Monica Peterson v. A-Z Friendly Languages, Inc., Relator, Department of Employment and Economic Development

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2012).
STATE OF MINNESOTA
IN COURT OF APPEALS
A13-2345
Monica Peterson,
Respondent,
vs.
A-Z Friendly Languages, Inc.,
Relator,
Department of Employment and Economic Development,
Respondent.
Filed October 20, 2014
Reversed
Ross, Judge
Department of Employment and Economic Development
File No. 31378245-3
Monica Peterson, Lakeville, Minnesota (pro se respondent)
Boris Parker, Nicholas M. Wenner, Jordan Wesley Anderson, Parker & Wenner, P.A.,
Minneapolis, Minnesota (for relator)
Lee B. Nelson, Munazza Humayun, St. Paul, Minnesota (for respondent department)
Considered and decided by Halbrooks, Presiding Judge; Ross, Judge; and Chutich,
Judge.
UNPUBLISHED OPINION
ROSS, Judge
This appeal concerns whether an unemployment law judge correctly held that an
agency that provides interpreter services is obligated to cover its former interpreters as
“employees” eligible to receive unemployment benefits. A-Z Friendly Languages, Inc.,
challenges an unemployment law judge’s determination that one of its interpreters and all
similarly situated workers are employees rather than independent contractors. We hold
that the circumstances demonstrate that interpreter Monica Peterson worked only as an
independent contractor. Even if this were not so, the unemployment law judge lacked a
sufficient factual basis to extend his ruling to characterize all similar workers as
employees. We reverse.
FACTS
A-Z Friendly Languages contracts with governmental agencies to provide
interpretation services through trained interpreters, like Monica Peterson. A-Z holds a
roster of interpreters, and when a government agency requests its interpretation services,
A-Z will contact a suitable interpreter and offer her the assignment. A-Z informs the
interpreter when and where the interpretation session is and the hourly payment rate.
Rates vary depending on the language, unique assignment requirements, and other
factors. Sometimes interpreters negotiate a different hourly rate. The interpreter is free to
accept or reject the assignment. A-Z does not train or certify its rostered interpreters, and
the interpreters also are free to work for other interpretation-service agencies.
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A-Z also serves as an administrative resource when interpreters make their
interpretation appointments independently. Interpreters who arrange their own
appointments simply submit verification forms to A-Z for payment. In this situation, A-Z
collects the fee from the client and pays the interpreter a “fair market rate,” which is
usually higher than if A-Z had been the source of the assignment. A-Z pays interpreters
every two weeks and withholds no employment taxes.
A-Z’s policy declares that an interpreter “works as an independent contractor”
(emphasis in original) and that each “is responsible for his [or] her own insurances . . .
and taxes and is ineligible for any benefits.” It requires the interpreter to “strictly follow
[A-Z] policies and procedures” when providing interpretation services. It includes a code
of ethics for interpreters, obligating them to protect the client’s confidential information,
translate fully and directly, remain objective, and avoid conflicts of interest. The policy
mandates that interpreters dress professionally and appropriately for each assignment and
prohibits religious or political insignia on clothing. It also prohibits body scents in
medical facilities, echoing the requirement of those facilities.
A-Z imposes other rules. It prohibits interpreters from transporting clients. It
requires interpreters to provide their own transportation and obtain their own directions to
assignments. It requires them to arrive 10 minutes early and introduce themselves
professionally as being “from A-Z Friendly Languages.” It prohibits “tight scheduling”
and requires each interpreter to notify A-Z if she might arrive late to an assignment. A-Z
will stop using an interpreter who is late for two assignments or absent from any.
Interpreters may not enter personal residences to interpret without being accompanied by
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the client’s staff person, and if no staff person is present, interpreters must contact A-Z
for instructions. A-Z directs interpreters to wear an A-Z badge. The policy limits when
interpreters can operate cell phones, make personal calls, and use computers while they
are on the assignment. It requires interpreters to verify that insurance will cover the cost
of A-Z interpretation services. Interpreters must report every interpreting assignment.
They must do so using A-Z forms, which A-Z requires interpreters to submit within 48
hours of the assignment. A-Z also prohibits interpreters from bringing any persons or pets
to the interpretation assignment and does not allow interpreters to find substitutes for
their A-Z assignments without A-Z involvement.
