FILED
Mar 05 2018, 9:24 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Andrew B. Murphy Curtis T. Hill, Jr.
Faegre Baker Daniels LLP Attorney General of Indiana
Minneapolis, Minnesota
Andrea E. Rahman
Deputy Attorney General
Angela N. Johnson
Indianapolis, Indiana
Faegre Baker Daniels LLP
South Bend, Indiana
Paul D. Borghesani
Law Office of Paul D. Borghesani
Elkhart, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Q. D.-A., Inc., March 5, 2018
Appellant, Court of Appeals Case No.
93A02-1703-EX-556
v. Appeal from the Indiana Department
of Workforce Development,
Unemployment Insurance Appeals.
Indiana Department of The Honorable Suzanne E. Manning,
Workforce Development, Liability Administrative Law Judge.
Case No. 93484
Appellee.
Friedlander, Senior Judge
[1] Appellant Q. D.-A., Inc. (“Company”) appeals from the determination of the
Liability Administrative Law Judge (LALJ) that Claimant was an employee of
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Company rather than an independent contractor, such that Company was liable
to the State for unemployment insurance taxes. We reverse.
[2] Company presents one issue for our review, which we restate as: whether the
LALJ’s conclusion that Claimant was an employee of Company under Indiana
Code section 22-4-8-1 (2006) was unreasonable.
[3] Company acts as a middleman between qualified drivers and companies that
manufacture recreational and other large vehicles. Specifically, Company pairs
drivers with companies for the transport of these vehicles to dealerships and
customers—known in the industry as “drive-away services.” On January 9,
2013, Claimant entered into a contract with Company to provide drive-away
services.
[4] Claimant subsequently filed for unemployment insurance benefits with the
Indiana Department of Workforce Development (IDWD). On April 14, 2015,
the IDWD issued a determination of wage investigation notifying Company
that it had misclassified payments it made to Claimant. Company filed a
protest to the IDWD’s determination, and the LALJ held a hearing on
Company’s protest. Following the hearing, the LALJ concluded that the
services provided by Claimant constitute employment such that Company
owed to the State unemployment insurance taxes on payments made to
Claimant. Company now appeals.
[5] The Indiana Unemployment Compensation Act provides that “[a]ny decision
of the liability administrative law judge shall be conclusive and binding as to all
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questions of fact.” Ind. Code § 22-4-32-9(a) (1995). 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 finding of facts. Ind. Code § 22-4-32-12 (1990). Under
this standard, basic facts are reviewed for substantial evidence, conclusions of
law are reviewed for their correctness, and ultimate facts are reviewed to
determine whether the LALJ’s finding is a reasonable one. Bloomington Area
Arts Council v. Dep’t of Workforce Dev., 821 N.E.2d 843 (Ind. Ct. App. 2005).
Ultimate facts are conclusions or inferences from the basic facts. Id.
[6] Company argues the LALJ wrongly determined that Claimant was an
employee of Company within the meaning of Indiana Code section 22-4-8-1.
For purposes of determining when an employer is liable for unemployment
taxes, employment is defined as “service . . . performed for remuneration or
under any contract of hire, written or oral, expressed or implied.” Ind. Code §
22-4-8-1(a). Further,
[s]ervices performed by an individual for remuneration shall be
deemed to be employment subject to this article irrespective of
whether the common-law relationship of master and servant
exists, unless and until all the following conditions are shown to
the satisfaction of the department:
(1) The individual has been and will continue to be free
from control and direction in connection with the
performance of such service, both under the individual’s
contract of service and in fact.
(2) The service is performed outside the usual course of the
business for which the service is performed.
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(3) The individual:
(A) is customarily engaged in an independently
established trade, occupation, profession, or
business of the same nature as that involved in the
service performed; or
(B) is a sales agent who receives remuneration solely
upon a commission basis and who is the master of
the individual’s own time and effort.
