Hilldrup Transfer & Storage v. State, Dept. of Labor and Employment Sec.Hilldrup Transfer & Storage v. State, Dept. of Labor and Employment Sec.
- Reporters:
- Before:
- Frank D. Upchurch Jr.
The facts involved here are essentially undisputed. The decision therefore depends upon the legal relationship that the undisputed facts engender. Cantor v. Cochran, 184 So.2d 173 (Fla. 1966), citing Toney Builders, Inc. v. Huddleston, 149 So.2d 38 (Fla. 1963). The question presented on appeal is whether the Division correctly concluded that a master-servant, as
Hilldrup is in the moving and storage business. It owns and uses van type trailers to move principally household furnishings. It utilizes its own tractors and drivers (their status is not in question) to move some loads. Other loads, however, are moved via company vans by operators who either own their own tractors or lease them from Hilldrup.2 Under a written agreement, these contract operators are paid a percentage (fifty-three percent) of the established rate for the particular haul. The operators are not contractually obligated to pack, load, or unload, but are compensated should they elect to do so. The agreement specifically provides that the operators are to be independent contractors and that the company cannot control or endeavor to control the manner, or prescribe the method of doing that portion of the business of the company which has been contracted for, and that the contractor is responsible for results only. The contract can be terminated by either party upon written notice, provided that the operator completes any delivery which had been commenced prior to termination.
The operators are responsible for payment of all expenses connected with the operation and ownership of their tractors, including fuel, insurance,3 repairs, maintenance, parking, licenses, applicable taxes, and road and bridge tolls. The operators can hire any help they require and are responsible for all wages, employment taxes, and worker‘s compensation for these helpers. The operators have complete control over the selection, supervision and discharge of these helpers.
Under this arrangement, Hilldrup is able to simplify its operation. Its capital requirement is substantially reduced since acquisition costs of tractors and expenses attendant to their operation are reduced. Control over operation and care of the tractors is transferred to the operators, who have the most to gain by prudent and careful operation. The cost of movement of a load becomes accurately predictable.
On the other hand, the operators receive economic benefits from the arrangement, which is illustrated by the fact that they work an average of four years for Hilldrup. They can increase their profits by prudent operation and maintenance of their tractors. They can work their own hours, select the routes they wish to travel and choose what assignments to accept. They are able to acquire and utilize profitably through care, judgment and their own industry an expensive piece of equipment which may substantially increase their income-producing potential.
The special deputy, citing Cantor, relied upon the factors enunciated in the Restatement (Second) of Agency, § 220 (1958) in finding that these contract-operators are employees. That section of the Restatement provides:
(2) In determining whether one acting for another is a servant or an independent contractor, the following matters of fact, among others, are considered:
(a) the extent of control which, by the agreement, the master may exercise over the details of the work;
(b) whether or not the one employed is engaged in a distinct occupation or business;
(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
(d) the skill required in the particular occupation;
(e) whether the employer or the workman supplies the instrumentalities,
tools, and the place of work for the person doing the work; (f) the length of time for which the person is employed;
(g) the method of payment, whether by the time or by the job;
(h) whether or not the work is a part of the regular business of the employer;
(i) whether or not the parties believe they are creating the relationship of master and servant; and
(j) whether the principal is or is not in business.
The deputy appears to have placed the greatest emphasis on control. He found control on the part of Hilldrup because the operators are obligated to keep the dispatcher informed of their progress and contents of their vehicles, file reports with Hilldrup as requested, wear company uniforms and paint their tractors with Hilldrup‘s colors and name.
The Division and the deputy have misconstrued the type of control which is specified in the Restatement which states:
(a) The extent of control which, by the agreement, the master may exercise over the details of the work. (emphasis added)
By the agreement here, Hilldrup has no right of control. The contract specifies that:
[I]t is understood and agreed that Company has not the right to, and will not control or endeavor to control the manner, or prescribe the method of doing that portion of the business of the Company which is contracted for herein by Contractor. Contractor will be held responsible for results only... .4
Of even more importance, however, is Hilldrup‘s interest in the end result as opposed to the details of the operator‘s work. See Cosmo Personnel Agency of Fort Lauderdale, Inc. v. State, 407 So.2d 249 (Fla. 4th DCA 1981); Herbert Hayes Yacht and Ship Sales, Inc. v. Lovell, 406 So.2d 1259 (Fla. 4th DCA 1981).5 By permitting the operators to set their own work hours and routes, hire and supervise their own helpers and accept or reject work assignments, Hilldrup has indicated a lack of interest in the details of their work.
