dissenting:
I respectfully dissent.
I disagree with the majority’s holding that the question of whether Bailey’s salespeople are independent contractors (and therefore Bailey need not pay contributions for purposes of unemployment insurance) depends on Bailey’s choice not to withhold Illinois income taxes from those individuals. If the members of the sales force are employees, then Bailey is required to withhold income tax and to make unemployment contributions. Bailey has no choice in the matter, except to the extent that Bailey is able to restructure its overall relationship with its salespeople so that they are not employees.
An employer is required to make unemployment insurance contributions "with respect to wages payable for employment.” 820 ILCS 405/1400 (West 1994). An employer is also required to withhold income taxes from compensation paid to an "employee.” Section 3(5) of the Membership Act provides that the same test that applies to income tax withholding applies to unemployment insurance contributions. Section 3(5) eliminates the possibility that someone in Bailey’s position will be treated differently for income tax purposes than for unemployment insurance purposes, and eliminates the necessity for Bailey to litigate the issue with both the Director of the Department and the Director of the Department of Revenue (Revenue). Under section 3(5), determination of status as a nonemployee for income tax purposes is binding for unemployment insurance purposes.
The fact that Bailey has chosen not to withhold for income tax purposes does not end the matter. The Director of Revenue may nevertheless determine that Bailey’s salespeople are employees and that Bailey is required to withhold. Until that is done, however, the Director of the Department must accept the fact that none of the members of the sales force "has tax withheld by a Membership Camping Operator pursuant to Section 701 of the Illinois Income Tax Act.” Ill. Rev. Stat. 1987, ch. 29, par. 903(5). Accordingly, unless we accept the Director’s argument under section 2202 of the Act, each of the salespersons in this case "is an independent contractor and not considered to be engaged in employment.” Ill. Rev. Stat. 1987, ch. 29, par. 903(5).
It is intolerable for one in Bailey’s position to allow members of its sales force to collect unemployment compensation but then assert that those individuals are not employees when the Director brings an enforcement action for unpaid unemployment insurance contributions. If Bailey shares (indirectly) the benefits of unemployment insurance, it must share the burdens of unemployment insurance. Section 2202 accordingly requires Bailey to litigate the issue of status as an employee at its first opportunity to do so. The decision involving salesman Larry Thompson became final before the circuit court’s decision in this case and as such became binding upon the circuit court.
I do not see that any undue burden is placed on Bailey "if 100 former sales staff of Bailey applied for unemployment” as the majority suggests. 289 Ill. App. 3d at 320. It is true there is no mutuality of estoppel between Bailey and its sales force. If Bailey won the first case, other members of the sales staff could still file their own claims alleging that they were employees. Once employee status is found to exist, however, that controls all the remaining cases, so long as the services in the remaining cases were rendered "under circumstances substantially the same” as those in the first case. 820 ILCS 405/2202 (West 1994). Of course, once Bailey begins paying contributions for the salespeople it becomes very difficult to argue the salespeople are not employees when they file claims. Even if Bailey is being subjected to "offensive collateral estoppel,” the legislature has determined, in section 2202, that that is appropriate.
Finally, I disagree with the majority’s holding that section 3(5) should be applied retroactively. It does appear that the supreme court has adopted a new test for determining whether legislation should be retroactive or prospective. "[T]he better approach is to apply the law that applies by its terms at the time of the appeal, unless doing so would interfere with a vested right.” First of America Trust Co., 171 Ill. 2d at 289, 664 N.E.2d at 39. A retroactive change in the law is one that takes away or impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability in respect of transactions or considerations already past. First of America Trust Co., 171 Ill. 2d at 290, 664 N.E.2d at 40. As the majority points out, the Department has consistently held campground membership sales personnel were not "independent contractors.” 289 Ill. App. 3d at 321. The legislature was not overturning a random incorrect interpretation when it enacted section 3(5), it was imposing a new duty or obligation on the Department in respect of transactions or considerations already past. Section 3(5) should be applied prospectively.