Concord Enterprises Of Knoxville, Inc. v. Commissioner Of Tennessee Department of Labor & Workforce Development
524 S.W.3d 233
| Tenn. Ct. App. | 2017Background
- Concord Enterprises operated a pet grooming business (also ran a grooming school and sold pet supplies) in Knoxville; owner Porterfield testified Concord was in the business of grooming dogs.
- From 2006–2011 Concord classified certain on-site pet groomers as independent contractors and paid them on a 50% commission basis; customers booked appointments through Concord.
- In 2011 the Tennessee Department of Labor audited Concord and determined the groomers were misclassified and that unemployment taxes were due; the Department’s redetermination and the Appeals Tribunal upheld that finding.
- The Commissioner’s Designee affirmed the Tribunal’s decision; Concord sought judicial review in chancery court, which affirmed the agency’s ruling and ordered payment.
- On appeal to the Court of Appeals, the central factual points were that the groomers performed services at Concord’s business and groomed animals—a service matching Concord’s usual business.
Issues
| Issue | Concord's Argument | Department's Argument | Held |
|---|---|---|---|
| Whether on-site groomers are "employees" under the ABC test (Tenn. Code Ann. § 50-7-207(e)) | Groomers were independent contractors because Concord primarily operated a grooming school; groomers set prices and were not on payroll | Groomers performed grooming at Concord’s place of business and provided services within Concord’s usual course of business; thus they are covered employees | Court affirmed: Concord failed to satisfy prong (B) of the ABC test (services were not outside Concord’s usual course of business nor performed outside its places of business) |
Key Cases Cited
- Beare Co. v. State, 814 S.W.2d 715 (Tenn. 1991) (explains clause (B) of the ABC test and that taxpayer may satisfy either alternative: outside usual course of business OR outside all places of business)
- Sanifill of Tenn., Inc. v. Tennessee Solid Waste Disposal Control Bd., 907 S.W.2d 807 (Tenn. 1995) (agency fact-finding reviewed under UAPA; courts may not substitute their judgment for agency findings of fact)
- Freedom Broad. of Tenn., Inc. v. Tennessee Dep’t. of Revenue, 83 S.W.3d 777 (Tenn. Ct. App. 2002) (discusses administrative review standards under the Uniform Administrative Procedures Act)