Great Northern Construction, Inc. v. Department of Labor
161 A.3d 1207
Vt.2016Background
- Great Northern Construction (GNC) was audited and assessed unpaid unemployment insurance taxes for 2011–2014 after classifying two skilled workers, Ray O’Connor and David LaPointe, as independent contractors.
- Vermont law presumes “employment” unless the worker satisfies the ABC test: (A) free from control/direction; (B) services outside employer’s usual course/location of business; (C) independently established in the same trade. 21 V.S.A. § 1301(6)(B).
- O’Connor: long-time restoration specialist, owns substantial specialized equipment, bids project-by-project (paid by project), sets his own schedule, declined employment to retain control, sometimes used an LLC (Ray O’Connor, LLC), filed Schedule C historically and had other indicia of independent business.
- LaPointe: restoration specialist new to Vermont, less formal business structure (no Secretary of State registration or Schedule C), paid hourly, used own equipment but not materials, received punch lists, reported most of his income from GNC and worked little for others.
- Administrative law judge and the Employment Security Board (ESB) found both were employees under the ABC test; Vermont Supreme Court affirmed as to LaPointe (fails part C) and reversed as to O’Connor (satisfies A, B, and C).
Issues
| Issue | Plaintiff's Argument (GNC) | Defendant's Argument (Dept. of Labor) | Held |
|---|---|---|---|
| Whether an LLC (Ray O’Connor, LLC) is an “individual” under the unemployment statute | GNC: contract was with the LLC, and an LLC is not an “individual” subject to the ABC test | DOL: LLC payments are effectively payments to an individual and LLC counts for ABC analysis | Not reached—court resolved liability on ABC application to facts, so question left to Legislature/court later |
| Application of ABC test to O’Connor (control/part A) | GNC/O’Connor: he set his own schedule, used his own methods and tools, declined employment, and negotiated bids | DOL: GNC exerted enough control (project schedules, result expectations) to show employment | Reversed ESB as to O’Connor — Court held he satisfies part A (GNC only controlled results, not means/methods) |
| Application of ABC test to O’Connor (usual course/part B) | GNC: restoration is part of its business so O’Connor’s work falls within usual course | DOL: O’Connor worked mainly for GNC and did restoration on GNC jobs | Reversed ESB as to O’Connor — Court held O’Connor’s specialized restoration services and equipment were outside GNC’s ordinary general-contracting business (satisfies B) |
| Application of ABC test to LaPointe (independently established/part C) | GNC: LaPointe declined employment and did restoration work; he was independent | DOL: LaPointe lacked business indicia (no registration, no Schedule C, income mainly from GNC) | Affirmed ESB as to LaPointe — Court held he failed part C (not independently established); GNC liable for taxes attributable to LaPointe |
Key Cases Cited
- 863 To Go, Inc. v. Dep’t of Labor, 196 Vt. 551 (Vt. 2014) (discusses ABC test and deference to ESB)
- Fleece on Earth v. Dep’t of Emp’t & Training, 181 Vt. 458 (Vt. 2007) (liberal construction of part A and employer burden under ABC test)
- Bluto v. Dep’t of Emp’t Sec., 135 Vt. 205 (Vt. 1977) (employer bears burden to prove ABC elements)
- Gerber Dental Ctr. Corp. v. Me. Unemployment Ins. Comm., 531 A.2d 1262 (Me. 1987) (equipment ownership and business definition relevant to part B)
- Carpetland U.S.A., Inc. v. Ill. Dep’t of Emp’t Sec., 776 N.E.2d 166 (Ill. 2002) (services necessary to employer’s business are within usual course)
- Standard Oil of Conn., Inc. v. Admin., Unemployment Comp. Act, 134 A.3d 581 (Conn. 2016) (factors for assessing control under part A)