The facts relied upon by the deputy in finding control are actually of little relevance when compared to the above factors. For instance, the requirement that the operators wear uniforms and paint their tractors with Hilldrup‘s colors and name is merely designed to assure the carrier‘s customers that the operators are representatives of Hilldrup. Also, while the operators are requested to notify Hilldrup daily of their whereabouts and contents of their vehicles, this is intended not so much as a control over the operators, but as an aid in utilizing the trucks and trailers efficiently. Finally, the operators are required to submit reports to Hilldrup “as requested.” The nature of these reports is not clear but, in any event, such requirement does not constitute control over the means and methods of accomplishing the results sought. See Florida Industrial Comm. v. State, 155 Fla. 772, 21 So.2d 599 (1945).
The special deputy also erroneously concluded that the operators are not in a separate business. It is clear that they are. Each operates an independent business of his own. Each must invest substantial sums in equipment and bear any risk of loss attributable to his operation.
It is the total situation, including the risk undertaken, the control exercised, the opportunity for profit from sound management, that marks these driver-owners as independent contractors.
Finally, we find another factor significant which neither the special deputy nor the Division considered. Section 443.131, Florida Statutes (1981), provides that an employer shall pay 2.7% of an employee‘s wages as contribution for unemployment compensation. The operators punch no time cards and work the times and hours they elect. What would their wage be? Would Hilldrup pay 2.7% of the “employee‘s” total compensation which includes payment for the use of the truck? Would the amount be figured after deducting fuel, garaging, insurance, maintenance, tolls and other expenses paid by the operator? A large truck represents a substantial investment. Could Hilldrup consider depreciation and interest on any purchase loans in determining wages? Could the Division require Hilldrup to calculate an estimated wage on the same basis as their non-contract drivers? If so, how could it determine hours when the operators are free to work their own hours and choose their travel routes?
The relationship between Hilldrup and its operators has a legitimate business purpose. Compare A Nu Transfer, Inc. v. Dept. of Labor & Employment Security, 427 So.2d 305 (Fla. 3d DCA 1983) with Justice v. Belford Trucking Company, Inc., 272 So.2d 131 (Fla. 1972).6 It is not simply a subterfuge to avoid the payment of unemployment or other taxes. The Division ignored the intent and relationship established by the agreement. It should have found that the contract operators are independent contractors.
REVERSED.
DAUKSCH, J., concurs.
SHARP, J., dissents with opinion.
SHARP, Judge, dissenting.
The issue in this case is whether or not the agency‘s determination that the truck drivers are employees is supported by substantial evidence.1 A substantial number of significant factors in this case, which are supported by the evidence in this record, point towards the agency‘s conclusion that both kinds of truck drivers are employees rather than independent contractors. Others, it is true, point the other way. But we should give credence to the agency‘s findings
This case involves the status of two kinds of truck drivers who transport house hold goods for Hilldrup in interstate moves: those who own their own power units or tractors, and in some cases, lease trailers from Hilldrup (owner-drivers); and those who lease tractors as well as trailers from Hilldrup (lease-drivers). The Division of Employment Security adopted the special deputy‘s findings of fact:
The Petitioner is a Florida corporation whose primary business activity is the movement and storage of household goods in both intrastate and interstate traffic. The Petitioner hires three types of drivers to transport the household goods in the course of its regular business. The first type drivers are those paid by the hour and are considered employees by the Petitioner. In addition to the drivers the Petitioner considers employees, the Petitioner also contracts with drivers who own their own tractors and drivers who rent or lease tractors from the Petitioner. The contract between the Petitioner and these drivers is written and entitled “Contractor‘s Agreement.” The contractual relationship and [sic] the Petitioner and the owner/operators provide for the following conditions. The owner/operator is required to devote his tractor exclusively to the service of the Petitioner. The tractor is painted with the Petitioner‘s colors, insignia, and permit and certificate numbers, at the expense of the Petitioner. If the tractor is removed from service within the first six months of the contract, the owner/operators are required to pay for the painting. The Petitioner supplies to the owner/operator a trailer to be used exclusively in the service of Petitioner. The Petitioner also furnishes moving pads, piano carrier and boards, dollies, and ramps. The owner/operator is required to furnish any additional equipment needed. The owner/operator is also required to furnish his own hand tools. The owner/operator‘s job responsibilities include the hauling, loading and unloading of household goods. The owner/operator may earn additional compensation by packing and unpacking the household goods. This latter function is performed at the discretion of the