Rubino Constr., Inc. v. Dept. of Job & Family Servs. ( 2018 )

[Cite as Rubino Constr., Inc. v. Dept. of Job & Family Servs., 2018-Ohio-5099.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Rubino Construction, Inc., :
Appellant-Appellant, : No. 17AP-662
(C.P.C. No. 16CV-8225)
v. :
(REGULAR CALENDAR)
Director, Ohio Department of Job and :
Family Services,
:
Appellee-Appellee.
:
D E C I S I O N
Rendered on December 18, 2018
On brief: Harrington, Hoppe & Mitchell, Ltd., and
Matthew M. Ries, for appellant.
On brief: Michael DeWine, Attorney General, and Susan M.
Sheffield, for appellee.
APPEAL from the Franklin County Court of Common Pleas.
BROWN, P.J.
{¶ 1} Rubino Construction, Inc. ("Rubino"), appellant, has filed an appeal from
the judgment of the Franklin County Court of Common Pleas, in which the court affirmed
the order of the Ohio Department of Job and Family Services ("ODJFS"), appellee.
{¶ 2} Rubino is a construction company owned by Dominic Marchionda. In 2015,
Rubino was hired by Wick Properties, LLC ("Wick"), as a general contractor for a
renovation project on the Wick building in Youngstown, Ohio. Wick is partially owned by
Marchionda. NYO Property Group, LLC ("NYO") is a property management company also
owned by Marchionda that was to manage the property once the renovations were
complete. Rubino hired GreenHeart Companies, LLC ("GreenHeart"), to coordinate the
No. 17AP-662 2
renovation and demolition. Rubino also hired Carmen Silvestri to complete the
demolition. Rubino contends it hired Silvestri as an independent contractor. Silvestri then
hired Alejandro Salinas ("claimant"). Rubino contends claimant was also hired as an
independent contractor. Claimant was a professional boxer, and between training and
fights, he worked intermittently over the course of several months. Rubino directly issued
claimant his wage payments.
{¶ 3} After the demolition work was completed, claimant filed for unemployment
compensation on January 20, 2016. On February 10, 2016, the Ohio Department of
Taxation rendered a Determination of Employer's Liability and Contribution Rate
Determination, finding Rubino was a liable "employer" under R.C. 4141.01 for purposes of
Ohio unemployment taxes and assigning an employer contribution rate. Rubino appealed
the determination.
{¶ 4} On June 22, 2016, a hearing officer held a hearing over the telephone.
Marchionda and Silvestri testified. On August 3, 2016, the Unemployment Compensation
Review Commission ("UCRC"), which operates under ODJFS, rendered a final decision,
finding claimant was an employee of Rubino. The effect of this determination was to
require Rubino to maintain an unemployment compensation account with ODJFS and
pay unemployment compensation taxes. Rubino appealed the decision to the Franklin
County Court of Common Pleas. On August 22, 2017, the common pleas court issued a
decision and entry affirming UCRC's decision. Rubino appeals the judgment of the
common pleas court, asserting the following assignment of error:
THE TRIAL COURT ERRED IN AFFIRMING THE
ADMINISTRATIVE DECISION OF THE UNEMPLOYMENT
COMPENSATION REVIEW COMMISSION, FINDING
RUBINO CONSTRUCTION WAS AN EMPLOYER
PURSUANT TO R.C. § 4141.01.
{¶ 5} In its sole assignment of error, Rubino argues the common pleas court erred
when it affirmed the decision of UCRC. R.C. 4141.26(D)(2) explains the common pleas
court, when reviewing a decision of UCRC:
[M]ay affirm the determination or order complained of in the
appeal if it finds, upon consideration of the entire record, that
the determination or order is supported by reliable, probative,
and substantial evidence and is in accordance with law. In the
absence of such a finding, it may reverse, vacate, or modify the
No. 17AP-662 3
determination or order or make such other ruling as is
supported by reliable, probative, and substantial evidence and
is in accordance with law.
