Evolocity, Inc. v. Department of Workforce Services
2015 UT App 61
| Utah Ct. App. | 2015Background
- Evolocity recruited Deabra C. Colbert (a teacher with no prior web-marketing business) to act as an intermediary between Evolocity clients and its web/design staff; she signed an independent-contractor agreement and received training and access to Evolocity’s Steel Jaws software.
- Colbert worked from a home office using her own computer, phone, and internet, but Evolocity supplied key business software (Steel Jaws and other programs); she was paid a biweekly retainer (a set salary) that did not vary with output and could be reduced for poor performance.
- Colbert did not form a separate business, kept expense records for taxes, worked full time for Evolocity, and did not perform similar services for other clients while employed.
- After termination, Colbert applied for unemployment benefits; an ALJ found she was an employee, the Department appeals board affirmed, and Evolocity sought judicial review.
- The Department applied Utah’s independent-contractor test (presumption of employment unless employer shows independent establishment and freedom from control) using the regulatory factors in Utah Admin. Code R994-204-303.
Issues
| Issue | Evolocity's Argument | Department / Colbert's Argument | Held |
|---|---|---|---|
| Whether the Department’s finding that Colbert was not an independent contractor is supported by the record | The evidence (home computer, phone, ability to work for others, networking) shows Colbert provided tools, could work for others, and thus was independently established | The facts show Evolocity provided essential software, Colbert lacked separate business, did not regularly serve other clients, did not advertise, and had no profit/loss risk | Affirmed — substantial evidence supports Department’s finding that Colbert was not independently established and thus was an employee |
| Tools/equipment factor: whether Colbert made a substantial investment | Colbert used her own computer/phone/internet — so she provided tools | The Department found those were ordinary household expenses and Evolocity supplied essential business software/hardware | Affirmed — purchases were not a substantial investment; Evolocity supplied critical tools (software) |
| Multiple-clients/regular business factor: whether Colbert regularly performed similar services for other clients | Colbert had the ability/freedom to work for others; short Census job noted | Colbert did not regularly perform similar services for others; the Census work was not same-nature work | Affirmed — no evidence Colbert regularly provided similar services to other clients |
| Profit-or-loss and advertising factors: whether Colbert could realize profit/advertised services | Evolocity contended Colbert could realize profit/loss and did networking/solicitation | Department found no evidence of advertising to generate her own business and Colbert received set salary with no exposure to loss | Affirmed — Colbert had no meaningful profit/loss exposure and did not advertise her services independently |
Key Cases Cited
- BMS Ltd. 1999, Inc. v. Department of Workforce Servs., 327 P.3d 578 (Utah Ct. App. 2014) (describes presumption that paid workers are employees unless employer proves independent establishment and freedom from control)
- Petro-Hunt, LLC v. Department of Workforce Servs., 197 P.3d 107 (Utah Ct. App. 2008) (profit-or-loss factor requires meaningful exposure to overhead or risk; otherwise payments may be pure profit)
- Kolender v. Lawson, 461 U.S. 352 (U.S. 1983) (void-for-vagueness doctrine standard for statutes/regulations)
- Greenwood v. City of North Salt Lake, 817 P.2d 816 (Utah 1991) (explains vagueness test for ordinary people to understand prohibited conduct)
- In re Adoption of Baby B., 308 P.3d 382 (Utah 2013) (deference owed to fact-like mixed findings; not clearly erroneous standard)
- Carbon County v. Workforce Appeals Bd., 308 P.3d 477 (Utah 2013) (discusses standard of review and deference to agency factfinding)