Ind. Code § 22-4-8-1(b). Thus, pursuant to the terms of the statute, all workers
are presumed to be employees until an employer demonstrates that all three
factors are fulfilled.
1. Freedom from Control
[7] To establish that an individual is not an employee, part (1) of the statutory test
requires a putative employer to demonstrate that the individual has been and
will continue to be free from control and direction in the performance of such
service, both under the contract and in fact. See Ind. Code § 22-4-8-1(b)(1). To
meet this requirement, an employer must show it lacks control and direction
over the manner, method, and means in which the services are performed by
the worker. Circle Health Partners, Inc. v. Unemployment Ins. Appeals of Ind. Dep’t of
Workforce Dev., 47 N.E.3d 1239 (Ind. Ct. App. 2015).
[8] Here, the LALJ found that Company “provides a two day orientation class to
its independent contractors which includes ‘the appropriate training for the
position,’” “a DOT [Department of Transportation] physical, drug screen,
information on Federal Motor Carrier Safety Act (FMCS) regulations,
employer policies, and a driving test” and that Company “provides the FMCSR
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pocketbook to its independent contractors.” Appellant’s App. Vol. 2, p. 9. The
LALJ then concluded that although Claimant was free to choose his routes and
to hire other drivers to perform the service, the orientation “is evidence that the
claimant was not free from the employer’s right to control.” Id. at 11.
[9] On appeal, Company argues that the LALJ’s determination is not supported by
the evidence. Specifically, Company contends that the basis of the LALJ’s
conclusion—that the orientation provided by Company demonstrates employer
control—is incorrect.
a. Under the Contract
[10] Pursuant to the terms of the contract between the parties, Company does not
employ any individuals to provide drive-away services; rather, it outsources this
responsibility to third parties with the required experience, knowledge, skills,
and license to operate commercial motor vehicles. Ex. Vol. 4, p. 14. Claimant
is a self-employed individual operating as an independent contractor engaged in
the business of providing drive-away services to various motor carriers and/or
manufacturing companies on a trip-to-trip basis. Id. Furthermore, it was
“expressly understood and agreed” that Claimant was an independent
contractor for the services he provided to Company. Id. at 17, ¶ 1. Claimant
was “in control of and free to determine the means and manner by which” he
performed the drive-away services, and he was required to furnish the necessary
tools, supplies, or materials to do so, including towbars, emergency equipment,
and cell phones. Id. at 15, ¶ 2 and 16, ¶ 4 a. Although free to determine the
manner in which he performed, Claimant agreed that he was performing
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subject to and in compliance with the laws, rules and regulations of both state
and federal agencies, including but not limited to the FMCSA and the DOT.
Id. at 16, ¶ 3. In addition, the contract required Claimant to maintain a bond
account with a minimum balance of $1,000. Id. at 17, ¶ 2.
[11] Also under the terms of the contract, Claimant was permitted to provide drive-
away services for other companies. Id. at 15-16, ¶ 2 a. Moreover, Claimant had
the right to hire qualified drivers to perform drive-away services for him, and, in
such cases, he would be responsible for the direction and performance of the
other drivers’ activities. Id. at 15, ¶ 1. Further, Claimant assumed “full control
and responsibility” for all hours scheduled and worked, wages, salaries,
workers’ compensation insurance, unemployment insurance, state and federal
taxes, and fringe benefits for any drivers he hired to provide drive-away
services. Id. at 17, ¶¶ 1, 1 a.
b. In Fact
[12] Jennifer Miller, Company’s Director of Administration, confirmed that
Company does not employ any individuals with the license necessary to
provide drive-away services but instead outsources this task to licensed third
parties. Tr. Vol. 2, pp. 47-48. She testified that Claimant had complete
discretion as to the route he took for deliveries and that no employee of
Company oversees, supervises, or evaluates the work of the independent
contractor drivers or rides with the independent contractors as they are
performing their services. Id. at 51, 47.