owner/operator. The owner/operators have the right to reject offered job assignments without adverse consequences to their continuing relationship with the Petitioner. The owner/operator is required to maintain a valid chauffeur driver‘s license, which is paid for by the owner/operator. All of the permits, licenses, and certificates for operation of the tractor and trailer in the Petitioner‘s business, is furnished by the Petitioner. The owner/operators are compensated by the Petitioner on a commission basis. The commission is a fixed percentage of the services performed, as set forth in the “Contractor‘s Rate Income Schedule.” The job cost in most cases is determined by the rates set by the Federal government with whom the Petitioner must file rate tariffs. The Petitioner does not guarantee to meet a minimum amount of compensation. The owner/operators are not required a minimum quota. The owner/operators are required to wear a specified uniform as designated by the Petitioner. The owner/operators are required to furnish, at their own expense, public liability and property damage insurance upon his vehicle. The owner/operators are also required to furnish all maintenance and upkeep of their vehicles including the cost of fuel, oil, tires, lubricants, garaging, and repairs. The Petitioner
is responsible for liability insurance that covers damages to the household goods being transported. The owner/operators are responsible for the first $75 in damages to the household goods caused by their negligence. The owner/operators have the right to hire helpers or assistants to aide them in carrying out their job functions. They have the right to hire, fire, and control these helpers and assistants. The owner/operators can also hire other drivers to operate the trucks. However, any co-drivers hired by the owner/operators must be approved by the Petitioner and meet all regulations imposed by the Federal government. The owner/operators are responsible for the compensation of the workers they use. The owner/operators are required to furnish worker‘s compensation insurance for the individuals which they hire. The owner/operators are also responsible for providing uniforms for these individuals. The owner/operators cannot work for other companies similarly situated as the Petitioner. The owner/operators are required to submit reports to the Petitioner as requested and notify the Petitioner daily of their whereabouts and contents of their vehicles. The owner/operators set their own hours of work within the pick-up and delivery times set forth in the bills of lading. The Petitioner does not deduct social security, withholding, or other taxes from the owner/operator‘s remuneration. The Petitioner does not provide any hospitalization or medical insurance for the contractors and the owner/operators are not eligible for bonuses, pensions, sick pay, vacation, or other fringe benefits provided by the Petitioner. The contractual relationship between the Petitioner and the owner/operators contemplates a continuing on-going relationship. The owner/operators usually work an average of four years with the Petitioner. The owner/operator may terminate the contract by supplying the Petitioner with 30 days advance written notice. The Petitioner may terminate the contract by written notice to the owner/operator. The Petitioner and owner/operator believe they are creating a principal/independent contractor relationship. The skills required in the occupation are to be a good truck driver, be able to handle the goods being transported, and be able to verbally communicate with customers. The contractual relationship between the Petitioner and the lease/operators are substantially the same as that between the Petitioner and the owner/operators, except for the following differences. Approximately 12 percent of the lease/operators commissions are retained by the Petitioner for rental of the vehicle. The Petitioner is responsible for repairs, servicing, garaging, etc. of the vehicle rented or leased by the lease/operators.
The determination of whether a certain kind of work relationship is that of employer or independent contractor, particularly in the context of current ways of doing business, is extremely difficult. There are no bright lines to distinguish the two.4 Each case turns on the weighing of numerous, and always diverse, factors,5 no one of which is determinative.6 As a result, other reported cases are of little precedential value. Magarian v. Southern Fruit Distributors, 146 Fla. 773, 1 So.2d 858 (1941).
Many courts, including our Florida state courts, frame their decisions around the considerations set forth in the Restatement (Second) of Agency § 220 (1958).7 That section of the Restatement provides:
(2) In determining whether one acting for another is a servant or an independent
contractor, the following matters of fact, among others, are considered: (a) the extent of control which, by the agreement, the master may exercise over the details of the work;
(b) whether or not the one employed is engaged in a distinct occupation or business;
(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
(d) the skill required in the particular occupation;
(e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
(f) the length of time for which the person is employed;
(g) the method of payment, whether by the time or by the job;
(h) whether or not the work is a part of the regular business of the employer;
(i) whether or not the parties believe they are creating the relationship of master and servant; and
(j) whether the principal is or is not in business.
