The Law Office of Deborah Agard v. Unemployment Insurance Appeals of the Indiana Department of Workforce Development

Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before any
court except for the purpose of
establishing the defense of res judicata,
collateral estoppel, or the law of the case.
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:
JAMES D. MASUR II GREGORY F. ZOELLER
Robert York & Associates Attorney General of Indiana
Indianapolis, Indiana
KATHY BRADLEY
FILED
Deputy Attorney General
Indianapolis, Indiana
Apr 17 2012, 9:17 am
IN THE
CLERK
COURT OF APPEALS OF INDIANA of the supreme court,
court of appeals and
tax court
THE LAW OFFICE OF DEBORAH )
AGARD, )
)
Appellant, )
)
vs. ) No. 93A02-1107-EX-672
)
UNEMPLOYMENT INSURANCE )
APPEALS OF THE INDIANA )
DEPARTMENT OF WORKFORCE )
DEVELOPMENT, )
)
Appellee. )
APPEAL FROM THE DEPARTMENT OF WORKFORCE DEVELOPMENT,
UNEMPLOYMENT INSURANCE APPEALS
Joanne T. Green, Liability Administrative Law Judge
Cause No. 11-02545
April 17, 2012
MEMORANDUM DECISION – NOT FOR PUBLICATION
MATHIAS, J.
The Law Office of Deborah Agard (“the Law Office”) appeals the decision of a
Liability Administrative Law Judge (“LALJ”) for the Unemployment Insurance Appeals
division of the Indiana Department of Workforce Development, (“the Department”), in
which the LALJ found that the Law Office owed unemployment insurance tax
contributions for Carlotta Wilson (“Wilson”), an individual the Law Office paid to
perform cleaning services at its office and at Kids’ Voice, a not-for-profit child advocacy
center where Deborah Agard (“Agard”), the sole proprietor of the Law Office, serves on
the board of directors. The Law Office raises one issue, which we restate as whether the
LALJ’s finding that Wilson was an employee of the Law Office for the purposes of the
Indiana Unemployment Compensation Act was unreasonable. We affirm.
Facts and Procedural History
For the past five years, the Law Office has rented office space and maintained its
place of business in a large office building. As part of the Law Office’s lease, the
landlord originally provided cleaning services. However, in 2008, after learning that
thefts had occurred on another floor of the building, Agard informed the landlord that she
no longer wished to use the landlord’s cleaning service and would be hiring her own
cleaning service. Thereafter, the Law Office engaged the services of Wilson to perform
housekeeping services in the office. During 2008, the Law Office treated Wilson as an
independent contractor for tax purposes and issued her an IRS Form 1099 rather than a
W-2.
In 2009, after Agard learned that Wilson did not carry her own liability insurance,
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the Law Office added Wilson to its payroll so that she could be covered by the Law
Office’s insurance policy while performing cleaning services there. Accordingly, in
2009, the Law Office paid unemployment insurance tax contributions for Wilson with
respect to the work she performed at the Law Office, and Wilson was issued a W-2 for
the wages she earned for those services. However, the Law Office also paid Wilson to
perform cleaning services at Kids’ Voice during 2009. The Law Office treated Wilson as
an independent contractor with respect to the services she performed at Kid’s Voice and
issued her an IRS Form 1099 for the wages she earned for those services.
In 2010, the Department initiated an audit of the Law Office and determined that
the Law Office had misclassified Wilson as an independent contractor rather than an
employee with respect to the cleaning services she performed at the Law Office in 2008
and at Kids’ Voice in 2009. As a result of the misclassification, the Department
determined that the Law Office was liable for $188.45 in additional unemployment
insurance tax contributions, plus interest and penalties. The Law Office filed a protest,
and on June 9, 2011, a hearing was held before the LALJ. At the hearing, the
Department’s auditor testified that when she reviewed the Law Office’s payroll records
and quarterly reports, she determined that Wilson had received a 1099 in 2008, and in
2009, she received both a W-2 and a 1099.