Monica Peterson joined A-Z’s roster of interpreters in March 2012. Peterson
applied for unemployment benefits in late May or early June 2013. The department of
employment and economic development determined that she is eligible for benefits
because A-Z “ha[s] had an employer-employee relationship with [Peterson] and [is]
required to report wages paid to all workers performing similar services.”
A-Z appealed the determination. An unemployment law judge (ULJ) began a
scheduled telephonic hearing and telephoned Peterson and A-Z to hear evidence.
Peterson asked to reschedule. The ULJ never put any witness under oath and never began
taking evidence. Peterson nonetheless continued discussing the case. She repeatedly
expressed that she was an independent contractor, not an employee. The ULJ eventually
rescheduled the hearing.
When the ULJ attempted to contact Peterson by telephone for the rescheduled
hearing, Peterson did not answer. A-Z’s attorney told the ULJ that Peterson had called
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A-Z to repeat that she did not want to pursue the unemployment claim. The ULJ decided
to hear testimony from the A-Z officers. The ULJ told them that the issue “is whether
Ms. Peterson was a covered employee of A-Z Friendly Languages and . . . if so, whether
any other individuals providing the same or similar services are also covered employees.”
The A-Z officers testified substantially to the facts just outlined.
The ULJ held that A-Z exercised so much control over the interpreters that
Peterson and others similarly situated are A-Z “employees.” A-Z asked the ULJ to
reconsider his decision and receive new evidence. The ULJ affirmed his ruling and held
that A-Z gave no excuse for not providing the evidence initially. And he reasoned that
even if the proffered evidence had been submitted, it would not have led to a different
decision.
A-Z appeals by writ of certiorari.
DECISION
A-Z argues that the ULJ erred by refusing to reopen the evidentiary hearing, by
finding that Peterson was an employee rather than an independent contractor, and by
extending the decision to cover all interpreters.
I
A-Z maintains that the ULJ erred by not holding an additional evidentiary hearing
or considering Peterson’s unsworn statements during the first scheduled hearing declaring
herself to be an independent contractor. We defer to a ULJ’s decision not to hold an
additional evidentiary hearing, Skarhus v. Davanni’s Inc., 721 N.W.2d 340, 345 (Minn.
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App. 2006), and we will reverse that decision only when the ULJ abuses his discretion,
Kelly v. Ambassador Press, Inc., 792 N.W.2d 103, 104 (Minn. App. 2010).
A-Z contends that the ULJ abused his discretion because he did not follow the
statutory requirement to “ensure that relevant facts are clearly and fully developed.” See
Minn. R. 3310.2921 (2013). A ULJ must reopen the hearing only when it appears that not
reopening it “would be inconsistent with substantial justice.” Minn. R. 1400.8300 (2013).
A-Z has failed to show how it was deprived of substantial justice by the ULJ’s decision
not to reopen the hearing in light of Peterson’s previous comments. Peterson’s comments
have no significant bearing on the issue, and this defeats A-Z’s argument that when it
engaged in the rescheduled hearing it assumed that Peterson’s prior comments were part
of the record. A participant’s belief about her legal relationship to a contracting entity is
irrelevant to whether she served as an employee or an independent contractor. St. Croix
Sensory Inc. v. Dep’t of Emp’t and Econ. Dev., 785 N.W.2d 796, 800 (Minn. App. 2010).
We focus instead on the parties’ arrangements and conduct. Id. Because A-Z’s proffered
evidence on reconsideration was irrelevant, we cannot say the ULJ abused his discretion
by not reopening the record.
II
A-Z argues that the ULJ erred by finding that Peterson is an employee rather than
an independent contractor. An “employee” performs “services for an employer in
employment.” Minn. Stat. § 268.035, subd. 13(1) (2012). And “employment” exists when
“an individual who is considered an employee under the common law of employer-
employee and not considered an independent contractor” performs services. Id., subd.
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15(a)(1). Whether a person served as an employee or an independent contractor is a
mixed question of law and fact. St. Croix, 785 N.W.2d at 799. We will overturn a ULJ’s
factual findings only when they are not supported by substantial evidence. Skarhus, 721
N.W.2d at 344. When facts are undisputed, however, the determination is a question of
law, which we review de novo. St. Croix, 785 N.W.2d at 799.
