The Colorado Court of Appeals issued its opinion in Western Logistics, Inc. v. Industrial Claim Appeals Office on Thursday, October 25, 2012.
Unemployment Tax Liability—Covered Employment Under CRS § 8-70-115.
In this unemployment tax liability case, petitioner Western Logistics, Inc., doing business as Diligent Delivery Systems, (Diligent) sought review of an order of the Industrial Claim Appeals Office (Panel). The Panel affirmed a hearing officer’s decision that services performed for Diligent by certain individuals constituted covered employment under CRS § 8-70-115. The Court of Appeals affirm the Panel’s order.
Based on an audit covering the 2008 and 2009 calendar years, respondent, the Division of Employment and Training (Division), issued a liability determination concluding that approximately 220 delivery drivers (drivers) were in covered employment with Diligent. Diligent was directed to report payments made to the drivers and to pay corresponding unemployment premiums.
Diligent appealed. The hearing officer made extensive factual findings, concluding that notwithstanding written contracts designating the drivers as independent contractors, the evidence demonstrated that was “not true in fact.” The officer found none of the drivers was “customarily engaged in a delivery business” and they “received direction and control” from Diligent. On review, the Panel affirmed, primarily based on the finding that the drivers were not customarily engaged in independent delivery businesses. On appeal, Diligent argued the Panel’s decision was not supported by substantial evidence. The Court disagreed.
The Court noted that to satisfy the “independent business” requirement, a worker generally must be shown actually, customarily, and contemporaneously to have provided similar services to others. Substantial evidence in the record supports the hearing officer’s
ultimate finding that Diligent failed to meet its burden of demonstrating that the drivers were truly engaged in independent delivery businesses and therefore it will not be disturbed on appeal.
Diligent also argued that the parties submitted specific evidence concerning roughly 10% of the drivers, and for the remaining drivers, the only evidence presented was the written contract stating they were engaged in a delivery business. Therefore, Diligent claimed that the “only permissible conclusion” as to these drivers is that they were customarily engaged in independent businesses. The Court disagreed.
The hearing officer’s express finding was that the written contracts did not accurately describe the relationship between Diligent and the drivers. Diligent was making an argument of evidentiary weight that is within the hearing officer’s discretion.
The Court also found that the decision was sustainable independently and separately based on the officers’ conclusion that Diligent failed to show the drivers were free from its control and direction. Substantial evidence supported this finding and the Court therefore will not disturb it. The Panel’s order was affirmed.
Summary and full case available here.