The auditor testified further that she contacted Wilson in an attempt to determine
whether Wilson had worked as an independent contractor with respect to her 1099
earnings. The auditor testified that Wilson provided her with a business card, but that the
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card was “unprofessional” and contained incomplete address information. Tr. pp. 12-13.
The auditor testified further that during a telephone conversation with Wilson, Wilson
told her that she only performed cleaning services for Agard. Ten minutes later, Wilson
called the auditor back and stated that she also performed cleaning services for a local
musicians’ union and another individual, Patty Pitman (“Pitman”). Because the auditor
discovered that Wilson had received a W-2 from the musicians’ union, the auditor
determined that Wilson worked for the musician’s union as an employee, not an
independent contractor. The auditor attempted to contact Pitman, but Wilson was unable
to provide Pitman’s address, and the phone number Wilson provided was disconnected.
Based on all of this information, the auditor determined that Wilson was not truly
engaged in an independently established cleaning business.
At the conclusion of the hearing, the LALJ took the matter under advisement.
Then, on June 30, 2011, the LALJ issued an order denying the Law Office’s protest,
which included the following relevant findings and conclusions:
2. The [LALJ] concludes that the employer exerted supervisory direction
and control over Carlotta Wilson. The employer determined Ms. Wilson
would work at Kids’ [V]oices [sic], the hours she would work and paid Ms.
Wilson for her services at Kids’ Voices [sic].
3. Although the employer is not engaged in the cleaning business, having a
clean and presentable office is integral to having a professional office
environment for an attorney’s practice.
4. The [LALJ] further concludes that the employer failed to establish that
[Wilson] was engaged in an independently established trade, occupation,
profession or business as a cleaning person. [Wilson’s] business card was
unsophisticated and incomplete. Ms. Wilson provided no [S]chedule C to
establish she had an independent cleaning business. She could not provide
the correct name and address of any other customer. She had W2s from the
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Musicians’ Union demonstrating she was an employee in the past while
performing similar services.
Appellant’s App. p. 6. The Law Office now appeals.
Standard of Review
The Indiana Unemployment Compensation Act provides that “[a]ny decision of
the liability administrative law judge shall be conclusive and binding as to all questions
of fact.” Ind. Code § 22-4-32-9(a) (2005). When the LALJ’s decision is challenged as
contrary to law, our review is 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
findings of fact. UTLX Mfg., Inc. v. Unemployment Ins. Appeals of Ind. Dep’t of
Workforce Dev., 906 N.E.2d 889, 891-92 (Ind. Ct. App. 2009). 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 reasonable. Bloomington Area Arts Council v. Dep’t of Workforce Dev.,
Unemployment Insurance Appeals, 821 N.E.2d 843, 849 (Ind. Ct. App. 2005). An
ultimate fact is a conclusion or inference from a basic fact. Id. In reviewing the decision
of an administrative agency, this court does not reweigh the evidence or judge the
credibility of witnesses. Jug’s Catering, Inc. v. Ind. Dep’t of Workforce Dev.,
Unemployment Ins. Bd., 714 N.E.2d 207, 209 (Ind. Ct. App. 1999), trans. denied.
Discussion and Decision
The Law Office contends that the LALJ erred in concluding that Wilson was an
employee of the Law Office within the meaning of Indiana Code section 22-4-8-1(b)
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(2005) with respect to the cleaning services she performed at the Law Office during 2008
and at Kids’ Voice during 2009. The governing statute provides:
Services 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.
(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). Whether a person is an employee or an independent contractor
is an ultimate fact to be determined from the evidence, and we will therefore affirm the
LALJ’s finding in that regard if it is reasonable. See News Pub. Co. v. Verweire, 113
Ind. App. 451, 451, 49 N.E.2d 161, 162 (1943). Assessments made against an employing
unit are considered prima facie correct. Ind. Code § 22-4-29-2 (2005); Bloomington
Area Arts Council, 821 N.E.2d at 849. Consequently, the Law Office had the burden of
demonstrating that Wilson was an independent contractor rather than an employee by
showing that all three parts of the statutory test were met. See Bloomington Area Arts
Council, 821 N.E.2d at 849.
