379 P.3d 608
Or. Ct. App.2016Background
- Market Transport, a federally authorized for-hire interstate motor carrier, engaged drivers under a standard "Contractor Lease Agreement" that purported to lease drivers' vehicles to Market Transport for exclusive possession, control, and use during the agreement.
- Drivers were either owner-drivers (own vehicle) or lessee-drivers (lease vehicle from third parties); both signed the Market Transport agreement and were paid primarily on a per-mile schedule plus bonuses and other transit-related payments.
- The agreement required contractors to operate and maintain vehicles, prohibited using the vehicle for other carriers, and obligated Market Transport to obtain licenses, insurance, and provide administrative support (with the right to charge back certain fees to drivers).
- The Employment Department audited and assessed payroll taxes for Q3 2007–Q4 2010, treating drivers as employees; the ALJ upheld the assessments, finding (1) the agreements were not "leases" because they lacked separate consideration for idle (non-miles) time, and (2) lessee-drivers did not "furnish and maintain" vehicles as required by ORS 657.047.
- The core statutory issue: ORS 657.047 exempts from "employment" services by persons who "lease" equipment to a for-hire carrier and who personally operate, furnish, and maintain the equipment; the question was whether Market Transport's arrangements fell within that exemption.
Issues
| Issue | Market Transport's Argument | Employment Dept.'s Argument | Held |
|---|---|---|---|
| Whether the Contractor Lease Agreement is a "lease" under ORS 657.047 when compensation is mileage-based and does not separately allocate payment for idle time | The agreement, read as a whole, provides consideration for the lease (mileage-based payments plus Market Transport's payment of licenses, insurance, and administrative support); adequacy of consideration is not for court to second-guess | The payments are remuneration for drivers' services, not lease payments; lack of separate compensation for non-utilization means no consideration for a lease | Reversed ALJ: agreement supplies consideration for a lease when read in whole (mileage compensation plus Market Transport's obligations constitute consideration); ALJ erred in requiring separate idle-time payment |
| Whether lessee-drivers "furnished and maintained" vehicles under ORS 657.047 where third-party leases were not in the record | The Market Transport agreement (signed by lessee-drivers and owners) plus testimony and payment flow shows lessee-drivers had transfer-able interest and maintenance obligations | Without the third-party lease in evidence, there is insufficient proof that lessee-drivers had transfer-able interests or maintenance duties required by the statute | Vacated and remanded: court found some record evidence (agreement and testimony) that may satisfy "furnish" and "maintain"; ALJ erred in finding no evidence — remand for factual determination; if proven, lessee-drivers' services are exempt |
Key Cases Cited
- 3P Delivery, Inc. v. Employment Dept. Tax Section, 254 Or App 180 (2012) (interpreting ORS 657.047's "furnish and maintain" requirement)
- Pacific Pines Const. v. Young, 257 Or 192 (1970) (courts do not inquire into adequacy of consideration)
- Port of Coos Bay v. Dept. of Rev., 298 Or 229 (1984) (no particular words required to create a lease)
- Byrne Trucking, Inc. v. Emp. Div., 284 Or 443 (1978) (look to substance of agreement to determine legal effect)
- Yogman v. Parrot, 325 Or 358 (1997) (contract interpreted as a whole)
- Gilstrap v. Mitchell Bros. Truck Lines, 270 Or 599 (1974) (mileage as common basis for truck-lease compensation)
- Asbury Trans. v. Cons. Freightways, 263 Or 53 (1972) (disputes concerning payments tied to truck leases and taxes)
- Emmert v. No Problem Harry, Inc., 222 Or App 151 (2008) (definition of consideration)
- Zimmerman v. Allstate Property & Cas. Ins. Co., 354 Or 271 (2013) (interpret statutory terms using ordinary or industry-specific meanings where appropriate)
- Delta Logistics, Inc. v. Employment Dept. Tax Section, 279 Or App 498 (2016) (illustrative authority on exemption application to wages paid to drivers under vehicle lease arrangements)