{¶ 6} "Our standard of review is narrower than the trial court's. As to factual
issues, our review is limited to a determination as to whether the trial court abused its
discretion." Miracle Home Health Care, LLC v. Ohio Dept. of Job & Family Servs., 10th
Dist. No. 12AP-318, 2012-Ohio-5669, ¶ 18 (citing numerous cases). "An abuse of
discretion requires more than an error in judgment. [In this context], [t]o find an abuse of
discretion, we must conclude that the trial court's decision is without a reasonable basis
and clearly wrong." Id. "Absent an abuse of discretion on the part of the common pleas
court, this court is obligated to affirm its judgment." Stouffer Hotel Mgt. Corp. v. Ohio
Unemp. Comp. Bd. of Review, 87 Ohio App.3d 179, 183 (10th Dist.1993). However, this
court's review of questions of law is plenary. BRT Transp. LLC v. Ohio Dept. of Job &
Family Servs., 10th Dist. No. 14AP-800, 2015-Ohio-2048, ¶ 15.
{¶ 7} Ohio employers must pay contributions into Ohio's unemployment
compensation fund. R.C. 4141.23(A). The definition of "employer" includes the type of
organization that has "in employment at least one individual." R.C. 4141.01(A)(1)(a).
"Employment" means:
[S]ervice performed by an individual for remuneration under
any contract of hire, written or oral, express or implied * * *,
unless it is shown to the satisfaction of the director that such
individual has been and will continue to be free from direction
or control over the performance of such service, both under a
contract of service and in fact.
{¶ 8} R.C. 4141.01(B)(1). The burden of proving entitlement to the independent
contractor exemption is on the employer. Peter D. Hart Research Assocs., Inc. v. Admr.
Ohio Bur. of Emp. Servs., 10th Dist. No. 95APE06-736 (Dec. 28, 1995), citing McConnell
v. Admr. Ohio Bur. of Emp. Servs., 10th Dist. No. 95APE03-262 (Oct. 5, 1995).
{¶ 9} R.C. 4141.01(B)(2)(k) provides:
Construction services performed by any individual under a
construction contract, as defined in section 4141.39 of the
Revised Code, if the director determines that the employer for
whom services are performed has the right to direct or control
the performance of the services and that the individuals who
perform the services receive remuneration for the services
No. 17AP-662 4
performed. The director shall presume that the employer for
whom services are performed has the right to direct or control
the performance of the services if ten or more of the following
criteria apply:
(i) The employer directs or controls the manner or method by
which instructions are given to the individual performing
services;
(ii) The employer requires particular training for the
individual performing services;
(iii) Services performed by the individual are integrated into
the regular functioning of the employer;
(iv) The employer requires that services be provided by a
particular individual;
(v) The employer hires, supervises, or pays the wages of the
individual performing services;
(vi) A continuing relationship between the employer and the
individual performing services exists which contemplates
continuing or recurring work, even if not full-time work;
(vii) The employer requires the individual to perform services
during established hours;
(viii) The employer requires that the individual performing
services be devoted on a full-time basis to the business of the
employer;
(ix) The employer requires the individual to perform services
on the employer's premises;
(x) The employer requires the individual performing services
to follow the order of work established by the employer;
(xi) The employer requires the individual performing services
to make oral or written reports of progress;
(xii) The employer makes payment to the individual for
services on a regular basis, such as hourly, weekly, or
monthly;
(xiii) The employer pays expenses for the individual
performing services;
No. 17AP-662 5
(xiv) The employer furnishes the tools and materials for use
by the individual to perform services;
(xv) The individual performing services has not invested in
the facilities used to perform services;
(xvi) The individual performing services does not realize a
profit or suffer a loss as a result of the performance of the
services;
(xvii) The individual performing services is not performing
services for more than two employers simultaneously;
(xviii) The individual performing services does not make the
services available to the general public;
(xix) The employer has a right to discharge the individual
performing services;
(xx) The individual performing services has the right to end
the individual's relationship with the employer without
incurring liability pursuant to an employment contract or
agreement.
