Carlos v. Department of Workforce Services
2013 UT App 279
| Utah Ct. App. | 2013Background
- Claimant worked as a bail bond producer associated with AAA Bail Bonds from Jan 2010 until AAA terminated the relationship in Feb 2012 for performance and liability concerns.
- Claimant received most clients via calls routed from AAA; on each bond he collected a premium and kept 40%, remitting 60% to AAA; AAA processed non-cash payments and sometimes recovered losses from Claimant for risky bonds.
- Claimant filed for unemployment benefits after termination; an ALJ awarded benefits and AAA appealed to the Department of Workforce Services Appeals Board, which also affirmed the award.
- AAA argued Claimant was exempt from unemployment coverage under the UESA and FUTA as an insurance agent paid solely by commission; the Board found Claimant was not an insurance agent and not paid solely by commission, and treated him as an employee (not an independent contractor).
- The court reviewed statutory interpretation and mixed law/fact issues de novo and set aside the Board, holding Claimant was (1) an insurance agent under the Utah Insurance Code, (2) paid solely by commission, and (3) therefore exempt under both the UESA and FUTA.
Issues
| Issue | Plaintiff's Argument (AAA) | Defendant's Argument (Claimant / Board) | Held |
|---|---|---|---|
| Whether a bail bond producer is an "insurance agent" under the UESA/FUTA | Bail bond producers are insurance agents: Bail Bond Act is within Utah Insurance Code and Insurance Code treats bail bonds as surety insurance | Board: bail bond producers differ from "traditional" insurance agents (do not solicit, limited licensing/education), so not "insurance agents" | Held: Bail bond producers are insurance agents; Board erred in narrowing definition by function or licensing |
| Whether Claimant was paid "solely by way of commission" | Payment structure (40% of each premium) is commission-based | Board: pointed to processing/collection practices and a brief pay-flow change as evidence payment was not solely commission | Held: Payment scheme was solely commission; short procedural variations did not convert it into wages |
| Whether services are exempt under FUTA (matching UESA exemption) | Same exemption language in FUTA applies; Utah Insurance Code definition supports treating bail bond producers as insurance agents for FUTA purposes | Claimant/Board argued lack of a federal definition and distinguished bail bond activity from typical insurance sales | Held: Exemption applies under FUTA as well; state Insurance Code definition controls for characterizing the work |
| Whether independent contractor analysis matters | AAA contended exemption applies so independent-contractor analysis unnecessary | Board had found Claimant an employee under the independent-contractor test | Held: Court did not reach or rely on the independent-contractor analysis because insurance-agent exemption controls and excludes the services from the UESA |
Key Cases Cited
- SF Phosphates LC v. Auditing Div., 972 P.2d 384 (Utah 1998) (standard for reviewing agency rule interpretation)
- Murray v. Labor Comm'n, 308 P.3d 461 (Utah 2013) (analysis of mixed questions of law and fact reviewability)
- Airport Hilton Ventures, Ltd. v. Utah State Tax Comm'n, 976 P.2d 1197 (Utah 1999) (administrative rule cannot confer greater rights or disabilities than statute)
- Parson Asphalt Prods. v. Utah State Tax Comm'n, 617 P.2d 397 (Utah 1980) (exemptions construed narrowly; burden on claimant)
- Buckman v. American Bankers Ins. Co. of Fla., 924 F. Supp. 1156 (S.D. Fla. 1996) (treating bail bond arrangements as insurance for statutory purposes)