Unemployment Insurance Tax Contribution, Pioneer Baseball League v. Friedrichs , 233 Mont. 384 ( 1988 )

No. 88-131
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988
IN THE MATTER OF UNEMPLOYMENT
INSURANCE TAX CONTRIBUTION,
PIONEER BASEBALL LEAGUE,
Employer and Appellant,
-vs-
JAMES FRIEDRICHS,
Cla.imant and Respondent.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Robert Holmstrom, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Richard J. Carstensen, Billings, Montana
For Respondent :
Melanie A. Symons, Dept. of Labor & Industry, Helena,
Montana
Submitted on Briefs: July 8, 1988
Decided: August 23, 1988
Mr. Justice R . C. McDonough delivered the Opinion of the
Court.
Pioneer Baseball League (the League) appeals from the
order of the District Court of the Thirteenth Judicial
District, Yellowstone County. The order affirmed the
decision of the Board of Labor Appeals that the $ 3 0 0 per
month plus expense allowance paid to League umpires
constitutes employment subject to the unemployment insurance
law. We affirm.
The League presents two issues for our review:
1. What is the burden of proof for determining whether
services are subject to the unemployment insurance law?
2. Is the compensation paid to League umpires subject to
the unemployment insurance law?
The League is a professional, minor-league baseball
league with teams in Montana, Idaho, Utah and Canada. Its
headquarters are in Billings, Montana. The League obtains
umpires for its games from the National Association of
Professional Baseball Leagues. The League and the umpires
enter into a Uniform Umpire Contract provided by the National
Association, which sets forth the terms of employment. James
L. Friedrichs entered into such a contract with the League on
June 18, 1985.
The contract provided that Friedrichs would be employed
to render skilled services as an umpire. He was paid $ 3 0 0
per month, with an allowance of $ 1 , 0 5 0 . 0 0 per month for
travel, lodging and other expenses. The contract could be
assigned by the League, or terminated by the League at any
time upon giving Friedrichs notice. The contract also
provided that Friedrichs could not perform services as an
umpire for any party other than the League unless he obtained
the League's consent.
In 1986 when he no longer worked for the League,
Friedrichs filed an unemployment claim. In his total of
claimed employment, he included time spent as an umpire for
the League. Subsequent proceedings led to a January 6, 1987,
decision by a Labor Department Appeals Referee that the
services rendered to the League by Friedrichs constituted
employment subject to the unemployment insurance law. On
March 7, 1987, the Board of Labor Appeals adopted the
referee's decision, and on December 9, 1987, the District
Court of the Thirteenth Judicial District affirmed the
Board's decision. This appeal followed.
The main issue in this appeal is whether Friedrichs was
an "employee" of the League for purposes of unemployment
insurance contributions. The standard of review in cases
appealed from the Board of Labor Appeals is controlled by 5
39-51-2410(5), MCA, which states in relevant part:
In any judicial proceeding under 39-51-2406 through
39-51-2410, the findings of the board as to the
facts, if supported by evidence and in the absence
of fraud, shall be conclusive and the jurisdiction
of said court shall. be confined to questions of
law.
The operation of this section has been discussed
previously by this Court, most recently in Zimmer-Jackson
Assoc. v. Dept. of Labor (Mont. 1988),752 P.2d 1095, 1097, 45
St.Rep. 679, 681:
When reviewing a decision of the Board of Labor
Appeals, the District Court must treat the findings
of the Board as conclusive if they are supported by
substantial evidence and are absent fraud.
[citations] This Court is held to the same
standard when reviewing a Roard of Labor Appeals
decision. [citation1 .
The facts found by the Board were adopted as conclusive by
the District Court, and are not disputed in this appeal. As
it appears from the record that the Board's findings were
supported by substantial evidence, "[wle must determine
whether the District Court committed an abuse of discretion
by affirming the Board's decision. [citation] ."Zimmer, 752
The League first seeks definition of the burden of proof
required for a showing that the unemployment insurance law is
inapplicable to a particular employment arrangement. The
League has sought to show that Friedrichs was an independent
contractor, and the League was therefore not required to make
unemployment insurance contributions based on his
compensation. The League argues that S 39-51-203 (4), MCA,
fails to give an adequate definition of employment that is
subject to the law. However, the League's brief on this
point misstates the applicable version of the statute. The
events at issue here took place in 1985 and are governed by
the version of the statute in force at that time:
Employment Defined...
(4) Service performed by an individual for wages is
considered to be employment subject to this chapter
unless and until it is shown to the satisfaction of
the department that:
(a) such individual has been and will continue to
be free from control or direction over the
performance of such services, both under his
contract and in fact;
(b) such service is either outside the usual course
of the business for which such service is performed
or that such service is performed outside of all
the places of business of the enterprise for which
such service is performed; and
(c) such individual is customarily engaged in an
independently established trade, occupation,
profession, or business.
Section 39-51-203 (4), MCA (1985) . This version of the
statute ennunciates the "ABC" test for independent contractor
status. Chapter 51, Part 2 of Title 39 was amended and
rearranged in the 1987 version of the Code, and the wording
of this section was changed to remove the ABC test. The
League bases its vagueness argument on the 1987 version of
the statute, which must he read in conjunction with other
sections of the Code, and which is not applicable to this
case. The burden of proof under fi 39-51-203 ( 4 ) , MCA (1985),
is set out in the statute itself and amply discussed in cases
from this Court applying the statute.
11.
The League disagrees with the District Court's holding
that compensation paid to umpires is subject to the
unemployment insurance law. According to the League, the
court misapplied fi 39-51-203(4), MCA (1985), to the
undisputed facts of this case. The League argues that under
the statute, its umpires are independent contractors not
covered by the unemployment insurance law. In order to
establish independent contractor status, all three parts of
the ABC test set out above must be met. Zimmer, 752 P.2d at
1098, citing Standard Chem. Mfg. Co. v. Employment Sec.
(1980), 185 Mont. 241, 605 P.2d 610; and Pat Griffin Co. v.
Employment Security Com'n (1974!, 163 Mont. 529, 519 P.2d
147.
The first, or "A" part of: the test requires that the
individual in question "he free from control or direction
over the performance of such services." We have held this to
be the most important of the three test elements. Zimmer,
752 P.2d at 1098, and cases cited. The record shows that
under the contract between Friedrichs and the League, the
League dictated Friedrichs's monthly compensation and expense
allowance, without giving him the opportunity to negotiate
those terms. The League controlled his game assignments, and
determined who his co-workers would be. Friedrichs was also
forbidden from contracting with another employer without
League permission, and the League reserved the right to
terminate him at any time. This combination of facts
provides ample evidence that Friedrichs was not free from
control or direction by the League as to how he performed his
services.
The League's arrangement with Friedrichs fails to meet
the first element of the ABC test, and therefore fails the
entire test under our holding in Zirnmer and its predecessors.
Friedrichs was an employee of the League, and his
remuneration was subject to the unemployment insurance law.
We find no abuse of discretion in the District Court's
decision to affirm the Board's ruling.
We affirm the decision of the District Court.
&/ Justice
Chief Justice