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[13] Miller further stated that Claimant was responsible for the expense and
requirements of obtaining/maintaining a commercial driver’s license, lodging,
fuel, tolls, meals, and return trip transportation. Id. at 80, 50. If Claimant
towed his own vehicle for the return trip, he was required to provide all the
proper hitch equipment, including the tow bar and light connectors, as well as
insurance on the tow car, and the triangles and fire extinguisher required by the
federal government. Id. Additionally, although Claimant indicated to the
IDWD wage investigator that he did not have a bond account, Miller testified
that in fact Claimant did have a bond account and that she was not aware of
any independent contractor working with Company that did not have a bond
account. Id. at 61. She explained that the bond account requirement remained
in effect for the duration of Claimant’s contract and that, if there were any
claims for which Claimant were liable, he would be responsible for the first
$1,000 of the claim. Id. at 60.
[14] Compensation for drive-away services is negotiated on a per trip basis. Id. at
51. Miller explained:
A: We pay on a per mile basis. There [are] times where –
depending upon where the – where the delivery is going, there’s
some routes that aren’t as probably [sic] to drivers as desirable as
other routes. Out East for example where there’s toll roads, and
he may ask for an additional five or ten cents a mile at that point
before he would agree to take the – the trip.
Q: So that would be sort of a bartering or a negotiation back
and forth –
A: - Yes. –
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Q: - between [Company] and [Claimant] about the exact
compensation?
A: Correct.
Q: And, if [Claimant] decided he didn’t want to take a trip
because he wasn’t satisfied with the compensation, did he have
the ability to do that?
A: Yes.
Q: And, do you know whether he in fact did that?
A: He has in fact.
Q: Are there any consequences for not taking a trip?
A: No.
Id. at 52.
[15] Miller also confirmed Claimant’s right to provide drive-away services for
Company’s competitors and occasions where Claimant did so, even on the
same day. Id. at 53-56. Miller further testified that, under his contract,
Claimant had the right to hire individuals to perform drive-away services for
him, and in that situation Company was neither involved in the hiring process
nor did it have the authority to reject someone hired by Claimant. Id. at 49.
Company also was not involved in how Claimant paid the drivers he hired. Id.
at 51.
[16] Miller stated that Company has a DOT number and is a registered motor
carrier with the DOT. Id. at 42. She testified that Claimant operated under
Company’s DOT number, which is very common in the drive-away industry.
Id. at 43. In addition, she explained that the federal motor carrier regulations
apply to the drive-away industry, including but not limited to hours of service
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(i.e., the number of hours per day a driver is permitted to drive), drug testing,
log books, and a DOT physical. Id. at 42-43, 44-45. These regulations are
mandated by the federal government, and Company is not at liberty to ignore
them. Id. at 44.
[17] Specifically with regard to the orientation, Miller testified that the purpose of
the orientation is to review with the drivers the federal regulations promulgated
by the FMCSA (Federal Motor Carrier Safety Administration), such as the
hours of service and the required DOT physical. Id. at 45-46. In addition, the
orientation session includes policies of Company, which are based upon the
federal regulations. For instance, the FMCSA has established time frames in
which certain accidents must be reported to the DOT, and Company
incorporated these requirements into its company policies. Id. at 46. At
orientation, Company provides the independent contractor drivers with the
phone numbers to report accidents, as well as the phone numbers and hours for
Company’s dispatch offices. Id. Dawn Dennis, Dispatch Supervisor at
Company, testified that contractor drivers received jobs either by calling in to
Company’s dispatcher or by receiving a call from the dispatcher. Id. at 85, 87.
Miller further testified that the orientation does not include: instruction to
drivers on how to perform their job, instruction on how to plan a route,
instruction on how to operate efficiently, instruction on how to maximize
profits, instruction on how to hire driver/employees, or information on how to
obtain the necessary licenses. Id. at 46-47.
