C.L.E.A.N., LLC. v. Division of Employment Security
2013 Mo. App. LEXIS 934
| Mo. Ct. App. | 2013Background
- C.L.E.A.N., LLC is a residential cleaning business operated by Robin Wittenborn that engaged numerous persons to clean client homes under signed "independent contractor," bonus, equipment-lease, and non‑compete agreements.
- Workers performed initial unpaid "situational interviews" (5–8 supervised cleanings), were trained on C.L.E.A.N. checklists and proprietary cleaning supplies, and typically leased equipment/supplies from C.L.E.A.N. for $10/week.
- Workers submitted weekly, company‑prescribed statements, were paid a 40% commission (company retained ~50%), and could be penalized or terminated under a progressive disciplinary/bonus policy; clients made checks payable to C.L.E.A.N.
- Division of Employment Security audited C.L.E.A.N. and determined (2011) that 27 workers were employees; Appeals Tribunal found 27 were employees; the Commission affirmed as to 26 workers and reversed as to one (Beddow), finding 26 employees since Jan. 1, 2008.
- C.L.E.A.N. appealed, arguing (1) workers are independent contractors, and (2) the Appeals Tribunal referee showed bias / denied fair opportunity to impeach witnesses. The court affirmed the Commission.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether C.L.E.A.N. workers are employees or independent contractors under the common‑law right‑to‑control test (Rev. Rul. 87‑41 factors applied) | Workers are independent contractors because they set schedules, work off‑site in client homes, are paid by commission, may form LLCs, and receive 1099s | Division/Commission: C.L.E.A.N. retained substantial control (checklists, training, equipment lease, reports, non‑competes, firing rights, discipline), so workers are employees | Affirmed: 13 of 20 IRS factors and additional evidence support employee status for 26 workers; only 4 factors favored independent contractor and 3 were neutral/inapplicable |
| Effect of workers forming LLCs and receiving 1099s on classification | Formation of LLCs and issuance of 1099s demonstrates independent business status and independent contractor status | Such formalities insufficient where company required LLC formation, retained control, and workers were held out as C.L.E.A.N. representatives; 1099s/tax treatment weigh toward contractor but do not overcome control evidence | Court: LLC formation and 1099 reporting are not dispositive; they do not change the substantive right‑to‑control analysis |
| Whether work performed off employer premises (client homes) favors independent contractor status | Work occurs at clients' homes, not C.L.E.A.N. premises, so factor favors independent contractor | Nature of residential cleaning requires off‑premises performance; thus the factor is inapplicable or weak | Court: Factor 9 (work off premises) is inapplicable given business nature; does not weigh in favor of contractor status |
| Whether Appeals Tribunal referee displayed bias or denied fair hearing (evidentiary rulings / impeachment) | Referee comment and evidentiary rulings showed bias and limited C.L.E.A.N.’s ability to impeach witnesses, denying fair process | Comment reflected witness order preference; tribunal afforded leniency to pro se Wittenborn and rulings were within discretion | Affirmed: Presumption of impartiality not rebutted; no abuse of discretion in evidentiary rulings; proceeding was fair |
Key Cases Cited
- Haggard v. Div. of Emp’t Sec., 238 S.W.3d 151 (Mo. banc 2007) (standard of review and Division authority on worker classification)
- E.P.M. Inc. v. Buckman, 300 S.W.3d 510 (Mo. Ct. App. W.D. 2009) (appellate deference to commission factual findings, no deference to legal conclusions)
- Nat’l Heritage Enters., Inc. v. Div. of Emp’t Sec., 164 S.W.3d 160 (Mo. Ct. App. W.D. 2005) (adoption of IRS 20‑factor guidance)
- K & D Auto Body Inc. v. Div. of Emp’t Sec., 171 S.W.3d 100 (Mo. Ct. App. W.D. 2005) (applicability of premises factor; context‑specific analysis)
- Kirksville Publ’g Co. v. Div. of Emp’t Sec., 950 S.W.2d 891 (Mo. Ct. App. W.D. 1997) (instructions factor — right to control when, where, how)
- Community for Creative Non‑Violence v. Reid, 490 U.S. 730 (U.S. 1989) (additional factors: benefits and tax treatment considered in totality)
- Fritts v. Williams, 992 S.W.2d 375 (Mo. Ct. App. S.D. 1999) (use of Reid additional factors)
- Scrivener Oil Co. v. Crider, 304 S.W.3d 261 (Mo. Ct. App. S.D. 2010) (referee impartiality standard for administrative hearings)
- Hubbell Mech. Supply Co. v. Lindley, 351 S.W.3d 799 (Mo. Ct. App. S.D. 2011) (discretionary evidentiary rulings reviewed for abuse of discretion)
- Bridges v. Mo. S. State Univ., 362 S.W.3d 436 (Mo. Ct. App. S.D. 2012) (administrative hearings not bound by strict evidentiary rules)