In this case, using the Restatement analysis, the agency‘s determination can be sustained.
(a) Control
The extent to which the employer exercises control over the details of the employee‘s performance of the work done has often been stressed as the telling distinction between a servant and an independent contractor.8 If the person performing the work is responsible and held accountable for the end product only, he is most likely an independent contractor. Florida Industrial Commission v. State ex rel. Orange State Oil Company, 155 Fla. 772, 21 So.2d 599 (1945); Cosmo Personnel Agency of Ft. Lauderdale, Inc. v. State, 407 So.2d 249 (Fla. 4th DCA 1981); Jean M. Light Interviewing Services, Inc. v. State, 254 So.2d 411 (Fla. 3d DCA 1971); Farmers & Merchants Bank v. Vocelle, 106 So.2d 92 (Fla. 1st DCA 1958). Although control and right of control over the work done is highly relevant in determining vicarious liability in tort suits, it is less relevant and therefore less determinative in this context, where the statute involved seeks to impose on business or industry some of the costs of unemployment formerly borne by labor alone.9
In this case, some factors point in both directions on the issue of control. Tending towards an independent contractor relationship are the special deputy‘s findings that the drivers may refuse work assignments (although neither witness at the hearing had ever done so); that they could set their own work hours and routes, so long as the load was delivered within the time on the bill of lading; that they could choose to pack and unpack or not; and that they could hire and supervise their own helpers, although any relief driver had to be approved by Hilldrup. However, the Restatement (Second) of Agency recognizes that the expectation or discretion to hire subservants is not necessarily determinative. It is possible to have superior servants, such as ship captains, managers of large businesses, or mine operators, who hire and direct their own assistants, but all are ultimately subject to the employer‘s (or master‘s) control.10
Other findings relating to control over the work performed support the special deputy‘s conclusion that the drivers are employees. The drivers make lengthy reports
(b) Whether the Drivers are Working in a Distinct Occupation or Business.
If the drivers were in a separate, distinct business apart from Hilldrup, this factor would strongly suggest they were independent contractors. But if they are not economically viable work units apart from Hilldrup, this factor would weigh towards an employment relationship. See City Cab of Orlando, Inc. v. NLRB, 628 F.2d 261 (D.C. Cir.1980).
The special deputy concluded that the drivers exclusively perform services for Hilldrup, and that they are not in a business distinct from it. They must wear Hilldrup uniforms and advertise its name on their trucks. Hilldrup alone makes all customer contacts. There is no way for the drivers to build up any individual customer goodwill for themselves. The record sustains the special deputy‘s conclusion that the drivers perform services essentially for Hilldrup solely. The drivers would have no business, customers, or goodwill apart from Hilldrup.
Further, the contracts provide that the drivers cannot work for any carrier other than Hilldrup while under contract with Hilldrup, and that doing so constitutes a breach of the contract. The witnesses testified that this contract provision was orally modified very recently to allow drivers to bring back loads for other carriers once they empty out a load in a distant city. However, they first must check with Hilldrup to see whether it has a carry-back load for them before looking for another assignment, and they cannot accept outgoing assignments in Florida from other carriers. This factor of not being permitted to work for other carriers on the same basis as Hilldrup distinguishes this case from the taxi drivers in SIDA of Hawaii, Inc. v. NLRB, 512 F.2d 354 (9th Cir.1975); the truck drivers in A Nu Transfer, Inc. v. Department of Labor & Employment Security Division of Employment Security, 427 So.2d 305 (Fla. 3d DCA 1983); the orchestra musicians in Florida Gulf Coast Symphony, Inc. v. Department of Labor & Employment Security, 386 So.2d 259 (Fla. 2d DCA 1980); the interviewers in Jean M. Light Interviewing Services, Inc.; and the janitor in Farmers & Merchants Bank.
(c) Concept of the Job Held in the Community
The special deputy made no particular finding on this point. Reported decisions indicate that truck drivers may be employees13 or they may be independent contractors.14
(d) Level of Skill Required
The greater the skill or special knowledge required to perform the work, the more likely the relationship will be found to
(e) Who Supplies the Instrumentalities, Equipment, Supplies, for the Person doing the Work
If the place of work, the supplies, the equipment, and other necessaries are supplied by the entity for whom the work is being done, this factor indicates an employment rather than an independent contractor relationship. Florida Industrial Commission; Florida Gulf Coast Symphony, Inc. And the greater the investment of the worker in the equipment he uses and owns to do the work, the stronger this factor weighs in the direction of an independent contractor relationship. See NLRB v. Associated Diamond Cabs, 702 F.2d 912 (11th Cir.1983); A. Duie Pyle, Inc.; SIDA of Hawaii, Inc.