Here, the LALJ determined that the Law Office had not met its burden of showing
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that any one of the three parts of the statutory test had been met. But because we can
resolve this appeal by considering only the third prong of the statute, we limit our
analysis to whether Wilson was “customarily engaged in an independently established
trade, occupation, profession, or business of the same nature as that involved in the
service performed[.]” I.C. § 22-4-8-1(b)(3)(A).
In Alumiwall Corp. v. Indiana Employment Security Board, this court addressed
the question of whether siding “applicators,” who were paid by a seller of roofing and
siding materials to install siding for customers, were employees for the purposes of the
Unemployment Compensation Act. 130 Ind. App. 535, 537-38, 167 N.E.2d 60, 60-61
(1960). The applicators received work assignments as they saw fit by contacting
Alumiwall, and they were paid according to the amount of siding they installed. Id. at
537, 167 N.E.2d at 60. The applicators furnished their own trucks and equipment, and
they hired whatever help they felt necessary to complete the particular job. Id., 167
N.E.2d at 60. Alumiwall had no control over the number of helpers, if any, the
applicators hired, the amount the helpers were paid, or whether helpers were retained or
fired. Id., 167 N.E.2d at 60. Nor did Alumiwall exercise any control with respect to the
applicators’ working hours, the number of jobs they took, or whether they took any jobs
at all; if, upon completion of a job, an applicator did not desire to take any more work
from Alumiwall, the applicator simply did not contact Alumiwall to request any more
work. Id. at 61, 167 N.E.2d at 538.
This court concluded that the applicators were not employees, in part because the
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applicators were engaged in an independently established trade, occupation, profession,
or business. Id. at 540, 167 N.E.2d at 62. In support of this conclusion, the court
reasoned that the applicators “supplied their own tools and equipment, hired and fired
their own helpers, were free to work or not work as they saw fit, and could perform the
same services for other than appellant if they so desired.” Id.; see also Twin States Pub.
Co. v. Ind. Unemployment Ins. Bd., 678 N.E.2d 110, (Ind. Ct. App. 1997) (concluding
that individuals who delivered shopping guides for Twin States were engaged in an
independently established business because “they provide[d] their own transportation,
[chose] their own hours of work within a 24 hour time frame, [chose] their own
replacements or sub-carriers if they [were] unable to perform, [chose] and [paid] their
own helpers, and [could have] perform[ed] the same services for publishers other than
Twin States if they so desire[d].”), trans. denied.
In Bloomington Area Arts Council, this court reached the opposite conclusion. In
that case, the court addressed whether the Council, a not-for-profit organization
supporting public participation in the arts, had misclassified the instructors of art
education classes the Council offered to the public as independent contractors rather than
employees. 821 N.E.2d at 845. In reaching the conclusion that the instructors were not
engaged in an independently established business, the court acknowledged that the
instructors were free to perform the same or similar services for entities other than the
Council, but concluded that this consideration was not dispositive. Id. at 853. The court
reasoned that the conclusion reached in Twin States was based on the totality of the
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circumstances, and not solely on the fact that the carriers were free to perform the same
services for others. Id. The court went on to reason that although the instructors were
free to teach art classes elsewhere, very few of them did so, and prior teaching experience
was not required. Id. The court also noted that the Council considered the instructors’
proposals for classes, determined which classes to offer, established a schedule of classes
based upon the instructors’ availability, published a catalog of courses, and provided the
location for and monitored the classes. Id. Based on the totality of these circumstances,
the court concluded that the LALJ’s finding that the instructors were not customarily
engaged in an independently established trade, occupation, profession or business of the
same nature as teaching the art classes was not unreasonable. Id.In light of this precedent, and considering the totality of the facts and
circumstances of the case before us, the LALJ’s conclusion that Wilson was not engaged
in an independent cleaning business was not unreasonable. Although the Law Office