{¶ 10} Here, the common pleas court affirmed UCRC's determination and found
claimant met 11 of the 20 factors of an "employee" under R.C. 4141.01(B)(2)(k), those
being (i), (iii), (v), (vii), (ix), (xii), (xiv), (xv), (xvi), (xviii), and (xix). Appellant argues in
the present appeal the evidence does not support a determination that Rubino was the
employer of claimant because a majority of R.C. 4141.01(B)(2)(k) factors weigh in
Rubino's favor. We will address Rubino's claim with regard to each factor cited by the
common pleas court.
{¶ 11} Initially, however, because UCRC did not set forth its findings and reasons
under specific factors, we will summarize UCRC's factual findings behind its conclusion
that claimant was an employee of Rubino. The UCRC found that Rubino had sufficient
control over the demolition crew to create an employer-employee relationship. Silvestri
began working for Rubino after he asked Marchionda if there was any work he could do
for him. Silvestri then hired claimant and the rest of the demolition crew. The demolition
crew was paid by the hour, their hours were tracked by Silvestri, they worked varying
hours, their hours were reported to the agents of Rubino by Silvestri, they worked on a
No. 17AP-662 6
worksite on which Rubino was the general contractor, and they were paid directly by
Rubino via company paychecks. The UCRC also found Rubino hired GreenHeart as the
construction manager, GreenHeart became Rubino's agent, and GreenHeart directed the
demolition crew as to the time and place to perform their work. Rubino also provided
tools to the demolition crew, including dumpsters to haul away the demolition debris.
{¶ 12} With regard to the first factor in R.C. 4141.01(B)(2)(k)(i)—the employer
directs or controls the manner or method by which instructions are given to the individual
performing services—the common pleas court found that, through its agent GreenHeart,
Rubino directed or controlled the manner by which instructions were given to the
demolition crew. In its appeal, Rubino argues there was no evidence to support such
because Silvestri testified the demolition crew received instructions from GreenHeart
regarding the manner of their work but Rubino did not give directions or oversee any of
the work performed by the demolition subcontractor. Rubino argues if this court were to
rely on the fact that GreenHeart was hired by Rubino to demonstrate that Rubino
controlled the activities of the subcontractors, it could arguably result in all workers on a
construction site being deemed an employee of the general contractor.
{¶ 13} As relevant to this factor, Silvestri testified at the hearing that he was an
independent demolition contractor. He said he does not have a business but works
"independently." He does not offer his services to other companies, does not advertise his
services, does not have a business name, and does not carry workers' compensation. He
said that GreenHeart told him what to demolish. Marchionda originally told him to meet
with GreenHeart at the Wick building to discuss the demolition and what work had to be
completed. He said he told claimant what to do, and Rubino did not require any training
of claimant and had no control over when claimant left the jobsite. Silvestri stated that
claimant dictated his own schedule, and there was no minimum number of hours that
claimant had to work.
{¶ 14} Marchionda testified at the hearing that he owned Rubino. Wick Properties
owns the Wick building, and NYO is a property management company. He is a 50 percent
owner of Wick Properties and has an ownership interest in NYO. Marchionda said he
hired GreenHeart as the construction management company in charge of coordinating
subcontractors for the project and setting the schedule for the demolition work. He stated
GreenHeart is a completely separate company than Rubino. He testified that Silvestri
No. 17AP-662 7
approached him and asked him if there was any work he could do. Silvestri put together a
"group of individuals," who then performed the demolition. Marchionda, however,
testified he did not know the details of how claimant was hired to work on the demolition
crew. He stated that Rubino had no disciplinary or scheduling authority over claimant,
did not require claimant to work a minimum number of hours, and did not require status
reports on claimant's work.