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[18] IDWD’s sole witness, Investigator Marcia Wager, testified that she never
inquired into what the orientation entailed, conceded she had no idea what
Company’s policies were, and that, with the exception of what was contained
in Claimant’s contract, she did not know specifically what Claimant was
required to do. Id. at 29-30.
[19] It is clear from the evidence that Claimant possessed rights that employees do
not generally enjoy. He had the right to negotiate his compensation for each
job he agreed to undertake, he had the right to decline work, he had complete
control over the routes and performance of his jobs, he was free from
supervision and evaluation by Company or any of its employees, he had the
right to hire people to perform the jobs for him, and he had the right to
simultaneously work for Company and its competitors. Moreover, the evidence
demonstrates that Company’s orientation and policies noted by the LALJ
simply incorporate the requirements imposed upon it and the independent
contractor drivers by the federal government. It is undisputed that Company is
licensed as a motor carrier and that it, as well as anyone it hires to perform
drive-away services, is required to follow the federal regulations.
[20] We liken the facts in this case to those in Twin States Publishing Co., Inc. v.
Indiana Unemployment Insurance Board, 678 N.E.2d 110 (Ind. Ct. App. 1997),
trans. denied. There, a panel of this Court held that the LALJ erred in
concluding that individuals who delivered newspapers and shopping guides
published by Twin States were employees. The Court determined the delivery
people were independent contractors because they were paid per delivery, and
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they had complete discretion over the manner, method, and means of
performing their work—even given the restrictions that they deliver the guides
by 5:00 p.m. on Tuesdays, place the guides in a dry place, and perform the
services in a workmanlike manner.
[21] Similarly, in Alumiwall Corporation v. Indiana Employment Security Board, 130 Ind.
App. 535, 167 N.E.2d 60 (1960), this Court reversed the Liability Referee’s
determination that siding applicators were employees of the corporation that
sold the roofing and siding materials. The applicators received work
assignments by contacting the office of Alumiwall; they were paid according to
the amount of siding they installed; and they furnished their own trucks and
equipment. The applicators could also hire whatever help they deemed
necessary with Alumiwall having no control over the number of helpers hired,
the amount the helpers were paid, or whether helpers were retained or fired. In
addition, the applicators had complete discretion as to the manner and means
of performing their work, and Alumiwall had no control over the applicators’
work hours, number of jobs they accepted, or whether they accepted any jobs at
all.
[22] In Circle Health Partners, Inc., a panel of this Court reached the opposite
conclusion. 47 N.E.3d 1239. In that case, the Court affirmed the LALJ’s
determination that nurses and phlebotomists were employees of Circle Health.
This decision was based on the fact that the nurses and phlebotomists who
contracted with Circle Health were given eighteen specific steps to complete in
conducting health screenings and collecting certain information. In addition,
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the nurses and phlebotomists were paid an hourly rate for their hours worked,
were entitled to reimbursement for travel and other expenses, and could not
conduct the screenings at times other than the hours scheduled.
[23] With specific regard to the incorporation of and requisite compliance with the
federal regulations, we find guidance from two cases in particular. In Equal
Employment Opportunity Commission v. North Knox School Corp., 154 F.3d 744 (7th
Cir. 1998), the court held that school bus drivers were independent contractors
and not employees. In looking at the control factor, the court discussed the
state’s extensive regulation of school bus drivers and stated that the imposition
of the regulations was insufficient to show the drivers were employees because
the regulations reflected control by the state, not control by the putative
employer. Essentially, the employer’s hands were tied by the state because it
could not contract with a person who did not satisfy the state regulations.
[24] In SIDA of Hawaii, Inc. v. National Labor Relations Board, 512 F.2d 354 (9th Cir.