In this case, the record shows that the owner-drivers own their own tractors. Both owner-drivers and lease-drivers lease trailers from Hilldrup, although in some cases the owners also own their own trailers. Hilldrup provides basic tools and equipment with its trailers (pads, dollies, ramps, and piano carriers), and usually the drivers supplement these items at their own expense. The owner-drivers have to pay for their own maintenance and fuel for the tractors. Hilldrup pays for the ordinary maintenance and repair and garaging of its leased trailers and tractors, but the lessees have to pay for the fuel. Hilldrup provides the necessary ICC and State of Florida permits, franchise, and certificate of necessity and commission to operate as a carrier for hauling, and it insures the goods moved. The owner-drivers carry their own liability insurance on their tractors, and all drivers procure their own licenses. This mixture of factors does not appear to weigh heavily in either direction.
(f) Continuity of Employment
The longer and more sustained the work relationship, the more this factor points towards an employment relationship. In this case, the special deputy found that the average time a driver works for Hilldrup is four years — a fairly substantial work time average. He further found, based on substantial evidence in the record, that while the drivers are under contract with Hilldrup, they work exclusively for that company and have a continuing, on-going relationship with it.18 These findings support the conclusion of the special deputy that the drivers are employees.
(g) Method of Payment
Because an independent contractor is paid on a job-by-job basis, compensation by paying a commission indicates an independent contractor relationship and payment by salary indicates an employment relationship. Florida Industrial Commission; Cosmo Personnel Agency of Ft. Lauderdale, Inc.; Restatement (Second) of Agency § 220 comments (1958). However, this factor, like the others, is not conclusive. Magarian; Justice; City Cab Company of Orlando, Inc.
The special deputy found that the drivers are paid on a commission basis. For each assignment they receive a percentage of
(h) Whether the Work is a Part of the Regular Business of the Employer
If the work performed in the relationship under consideration is a part of the principle‘s business, this factor indicates an employment status, even if the work requires a high level of skill to perform it. Cantor; Magarian; Restatement (Second) of Agency § 220 comments (1958). The more vital or essential the work is to the principal‘s business, the stronger this factor weighs.
The special deputy concluded that the work done by the drivers in this case is an essential part of Hilldrup‘s business. These drivers perform most of Hilldrup‘s interstate or long distance hauling. Were it not for their services, Hilldrup would not be in the interstate carrier business.
The special deputy properly weighed this factor as pointing towards an employment relationship. This factor is more relevant than some of the others in the context of carrying out the state‘s policy of taxing a business to pay (in part) for the risks of unemployment in that business.
(i) Express Belief of the Parties as to the Nature of the Work Relationship
The understanding or expressed intent of the parties to enter into an independent contractor relationship rather than an employment relationship, or vice versa, is another factor the fact-finder should consider;19 however, it is not determinative.20 In this case, the special deputy concluded that these parties intended to enter into an independent contractor relationship. The witnesses’ testimony at the hearing and the express language of the contract support this finding. The special deputy weighed this factor as one of the primary factors in this case pointing towards an independent contractor relationship.
(j) Whether the Principal is or is not in Business
As discussed above, Hilldrup purports to be in the interstate carrier business — the very function being performed for it by the truck drivers involved in this case. It is no more independent of the drivers than they are of it as regards the interstate hauling business. This factor weighs heavily towards the agency‘s conclusion that the drivers are employees.
I would affirm.
Notes
Section 443.036(17), Florida Statutes (1981), defines “employment” as:
[A]ny service performed by an employee for the person employing him... .;
and an “employee” as:
[A]ny individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee.
None of the special inclusions or exclusions of the statute appear applicable in this case.
See City Cab Co. of Orlando, Inc. v. NLRB, 628 F.2d 261 (D.C. Cir.1980); Justice v. Belford Trucking Co., Inc., 272 So.2d 131 (Fla. 1972); Farmers & Merchants Bank v. Vocelle, 106 So.2d 92 (Fla. 1st DCA 1958).