{¶ 15} An important issue underlying this factor, as well as several other factors, is
whether others acted as Rubino's agents, so as to impute their actions and control to
Rubino. We agree with UCRC and the common pleas court that GreenHeart, as well as
Silvestri, acted as agents for Rubino in directing and controlling the actions of claimant.
Rubino was the general contractor and, although Rubino hired GreenHeart as the
management company, Rubino had the ultimate control over the entire project as the
general contractor. Although Rubino argues it is not in the demolition business, as the
general contractor, it was ultimately responsible for the demolition and how GreenHeart
and Silvestri completed their jobs. Furthermore, although Silvestri claimed to be acting as
an independent contractor, he was hired by Marchionda and had little resemblance to a
truly independent business. He acted more like an extension of Rubino and a supervisor
that Marchionda put in charge of hiring additional employees to complete the demolition
work. Given this analysis, we agree that, through GreenHeart and Silvestri, Rubino
directed and controlled the manner and method by which instructions were given to
claimant based on the above testimony. Therefore, we can find no abuse of discretion in
the common pleas court's finding on this issue, and find factor (i) weighs in favor of
claimant.
{¶ 16} With regard to factor (iii)—services performed by the individual are
integrated into the regular functioning of the employer—the common pleas court found
the services provided by claimant were integral to Rubino's work and, as the general
contractor, the relationship between Rubino, Wick, and NYO was intertwined for
purposes of demolition. In its appeal, Rubino argues it is a general contractor in the
construction industry and does not provide demolition services, which is why it
outsourced the demolition work to a demolition subcontractor.
{¶ 17} We have already discussed above the interrelationship between Marchionda
and Rubino and the other companies Marchionda owns. We have also addressed how
No. 17AP-662 8
GreenHeart and Silvestri acted as agents for Rubino in controlling claimant's work.
Although Rubino argues it is a general contractor and not involved in demolition, hiring
managers and employees to complete demolition is a general contractor's responsibility.
Therefore, we find the common pleas court did not err when it found the services
performed by claimant were integrated into the regular functioning of Rubino, and this
factor weighs in favor of claimant.
{¶ 18} With regard to factor (v)—the employer hires, supervises, or pays the wages
of the individual performing services—the common pleas court found that, regardless of
Rubino's rationale for doing so, Rubino paid claimant's wages directly, and the wages
were based on an hourly rate tracked by Silvestri. In his appeal, Rubino argues that
Silvestri testified he hired claimant, and Marchionda testified he had no disciplinary
authority over claimant. Rubino also argues that, although it did pay claimant directly, it
did so only because, in the past, subcontractors had failed to pay their employees and
those employees threatened to sue Rubino, as the general contractor. However, Rubino
concedes that, given our standard of review to defer to the trial court's weighing of
conflicting evidence, this factor must weigh in favor of claimant. We agree.
{¶ 19} Silvestri testified he was an independent demolition contractor. He stated
he does not have a business, does not offer his services to other companies, does not
advertise his services, does not have a business name, and does not carry workers'
compensation. Rubino did not hire claimant; rather, Silvestri did. He stated Marchionda
paid him and claimant through company checks issued by Rubino. Silvestri told claimant
what to do and kept track of how many hours claimant worked. At the end of the week,
Silvestri submitted the hours worked to NYO. He stated claimant got paid every two
weeks.
{¶ 20} Marchionda testified he did not know how claimant came to be hired to
work demolition at the Wick building. Rubino paid claimant, in addition to all plumbers,
electricians, and drywallers. He stated that, based on a prior incident when he was
threatened by a worker who was not paid by one of the subcontractors he had hired, he
began to pay workers directly. Based on the same reasoning as the common pleas court,
we find the court did not err in its finding and this factor weighs in favor of claimant.