1975), the court reviewed the determination of the National Labor Relations
Board that taxi drivers were employees instead of independent contractors. In
doing so, the court recognized that the primary test was the extent of control
exercised by the alleged employer and disagreed with the Board’s conclusion
that certain rules and regulations evidenced SIDA’s control over the drivers.
Rather, the court concluded, the rules and regulations were designed to enforce
standards of conduct. Most relevant to the present case is the court’s
recognition that several of the regulations simply incorporated requirements
imposed on SIDA by its commercial contracts and state and local ordinances.
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Notably, the court affirmed the concept that “the fact that a putative employer
incorporates into its regulations controls required by a government agency does
not establish an employer-employee relationship.” Id. at 359.
[25] In light of this precedent and the totality of the facts and circumstances of the
case before us, we determine Company’s one-time orientation session does not
demonstrate the kind of ongoing control over work methods needed to show
control and direction under Indiana Code section 22-4-8-1(b)(1). Moreover, we
do not find the incorporation of federal regulations into Company’s policies to
be inconsistent with an independent contractor relationship but rather an
enforcement of standards mandated by the federal government with regard to
which Company has no authority. Thus, we conclude the LALJ’s
determination that Claimant was not free from Company’s control and
direction is contrary to the substantial evidence.
2. Usual Course of Business
[26] The second factor required to establish that an individual is not an employee is
a demonstration that the service performed by the individual is performed
outside the putative employer’s usual course of business. See Ind. Code § 22-4-
8-1(b)(2). Thus, here, Company was required to establish that the drive-away
services provided by Claimant were outside of Company’s usual course of
business.
[27] With regard to the second factor, the LALJ concluded:
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The employer is a provider of one-way transportation of
commodities. The employer chooses to use independent
contractors to provide the deliver[y] service of the commodities.
The independent contractors provide those services to the clients
on behalf of the employer. The employer could not perform the
work without the independent contractors such as the claimant.
The claimant’s work was within the usual course of the
employer’s business.
Appellant’s App. Vol. 2, p. 11.
[28] In support of the LALJ’s conclusion that Company is a provider of one-way
transportation of commodities, IDWD notes in its brief that Company’s
contract with Claimant states in the introductory recital paragraphs that
Company is a licensed company authorized to engage in the transportation of
motor vehicles. See Ex. Vol. 4, p. 14. However, Miller specifically testified to
the meaning of this recital at the hearing. She explained that this provision
means that Company is licensed/authorized to transport because it has a DOT
number but that Company is not in the business of transporting. Tr. Vol. 2, p.
47. This is confirmed by the terms of the contract as well as by Miller’s
testimony that Company does not employ any individuals to provide drive-
away services. Ex. Vol. 4, p. 14; Tr. Vol. 2, pp. 47-48. In fact, one-way
transportation of commodities is the precise description of the services Claimant
and the other contractor drivers provide to Company for its clients.
[29] Miller further testified that Company’s business is assisting its customers by
pairing them with contractor drivers so that their customers can get their
product from point A to point B. Tr. Vol. 2, p. 42. IDWD Investigator Wager
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agreed that, based on her investigation, one way to describe Company’s
business is that of a middleman between manufacturers and drivers like
Claimant. Id. at 19.
[30] Thus, the evidence established that Company’s business is providing brokerage
services between its customers and those individuals licensed and authorized to
provide drive-away services. Stated another way, Company functions as an
intermediary or middleman by employing people to pair its customers
(manufacturers of RVs and other commercial motor vehicles) with individuals
who are properly licensed to do the work (Claimant and other drivers).
Accordingly, Company’s business and Claimant’s business, while
complementary, are distinct. Therefore, the LALJ’s determination that
Claimant performed services that are within Company’s usual course of
business is contrary to the substantial evidence.
3. Independently Established Trade or Occupation
[31] The LALJ concluded that Company established the third factor that Claimant
was customarily engaged in an independently established trade, occupation,
profession, or business of transporting commodities. Neither Company nor the
IDWD disputes this conclusion.
