two weeks’ notice to Purchaser.
At the time of signing the agreement, Builder’s was the only trucking company that would
agree to the income-assignment requirement.
Allen thus leased the truck to Builder’s. Builder’s would send dispatches to Allen, who
would then deliver the load to its destination in the truck that was the subject of the lease-
purchase agreement. When it came time to pay Allen, Builder’s would write a check to
Clifton Services, and Clifton Services would withhold the lease payment on the truck and
other expenses and remit the remainder to Allen. Of the payment made to Builder’s for any
given load, Allen received 65%, Builder’s kept 20%, and Clifton Services kept 15%.1
Allen’s lease agreement with Builder’s was terminated after he was involved in a wreck
in which the truck was totaled. After termination, Allen sought unemployment benefits. In
response, Clifton Services asserted that Allen was not an employee but rather was an
independent contractor. After an investigation, the Department of Workforce Services
determined that Clifton Services was, in fact, Allen’s employer and that it should have been
1
The percentage retained by Clifton Services was for a separate lease agreement that
it had with Builder’s concerning trailers, independent of the withholdings from Allen’s
percentage for truck payments and other expenses.
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paying unemployment-insurance taxes. Clifton Services requested a hearing for a
determination of coverage. Following that hearing, the Director concluded that Clifton
Services was Allen’s employer and was thus liable for unemployment-insurance taxes. Clifton
Services appealed that decision to the Board of Review, which affirmed. Clifton Services
now appeals the Board’s decision to this court.
On appeal, Clifton Services argues that the Board erred in finding that it was Allen’s
employer. The determination of whether an individual is an employee is governed by
Arkansas Code Annotated section 11-10-210(e), which provides as follows:
Service 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 the service, both under his or her
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.
In order to obtain the exemption contained in section 11-10-210(e), the employer
must prove each of subsections (e)(1) through (3). Stepherson v. Dir., 49 Ark. App. 52, 895
S.W.2d 950 (1995); Am. Transp. Corp. v. Dir., 39 Ark. App. 104, 840 S.W.2d 198 (1992);
Morris v. Everett, 7 Ark. App. 243, 245, 647 S.W.2d 476, 477 (1983) (noting the 1971
amendment to the statute that made the provisions conjunctive and commenting that, by the
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amendment, the General Assembly “obviously intended to make it more difficult to claim
an exemption under our Employment Security Act”). If there is substantial evidence to
support the fact-finder’s finding that any one of the three requirements is not met, the case
must be affirmed. W. Land Servs., supra.
We hold that there is substantial evidence to support the Board of Review’s finding
that Clifton Services exercised “significant control” over Allen under section 11-10-210(e)(1)
and that Clifton Services failed to rebut the statutory presumption. In theory, Allen was able
to haul loads for whomever he wanted. In practice, however, Clifton Services was in control.
Clifton Services would not sell Allen the tractor unless he leased it to a third-party trucking
company that would agree to a wage assignment. As Builder’s was the only company that had
agreed to that kind of assignment, Allen was limited to working only with Builder’s, a
company with whom Clifton Services had a separate financial arrangement for the leasing of
trailers. In essence, Clifton Services controlled and selected which motor carriers Allen could
or could not use. Finally, Allen’s paycheck was directly controlled by Clifton Services:
Clifton Services deducted payments for the truck and other expenses from Allen’s check, and
if Allen did not earn a paycheck by working for Builder’s and thus missed payments on the
truck, Clifton Services would repossess the vehicle.
This court has addressed a similar situation before. In Steinert v. Director, 64 Ark. App.
122, 979 S.W.2d 908 (1998), the trucking-company owner testified that it was “rare” for his
drivers to drive for other trucking companies. The owner also entered into lease-purchase
agreements with his drivers, and the drivers owed him 25% of the total load for each trailer.
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Steinert, 64 Ark. App. at 125–26, 979 S.W.2d at 909–10. On those facts, this court held that
there was evidence to support the Board’s finding that the trucking company was an
employer due to its control and direction over its drivers. We reach the same conclusion
here. Moreover, because the Board’s finding that Clifton Services failed to satisfy the first
prong of section 11-10-210(e) is supported by substantial evidence, it is unnecessary to
address the Board’s findings as to the other prongs of the test. See Stepherson, 49 Ark. App.
at 55, 895 S.W.2d at 952.
In its second argument on appeal, Clifton Services maintains that the Director and the
Board committed reversible error when they relied on an unpublished Board opinion in a
previous case.2 We disagree. Based on Tommy Clifton’s testimony before the Board alone,
there was substantial evidence to support the Board’s decision that Clifton Services was an
employer pursuant to section 11-10-210(e). The Board’s reliance on the earlier case was thus
not prejudicial, and Clifton Services’s arguments to the contrary are unavailing.
Affirmed.
GRUBER and VAUGHT, JJ., agree.
Jensen Young & Houston, PLLC, by: Brent D. Houston, for appellant.
Phyllis A. Edwards, for appellee.
2
In the Director’s opinion, Appeal No. 88-BR-2 was mentioned in a footnote. In that
case, the Board issued a determination of coverage as to “Clifton Trucking” and concluded
that Clifton Trucking was an “employer” subject to the payment of unemployment-
insurance taxes. In the instant case, the Director found that the previous appeal “should be
considered as persuasive authority if not precedential.” Clifton Services argues that it was
never provided with notice that the previous case would be relied on, let alone provided a
copy of the decision, and was thus unfairly prejudiced by the Director’s and the Board’s
reliance on the earlier case.
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