The totality of the circumstances bearing on several factors determines whether an
individual is an independent contractor or an employee. St. Croix, 785 N.W.2d at 800.
We consider the factors “in light of the nature of the work involved.” Guhlke v. Roberts
Truck Lines, 268 Minn. 141, 143, 128 N.W.2d 324, 326 (1964); Minn. R. 3315.0555,
subp. 1 (2013) (“[t]he degree of [a factor’s] importance may vary depending upon the
occupation or work situation . . . and why the factor is present in the particular
situation.”). The factors we consider include the company’s control over the individual’s
means and manner of performance, the payment method, whether the entity furnishes
tools or materials, the entity’s control over the premises where the work is completed,
and the right of the entity to discharge the worker without incurring liability. St. Croix,
785 N.W.2d at 800. The two most important factors are the entity’s ability to control the
manner and means of performance and its ability to discharge without incurring liability.
Id. (citing Minn. R. 3315.0555, subp. 1 (2009)). If the listed factors are inconclusive, we
may consider other factors. Minn. R. 3315.0555, subp. 1 (2013). Applying this standard,
we hold that the ULJ erred by concluding that Peterson was A-Z’s employee.
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The Right to Control the Means and Manner of Performance
We look first at whether A-Z had substantial control over Peterson’s means and
manner of performance. We do not look mainly at control over what is done but control
over how it is done. St. Croix, 785 N.W.2d at 800. In doing so, we consider whether A-Z
had a right to control Peterson’s performance, not whether it actually exercised control.
See id.; Minn. R. 3315.0501, subp. 2 (2013). We determine control “in light of the nature
of the work involved.” Guhlke, 268 Minn. at 143, 128 N.W.2d at 326.
Factors bearing on control generally include whether the company’s rules are its
own or are instead standards passed down by regulatory agencies or customers, the
company’s ability “to instruct or direct the method of doing work,” “whether regular
reports relating to how the services are performed must be submitted to the employer,”
whether set work hours exist, whether the company provides training, and whether the
employer pays job-related expenses. St. Croix, 785 N.W.2d at 800–01 (citing Minn. R.
3315.0555, subp. 3 (2009) (now repealed)). Under these measures, we do not agree with
the ULJ that A-Z “controls almost every conceivable aspect of an interpreter’s actual
performance.” A-Z controls its interpreters primarily to comply with its client’s policies.
For example, A-Z requires interpreters to wear professional clothing depending on the
setting, but these requirements are passed down by the clients. When asked by the ULJ
whether A-Z has “any independent rules that it provides to its interpreters,” A-Z’s
principal answered, “[N]o, there are certain requirements that our customers set” that A-Z
interpreters must follow. The ULJ seemingly recognized that A-Z’s requirements were
passed down from clients, explaining that “no matter who establishes [detailed policies
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and procedures], [A-Z] adopts those policies as its own.” He added, “Because [A-Z’s]
adopted policies . . . control every aspect of an interpreter’s performance, the evidence
shows that interpreters have little or no material discretion in how they form their
interpretive services.” (Emphasis added.) Because “general” instructions passed on by the
employer from a client generally do not evince control, St. Croix, 785 N.W.2d at 802, we
do not share the ULJ’s reasoning that A-Z’s “adopted” policies support its conclusion.
Instructions that relate to the definition of the task—that is, the end product that
the client seeks—also do not indicate control. Id. at 801; Neve v. Austin Daily Herald,
552 N.W.2d 45, 48 (Minn. App. 1996). A-Z’s supposedly exhaustive controlling policies
are largely instructions of this sort. For example, A-Z requires its interpreters to “render a
complete and accurate interpretation . . . without altering, omitting, or adding anything to
the meaning,” to avoid counseling or advising the non-English speaker, and to refrain
from showing emotion. These directives merely define the interpretive task that
professional interpreters undertake.
