SZL, Inc. v. Industrial Claim Appeals Office
2011 Colo. App. LEXIS 320
Colo. Ct. App.2011Background
- SZL, Inc. (SZL) challenges an Industrial Claim Appeals Office final order determining claimant Michael J. Smith performed services for SZL as covered employment for unemployment tax purposes under CESA § 8-70-115(1)(b).
- Claimant worked as an over-the-road truck driver for SZL for about three months (Dec 2008–Mar 2009) under a written agreement and leased SZL’s truck.
- Deputy and hearing officer found claimant not free from control and direction and not independently in business, thus constituting employment for tax purposes.
- Panel affirmed the hearing officer’s finding that claimant was not customarily engaged in an independent business but held some doubt that claimant was subject to control/direction for § 8-70-115(1)(b).
- SZL argued conflicts with trucking statutes/regulations (40-11.5-101, 40-11.5-102, and 49 C.F.R. § 376) and federal preemption; court rejected these and affirmed employment status.
- The decision notes the possibility that unemployment status can differ from other legal classifications (employee for tax purposes, independent contractor for other purposes).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Smith’s services were covered employment under 8-70-115(1)(b). | SZL contends Smith was not an employee (failure of the two conditions). | Smith’s status as employee is supported by evidence of control and lack of independent trade. | Yes; claimant was in covered employment. |
| Whether Smith was not customarily engaged in an independent business related to trucking. | SZL maintains he was not dependent on SZL and did not run his own trucking business. | SZL argues substantial independent business factors were present. | No; not customarily engaged in an independent business. |
| Whether there is a conflict between unemployment tax status and trucking industry statutes/regulations. | SZL asserts exclusive-use lease provisions conflict with 8-70-115(1)(b). | Statistics and regulations do not preclude unemployment tax treatment; no conflict. | No conflict; status determined under 8-70-115(1)(b) may stand. |
| Whether § 49 U.S.C. § 14501(c)(1) preempts the employment determination. | Federal preemption prevents state unemployment tax treatment of drivers. | Preemption does not apply to this state unemployment law context. | Not preempted. |
| Whether SZL’s asserted ‘freedom to contract’ issue invalidates the Panel's determination. | Parties contracted for independent contractor status, which should bind. | Unemployment tax status can differ from contract terms; not unconstitutional. | No; not a violation of freedom to contract. |
Key Cases Cited
- Long View Sys. Corp. USA v. Indus. Claim Appeals Office, 197 P.3d 295 (Colo.App.2008) (burden of proof on employer; substantial evidence standard for facts)
- Barge v. Indus. Claim Appeals Office, 905 P.2d 25 (Colo.App.1995) (two-part test; independent business factors; reliance on separate venture)
- Speedy Messenger & Delivery Serv. v. Indus. Claim Appeals Office, 129 P.3d 1094 (Colo.App.2005) (independent business factors; lack of contemporaneous work not dispositive)
- Carpet Exch. of Denver, Inc. v. Indus. Claim Appeals Office, 859 P.2d 278 (Colo.App.1993) (independent contractor considerations for employment status)
- Jackson Cartage, Inc. v. Van Noy, 738 P.2d 47 (Colo.App.1987) (driver may be employee for unemployment tax purposes despite contracting language)