Company v. Indiana Department of Workforce Development
86 N.E.3d 204
| Ind. Ct. App. | 2017Background
- Company operates a driveaway/transport business delivering RVs and contracts with drivers it classifies as independent contractors.
- Claimant, a commercial driver, contracted with Company from April 2014 to March 2015 to deliver RVs.
- Claimant filed for unemployment benefits after stopping work; the Indiana DWD concluded Claimant was an employee, not an independent contractor, and assessed unemployment tax liability against Company.
- Company protested; a Liability Administrative Law Judge (LALJ) held Claimant was an employee under Indiana Code § 22-4-8-1 using the statutory ABC (1-2-3) test.
- The LALJ found Company proved prong C (Claimant engaged in an independent trade) but failed prongs A and B, chiefly that the services were not outside Company’s usual course of business (prong B).
- Company also argued that application of the Act is preempted by the Federal Aviation Administration Authorization Act (FAAAA); the court rejected preemption, finding any cost impact on Company’s prices was not sufficiently “significant.”
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Claimant was an "employee" under Indiana Code § 22-4-8-1 (ABC test) | Claimant: her services qualify as employment; DWD correctly classified her as employee | Company: Claimant was an independent contractor; she was free from direction/control and performed work outside Company’s usual course of business | Held: LALJ decision reasonable. Company failed prong B (work was within Company’s usual course — transporting RVs), so Claimant is an employee for unemployment purposes. |
| Whether application of § 22-4-8-1 is preempted by the FAAAA | Company: reclassification would significantly affect prices, routes, or services and thus is preempted | DWD: the Act is generally applicable and any effect on prices is not significant; no direct regulation of prices/routes/services | Held: Not preempted. Any price impact (at most ~4% increase) is not a "significant" effect and the Act is a generally applicable law outside FAAAA preemption. |
Key Cases Cited
- Costello v. BeavEx, Inc., 810 F.3d 1045 (7th Cir. 2016) (FAAAA preemption analysis; worker-classification rules often do not significantly affect carrier prices/routes/services)
- Dilts v. Penske Logistics, LLC, 769 F.3d 637 (9th Cir. 2014) (state laws of general applicability that do not regulate prices/routes/services are not FAAAA-preempted)
- Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992) (FAAAA-related precedent on preemption where state law has a connection with prices/routes/services)
- Rowe v. New Hampshire Motor Transp. Ass'n, 552 U.S. 364 (2008) (preemption where state law has significant impact on carrier operations)
- Bloomington Area Arts Council v. Dep’t of Workforce Dev., 821 N.E.2d 843 (Ind. Ct. App. 2005) (applying Indiana’s ABC test conjunctively and reviewing ALJ findings for reasonableness)
- Indpls. Concrete, Inc. v. Unemp’t Ins. Appeals, 900 N.E.2d 48 (Ind. Ct. App. 2009) (describing unemployment insurance as a generally applicable employer-funded program)