[32] Accordingly, as Company has established all three factors of the section 22-4-8-
1(b) test, we conclude that Claimant performed drive-away services for
Company as an independent contractor and not an employee. Here we pause
to acknowledge that another panel of this Court recently reached the opposite
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conclusion in a case similar to this. Company v. Indiana Department of Workforce
Development, 86 N.E.3d 204 (Ind. Ct. App. 2017) also involved a company and
contractor driver in the drive-away services industry. There, the Court affirmed
the LALJ’s determination that claimant was an employee of company because
company had failed to establish factor 2 regarding the company’s usual course
of business. In short order, the panel concluded that the transport and delivery
of large motor vehicles by licensed contractor drivers was not outside
company’s usual course of business because company was registered as a motor
carrier with the DOT and competed with companies who offered the same
drive-away services provided by employee drivers. Nevertheless, we conclude
that, pursuant to the facts and circumstances presented in this case, Claimant
was an independent contractor not an employee, and the LALJ’s conclusion to
the contrary is unreasonable.
[33] Decision reversed.
Najam, J., concurs.
May, J., dissents with separate opinion.
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ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Andrew B. Murphy Curtis T. Hill, Jr.
Faegre Baker Daniels LLP Attorney General of Indiana
Minneapolis, Minnesota
Andrea E. Rahman
Deputy Attorney General
Angela N. Johnson
Indianapolis, Indiana
Faegre Baker Daniels LLP
South Bend, Indiana
Paul D. Borghesani
Law Office of Paul D. Borghesani
Elkhart, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Q. D.-A., Inc., Court of Appeals Case No.
93A02-1703-EX-556
Appellant,
v.
Indiana Department of
Workforce Development,
Appellee.
May, Judge, dissenting.
[34] Because I would affirm the LALJ’s conclusion that Claimant was an employee
of Company under Indiana Code section 22-4-8-1, I must respectfully dissent.
Court of Appeals of Indiana | Opinion 93A02-1703-EX-556 | March 5, 2018 Page 17 of 20
[35] As the majority notes, Indiana Code section 22-4-8-1 requires we consider every
paid worker an employee unless an employer can demonstrate three factors.
The second of these factors is that the Claimant’s “service is performed outside
the usual course of the business for which the service is performed.” Ind. Code
§ 22-4-8-1(b)(2). With regard to that factor, the LALJ concluded:
[T]he employer failed to establish that the claimant was
performing work that was outside of the usual course of the
employer’s business. The employer is a provider of one-way
transportation of commodities. The employer chooses to use
independent contractors to provide the deliver[y] service of the
commodities. The independent contractors provide those
services to the clients on behalf of the employer. The employer
could not perform the work without the independent contractors
such as the claimant. The claimant’s work was within the usual
course of the employer’s business.
(Appellant’s App. Vol. 2 at 11.)
[36] In support of those ultimate facts and conclusions, the LALJ entered the
following findings of fact:
The employer is a registered motor carrier with the Department
of Transportation (DOT). The employer’s DOT number is
[******]. The employer provides one-way transportation of
commodities. The commodities the employer transports are
commercial vehicles including motor homes, buses, etc. This is
referred to as drive away or tow away service. Employer’s Exhibit
S.
The employer contracts with clients to provide delivery of the
commodities. The employer uses independent contractors to
perform the delivery service. If a commercial vehicle exceeds
26,000 pounds, it must be operated by someone who has a
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Commercial Driver’s License (CDL). The employer does not
employ any employees that have a CDL. The employer could
not provide the delivery of the commodity without the
independent contractors. The employer’s contract with the
claimant specifies that the employer is a company that engages in
transportation of property, including motor vehicles.
Department’s Exhibit 3.
(Id. at 9) (italics in original).