{¶ 21} With regard to factor (vii)—the employer requires the individual to perform
services during established hours—the common pleas court found that claimant was
No. 17AP-662 9
required to work certain hours and could only perform his job when the jobsite was made
available to him during the same working hours as other crews, was supervised by
Silvestri and GreenHeart, and was not permitted to perform his job on weekends or off
hours. In its appeal, Rubino argues it never set any hours for claimant or required him to
work any particular hours, pointing to Silvestri's testimony that claimant dictated his own
schedule, Rubino did not have any control over when claimant left work, and there were
no required hours that claimant had to work. Rubino also counters the mere fact that
claimant did not work weekends or off hours does not mean that Rubino controlled
claimant's hours. Rubino contends the fact that claimant had to work during established
hours is true of all subcontractors, and Rubino was not the property owner, did not dictate
access, and did not establish the hours of demolition.
{¶ 22} As pertinent to this factor, Silvestri testified claimant worked sporadically.
claimant worked no set hours and could come and go from the jobsite at his discretion.
He stated Rubino had no control over when claimant left the jobsite, and claimant left
many times in the middle of the day. There was no minimum number of hours that
claimant had to work, and claimant was allowed to end his work at any time. Claimant
dictated his own work schedule. Silvestri testified that claimant could not work off hours
or on the weekend and had no independent access to the building to work.
{¶ 23} Marchionda testified GreenHeart set the schedule for the demolition work
at the Wick building. Rubino had no scheduling authority over claimant and did not
require him to work a minimum number of hours.
{¶ 24} Clearly, although claimant could control which days he worked, he could
only perform his job when the worksite was open and generally followed the same
workday hours as other workers. Claimant could not work weekend hours and could not
access the worksite during off hours. Rubino, through its agents GreenHeart and Silvestri,
controlled the standard work hours for claimant. Although Rubino presents contrary
arguments as to why these findings should not be relevant, they fit within the definition of
the factor, and we cannot say the common pleas court erred in finding this weighed in
favor of claimant.
{¶ 25} With regard to factor (ix)—the employer requires the individual to perform
services on the employer's premises—the common pleas court found that claimant's work
had to be performed at the Wick building, which was a jobsite operated and controlled by
No. 17AP-662 10
Rubino. The court also found that Marchionda's tri-ownership interests justified the
UCRC's determination that claimant's work was performed on Rubino's premises. In its
appeal, Rubino argues it never required claimant to perform work on its premises, given
all the work was performed at the Wick building, which was owned by Wick.
{¶ 26} As relevant to this factor, Silvestri and Marchionda testified that claimant
did not do any work on Rubino's premises. All work was performed at the Wick building.
However, as related to the common pleas court's reasoning, Marchionda testified that
Wick owns the Wick building, and he is 50 percent owner of Wick. Thus, consistent with
the common pleas court's analysis, based on Marchionda's ownership interests common
to Rubino and Wick, we can find no error in the common pleas court's conclusion that
Rubino required claimant to perform his demolition on Rubino's premises. Thus, this
factor weighs in favor of claimant.
{¶ 27} With regard to factor (xii)—the employer makes payment to the individual
for services on a regular basis, such as hourly, weekly, or monthly—in its appeal, Rubino
concedes this factor weighs in favor of claimant, but it notes that Rubino paid claimant
directly only because it had been threatened in the past with legal action by
subcontractors' employees when those subcontractors failed to pay the employees.
{¶ 28} As relevant to this factor, Silvestri testified that claimant was paid hourly, he
would submit the hours claimant worked to NYO at the end of every week, and Rubino
would pay claimant. Marchionda similarly testified that Rubino paid claimant, but
claimed he did so directly only because of a prior incident in which he was threatened by a
worker who was not paid by one of the contractors he had hired. However, regardless of
Rubino's claimed reason for paying claimant, the evidence clearly established that Rubino
paid claimant for his services on a regular, hourly basis, which weighs in favor of Rubino
being claimant's employer.