emphasizes the apparent fact that Wilson was free to perform cleaning services for others,
that fact standing alone is not dispositive. Indeed, absent an agreement to the contrary,
employees are generally free to perform similar services for other employers. Moreover,
the facts most favorable to the LALJ’s conclusion do not establish that Wilson in fact
performed such services for anyone else as an independent contractor. In her first
conversation with the auditor, Wilson stated that she only provided cleaning services for
Agard. Ten minutes later, Wilson called the auditor back and stated that she also
provided housekeeping services for the musicians’ union and Pitman. The auditor
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confirmed that Wilson performed cleaning services for the musicians’ union, but this
does not support a conclusion that Wilson was engaged in an independently established
business because she performed cleaning services for the musicians’ union as an
employee, not an independent contractor.1 And the auditor was unable to verify that
Wilson provided cleaning services to Pitman because Wilson could not provide Pitman’s
address and the telephone number Wilson provided was disconnected.2
Additionally, the business card that Wilson gave to the auditor was incomplete and
unprofessional. Specifically, it appears that the card was created using a template, but
Wilson did not complete the form. For example, the spaces for the second and third lines
of the business address were never changed, so they read “Address Line 2” and “Address
Line 3.” See Ex. Vol. p. 16, Division Ex. 8. Likewise, the spaces for the business fax
number and e-mail address were never changed or deleted, so they read “Fax #” and
“Email.” Id. Because many legitimate small businesses use templates to create their own
business cards, the fact that the card was homemade would not necessarily support a
conclusion that Wilson was not engaged in an independent cleaning business. But the
card’s incomplete and sloppy appearance, when combined with Wilson’s equivocal
statements concerning the cleaning services she claimed to have provided to others and
1
The Law Office directs our attention to Agard’s testimony that she believed that Wilson provided cleaning services
for several other people, including other tenants in the office building. But in light of Wilson’s statements to the
auditor, the Law Office’s arguments in this regard are simply requests to reweigh the evidence, judge the credibility
of witnesses, and consider evidence unfavorable to the LALJ’s decision, which we will not do on appeal.
2
The Law Office complains that the auditor’s investigation was not sufficiently thorough. This argument overlooks
the fact that services performed for remuneration are presumed to be employment, and the purported employer bears
the burden of establishing that the purported employee is an independent contractor. See Bloomington Area Arts
Council, 821 N.E.2d at 849.
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her inability to provide contact information for Pitman, as well as her failure to provide
tax documents establishing that she had received payments from others for her cleaning
services, could support a reasonable inference that Wilson had not actually been engaged
in an independent cleaning business, but was attempting to make it appear otherwise.
The facts of this case are also distinguishable from Alumiwall and Twin States
because there is no evidence to suggest that Wilson was free to hire helpers or to send a
substitute to perform cleaning services when she was unavailable to work. Nor was there
any testimony or evidence suggesting that Wilson was free to work or not work as she
saw fit. Although Wilson provided her own cleaning supplies and was apparently free to
perform cleaning services for others, when considering the totality of the circumstances,
we cannot conclude the LALJ’s finding that Wilson was not engaged in an independent
cleaning business was unreasonable.3 Consequently, the LALJ’s conclusion that the Law
Office failed to satisfy its burden of establishing that Wilson was not an employee with
respect to the cleaning services she performed at the Law Office in 2008 and at Kids’
Voice in 2009 was not unreasonable.
Affirmed.
FRIEDLANDER, J., and RILEY, J., concur.
3
The Law Office raises a number of public policy-based arguments for the first time in its reply brief. It is well
settled that a party may not raise an argument for the first time in a reply brief. Naville v. Naville, 818 N.E.2d 552,
553 n.1 (Ind. Ct. App. 2004). Because the Law Office failed to assert its public policy arguments in its principal
appellate brief, they are waived.
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