[37] As the majority notes, another panel of this court recently affirmed an LALJ’s
decision, based on similar facts, that a driver for another drive-away company
was an employee of that company. See Company v. Indiana Department of
Workforce Development, 86 N.E.3d 204 (Ind. Ct. App. 2017). In analyzing
whether that company proved its driver’s service was outside that company’s
usual course of business, we stated:
We have little trouble concluding that Company failed to do this.
Indeed, the provision of transport and delivery of RVs is not just
Company’s usual course of business, it seems that it is its only course of
business. Company is registered as a motor carrier with the United
States DOT, its name is “* * * * * * * Transport,” Department’s Ex. 7A,
and it would compete directly with companies who offered the same
service provided by drivers who were employees. Company contends
that its usual course of business is not the provision of transport services,
but, rather, the provision of brokerage services. While perhaps
technically true, we seriously doubt that customers with RVs to transport
contact Company to act as a “middle man” between them and
independent haulers; they call Company to have an RV moved from
point A to point B and almost certainly do not care how Company
accomplishes that task. From a common-sense standpoint, the
Company’s business is transport, and this is the precise service that
Claimant provided to Company. The LALJ’s conclusion that Claimant
was, therefore, an employee for purposes of the Act is reasonable.
Id. at 208-9.
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[38] Because the facts herein are not appreciably different from the facts in that case,
I would reach the same result and affirm the LALJ’s conclusion that Claimant’s
service was within the Company’s usual course of business, such that Claimant
was an employee of Company. Accordingly, I respectfully dissent from the
majority’s reversal of the LALJ’s determination.1
__________________________
1
Were I writing a majority opinion affirming the LALJ’s decision, I would also need to address the other
issues raised by Company on appeal: (1) whether the Internal Revenue Service (“IRS”) determination that
Claimant was not an employee should be binding in this proceeding; (2) whether Indiana Code section 22-4-
8-1 is preempted by federal law regarding regulation of motor carriers; and (3) whether the LALJ denied
Company due process when the LALJ failed to use its subpoena power to require Claimant to appear and
produce documents demonstrating he was not an employee of Company. Because my opinion herein cannot
create binding precedent, I will address each of those issues only briefly.
I would hold the IRS determination of Claimant’s status for federal unemployment tax purposes is not
binding in Indiana unemployment tax proceedings because, while the two systems are intended to work
cooperatively to create “a unitary plan for unemployment relief,” Buckstaff Bath House Co. v. McKinley, 308
U.S. 358, 363 (1939), the two systems have different definitions of “employee.” Compare Ind. Code § 22-4-8-
1 with 26 U.S.C. § 3306(i) (“‘[E]mployee’ has the meaning assigned to such term by section 3121(d), except
that paragraph (4) and subparagraphs (B) and (C) of paragraph (3) shall not apply.” Section 3121(d) defines
an employee based on the common law definition.). See also Department of Labor, Licensing & Regulation v. Fox,
697 A.2d 478, 485 (Md. 1997) (declining to apply federal test of employment instead of the three-factor test
adopted by the Maryland legislature).
I would follow this Court’s reasoning in Company v. Indiana Dep’t of Workforce Dev., 86 N.E.3d at 209-214, and
hold Indiana Code section 22-4-8-1 is not preempted by the Federal Aviation Administration and
Authorization Act. And, finally, I would hold any possible error that may have been created by the LALJ’s
refusal to enforce the subpoena for Claimant’s documents was at most harmless because Company has not
suggested how Claimant’s documents could be relevant to a determination whether Claimant’s services were
“outside the usual course of” Company’s business. See Ind. Appellate Rule 66(A) (“No error . . . is ground
for granting relief or reversal on appeal where its probable impact, in light of all the evidence in the case is
sufficiently minor so as not to affect the substantial rights of the parties.”).
Court of Appeals of Indiana | Opinion 93A02-1703-EX-556 | March 5, 2018 Page 20 of 20
Q. D.-A., Inc. v. Indiana Department of Workforce Development
Combined Opinion