Other circumstances show a lack of A-Z’s control. For instance, A-Z does not
require its interpreters to file regular reports on how they performed their services;
interpreters instead provide a mere service-verification form to administratively track
payments and billing. And interpreters may freely decline any A-Z assignment for any
reason. A-Z imposes no set work hours and no specific hourly requirement. It provides no
interpreter training. Interpreters find their own routes to assignments. They must furnish
their own technical equipment and A-Z sets no standard governing interpreter choices
about the equipment. A-Z’s policies apply only during A-Z interpretation sessions, with
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no restrictions on interpreters otherwise. The record includes none of the typical indicia
of employer control, such as setting lunch breaks, limiting work breaks, obligating
workers to accept on-call assignments, and subjecting workers to supervisor instruction
and monitoring. And interpreters can accept assignments through competing agencies
without A-Z restriction. In sum, the record refutes the ULJ’s finding that A-Z exercised
substantial employer-like control over Peterson.
Ability to Discharge Without Incurring Liability
An entity’s ability to discharge a worker without incurring liability generally
indicates an employee-employer relationship. St. Croix, 785 N.W.2d at 803. Although an
entity’s ability to discharge without incurring liability during a session may strongly
indicate an employee-employer relationship, see id. at 803–04, there was no evidence that
A-Z has this ability. The testimony indicated that A-Z does not supervise or monitor
sessions, so immediate termination is not possible. If a client complains about an
interpreter, A-Z chooses whether or not to give the interpreter future assignments. This
factor does not argue strongly for or against an employment relationship here.
Mode of Payment
Another key factor is the mode of payment. Minn. R. 3315.0555, subp. 1(B)
(2013). When an entity pays the worker hourly wages rather than a per-job fee, this factor
favors finding an employer-employee relationship. St. Croix, 785 N.W.2d at 804. The
ULJ found that interpreters working for A-Z are paid at a “standard market hourly rate,
with some adjustments” and that this mode-of-payment factor therefore indicates an
employment relationship. This analysis is flawed. Although the ULJ properly recognized
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that an hourly rate usually suggests an employment relationship, he overlooked the
indicia of an independent-contractor relationship here. For example, although A-Z pays
interpreters on an hourly rate, that hourly rate varies depending on the nature of each job.
This does not occur in a typical employment relationship. How the entity treats the
compensation for income-tax purposes is also relevant: if the individual is responsible for
her own tax obligations, this factor favors independent-contractor status, while an entity’s
practice of withholding wages to cover income taxes favors an employment finding. Id.A-Z requires interpreters to account for their own income taxes and engages in no
withholding. The ULJ also appears to have ignored situations in which A-Z can withhold
pay. If an interpreter fails to verify insurance coverage (verification that would ensure
that A-Z will be paid for its services), A-Z will not pay the interpreter even though she
completed that assignment. Similarly, if the interpreter provides a service-verification
form that is somehow deficient—such as not being signed by a staff member at the client
facility—A-Z can withhold interpreter payment. And if an interpreter violates an A-Z
policy, A-Z can penalize the interpreter financially. None of these resembles a usual
employment arrangement, and all suggest that A-Z and Peterson engaged in an
independent-contractor relationship.
Furnishing of Tools or Materials
The next factor, whether A-Z provided tools or materials, also indicates a
contractor relationship. A-Z does not reimburse any interpreter expenses, provides no
transportation or directions, and furnishes no materials.
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Control Over the Premises Where the Work is Done
The final factor, control over the premises where interpreters perform their work,
suggests the same result. Interpretation takes place at a third-party client’s location not
controlled by A-Z. Even when the assignment is performed by telephone, the interpreter
is not required to work from A-Z’s location or use its equipment.
Conclusion
The circumstances do not support the ULJ’s conclusion that Peterson worked as an
A-Z employee. The record instead demonstrates plainly that she worked through A-Z as
an independent contractor.
III
A-Z argues that the ULJ acted outside his authority when he concluded that his
decision applied to all interpreters. The department’s audit focused only on Peterson; the
arrangements of no other interpreters were investigated to assess whether their
circumstances differed from Peterson’s. So even if the ULJ’s extended holding does not
depend on the erroneous conclusion that Peterson was an A-Z employee, the holding as
to the other interpreters is nevertheless infirm. The ULJ had an insufficient factual basis
to determine that all other interpreters were employees.
Reversed.
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