{¶ 29} With regard to factor (xiv)—the employer furnishes the tools and materials
for use by the individual to perform services—the common pleas court found that,
although claimant provided some of his own tools, Rubino provided some essential tools
and items, such as dumpsters, necessary for claimant to perform his demolition work. In
its appeal, Rubino argues that both Marchionda and Silvestri testified Rubino provided
claimant with no tools, equipment, or materials for use at work. Rubino points to
Silvestri's testimony that claimant provided his own tools or shared tools owned by other
No. 17AP-662 11
contractors. Rubino also asserts that, despite the common pleas court's finding, the
dumpsters were owned and provided by a third-party refuse company.
{¶ 30} As relevant to this factor, Silvestri testified that he and claimant either use
their own equipment or borrowed equipment from other subcontractors. Marchionda also
stated that Rubino did not supply tools or equipment to claimant. However, Silvestri
testified that he and claimant would dump construction debris into dumpsters for which
Rubino paid. It is unclear from Rubino's argument whether it is actually refuting that it
paid for the dumpsters. Regardless, Silvestri's testimony provided evidence to support the
finding by the common pleas court that Rubino provided at least the dumpsters for the
demolition. Thus, we find no error in the finding that this factor favored claimant.
{¶ 31} With regard to factor (xv)—the individual performing services has not
invested in the facilities used to perform services—the common pleas court found that
claimant was not invested in the facilities, as those instrumentalities were provided by
either Silvestri or Rubino. In its appeal, Rubino concedes this factor likely weighs in favor
of claimant, to the extent claimant used other subcontractor's tools that were not his own.
We agree, based on the same reasoning and testimony already discussed above.
{¶ 32} With regard to factor (xvi)—the individual performing services does not
realize a profit or suffer a loss as a result of the performance of the services—the common
pleas court found that claimant did not realize any profit or suffer any loss because he was
paid on an hourly basis. In its appeal, Rubino concedes this factor weighs in favor of
claimant, based on the applicable standard of review. We agree. The testimony
demonstrated claimant was paid hourly and did not have any potential to earn a profit or
suffer a loss based on his performance.
{¶ 33} With regard to factor (xviii)—the individual performing services does not
make the services available to the general public—the common pleas court found there
was no evidence claimant made demolition services available to the general public, and
the burden of proving entitlement to the independent contractor exemption was on
Rubino. In its appeal, Rubino argues that neither party presented any evidence on this
factor, yet the court found it weighed in favor of claimant. Although we agree there was
no direct testimony as to whether claimant made the services available to the general
public, Silvestri testified that claimant was a professional boxer and only worked
sporadically between training and fights. Silvestri stated claimant did very little on the
No. 17AP-662 12
jobsite, and he only gave him a job because claimant's manager said claimant needed
some money. Although there was no direct testimony, Silvestri's testimony suggested that
claimant did not offer his demolition services to the general public. We find no error.
{¶ 34} With regard to factor (xix)—the employer has a right to discharge the
individual performing services—the common pleas court found that Rubino had the right
to terminate claimant, as acknowledged by Rubino. In its appeal, Rubino concedes that it
had the right to terminate its independent contractor agreement with claimant once the
demolition work was completed and, in fact, did so. However, Rubino contends
termination clauses are common with independent contractors and, thus, its relevance is
dubious, but, nevertheless, concedes that this factor weighs in favor of claimant. We agree
this factor weighs in favor of claimant. Silvestri told claimant that once the job was
completed, his employment would be terminated. Marchionda testified that Rubino had
no written employment agreement with claimant and could terminate him at any time.
{¶ 35} Given our above determinations, we confirm the findings of the common
pleas court that claimant met at least 11 of the 20 factors of an "employee" under R.C.
4141.01(B)(2)(k). Thus, UCRC was required to presume that Rubino had the right to
control claimant's performance of services and was Rubino's employee. Therefore, we find
the common pleas court did not abuse its discretion when it found UCRC's decision was
supported by reliable, probative, and substantial evidence, and we overrule Rubino's
assignment of error.
{¶ 36} Accordingly, we overrule Rubino's sole assignment of error and affirm the
judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.
DORRIAN and BRUNNER, JJ., concur.
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