*1
Appellant,
JOHNSON,
v. MONTANA
Petitioner
JOE
Respondent
INDUSTRY,
DEPARTMENT
OF LABOR AND
Respondent.
No. 89-281.
25, 1989.
on Briefs Oct.
Submitted
Dec.
1989.
Decided
JUSTICE dissenting opinion MCDONOUGH filed which JUS- TICE joined. HUNT Falls, Neill, Neill, & petitioner
Larsen Kenneth R. Great for and appellant. Neal, Dept, Helena, Industry, respondent
Claren of Labor and for respondent. and Opinion
JUSTICE HARRISON delivered the the Court. Johnson, homeowner, appeals Joe a Great Falls the decision of the confirming holding by Appeals. District Court a the Board of Labor upheld finding carpenter The decision a who that a had worked on remodeling the employee of Johnson’s home his was and Johnson unemployment therefore employee’s owed insurance tax the wages. We reverse.
Only presented: one issue is Did the District Court err when it found that there was substantial support evidence to decision of Board Labor that Voeller, Mike question, employee worker in was an not an 39-51-201(14), contractor under the AB test of MCA? Johnson, Joseph V. petitioner appellant, is a food broker Falls, wife, Mary, bought Great Montana. When Johnson and his they building new home neighbor, contacted their former con- tractor, to see if he in remodeling would be interested the new son, house. The neighbor job, but his Mike declined the indicated Voeller, might then carpentry be able to do the work. Johnson con- who, Pontdt, tacted Mike Voeller to do agreed with a Mr. remodeling job. remodel,
At they engaged the time the John- Voeller and Pontdt to they sons were exactly not sure what done their new wanted they They home or how much know wanted could afford. did bedroom, bathroom, enlarged and a the kitchen and remodeled discussing reviewing project and porch After and deck added. finances, would be done on parties agreed that the work bid, each re- Voeller and Pontdt rather than with basis paying materials. ceiving per the Johnsons for hour and $7 Al- contracting their own businesses. Voeller and Pontdt each had himself formally incorporated, Voeller called though he not had Voeller, shop in his and a small Mike Inc. Voeller had his own tools in- performed job Voeller home. Both before and after the Johnson doing remodeling, roof- dependent contracting jobs carpenter, as a immediately ing, siding making. For several months and cabinet wages carpenter job, as a preceding the Johnson Voeller worked B-A-C, M-S-C, During variously Hallmark. for a firm known work, only time he ever years the three Voeller did completed wages B-A-C. After Voeller worked for was his stint with unemployment jobs, benefits the B-A-C and Johnson he unemployment benefits from his work at thinking he was entitled to However, Johnson enti- B-A-C. did not believe his work for Voeller unemployment tled him to benefits. mini- was
The direction Voeller and Pontdt received from Johnson carpenters, options mal. and Voeller Johnson would discuss with *3 not and Pontdt tell could or could would Johnson whether carry arrange hire out his and Pontdt would for and idea. Voeller electrician, perfa-taper and building professionals other such as the plumber, As the work all of whom were also on an basis. would, customary, progressed approve the final construc- plans tion and select the finish materials to be used. Department Labor unemployment
When Voeller for Industry employee, and Johnson’s based determined Voeller to be questionnaires Department completed by men. The the two found, therefore, past Department for un- that Johnson owed the paid unemployment period worked during the Voeller contributions for Johnson. hearing Appeal’s
A Referee confirmed redetermination before an employee. appealed determi- Voeller’s status as an Johnson then telephone hear- Appeals. Following nation to the a Board of Labor ing, Depart- Appeals hearing the Board of affirmed the Labor officer conclusion, employee 39-51- ment’s under Voeller an §§ 203(4) 39-51-201(14), District judicial and review the MCA. On similarly upheld Court findings the earlier Voeller and others that
291 employees, appeals situated were Johnson’s and Johnson now court’s decision. involving standard review cases claims before the Board Appeals 39,
of Labor Chapter is found Title Part 24 of 51: any judicial 39-51-2410, “In proceeding through under 39-51-2406 facts, of the as to board evidence and fraud, the absence of jurisdiction shall be conclusive of said questions court shall be confined to of law.” 39-51-2410(5), Section MCA. facts,
Accordingly, those as the Board of Labor found exist, by evidence, them to if supported will stand absent fraud. by Recent case law has “supported held that the evidence” means supported evidence, “something substantial which is more than evidence, may scintilla preponderance but be less than a of evi Highview Gypsy Gathering System, Inc. v. Stokes (1986), dence.” 11, 15, Co., 620, Larry’s Mont. Post Inc. 716 P.2d 623. See also v. Unemployment (Mont. Insurance Division 1989), Mont. [238 190,] 325, 777 P.2d St.Rep. 1193. While the substantial evidence gives finder, test deference agency judicial to the fact the court’s re view careful, must be “searching nonetheless subjecting agency’s judicial scrutiny.” (9th decision to close Cranston v. Clark 1985), 1319, Memorial, Cir. v. (9th 767 F.2d Inc. Harris (citing 1980), 912). Cir. 655 F.2d importantly,
More permit we cannot letter law to tran- spirit scend the previously of the law. As we noted when faced with question: this person
“We feel that whether performing employee is services an or an us, question contractor is the before and statutes guides used as in making such determinations must not be distorted persons to allow truly independent operation who are be their employees held merely purposes resulting tax benefits de- rived from an employer-employee relationship.” Regis Paper St. Co. Unemployment Compensation v. Comm’n 548, 552, 487 P.2d 526. two-part test to determine whether an individual inde- pendent 39-51-201(14), is found at MCA: “ ‘Independent *4 contractor’ means an individual renders ser- who in vice the occupation course of an and: “(a) has been and will continue to free from be control or direction performance over the services, in both under his contract and fact; and
“(b) engaged trade, in independently occupation, established profession, or business.” test, formerly test,
This by known as the ABC was amended the Legislature dropping prong a third of the test. The amended 39-51-201(14), MCA, version test, AB is now called the its and emphasis, test, law, as under the ABC and at common is control. previously This recognized Court has four factors to consider in de- (1) termining right if the to control right exists: direct evidence of or (2) control; (3) exercise of payment; method of equip- ment; (4) right Sharp Corp. v. Hoerner Waldorf and to fire. 419, 425, Larson’s Work- (citing P.2d 1301-02 Compensation Law, men’s 1A, 44.31, 8-35). p. Vol. Hearings factor, Examiner addressed the first exercise of or
right control, Finding to in Appellant his of Fact 4: “The No. asked carpenters advice from the as well as directed their work or among options chose suggestions by carpenters or made their as progressed. chose, work Appellant needed, also as the finish purchased materials decision, In affirming used.” the Dis- evidence, trict Court relied on the same finding sort of in its memo- randum and order that: record contains petitioner evidence that shows the
“[T]he made changes numerous scope per- and extent of the work to be petitioner formed. The chose the supplier materials and di- rectly supplies petitioner utilized. The ap- also had the prove performed the work and indicated he had the to make workers work faster.”
All of pointed the facts Hearings Examiner the Dis- trict support Court to finding their ordinary of control are usual and practices in the business. The does not so much show control as it does practice. indicate a business Mr. Voeller tes- tified that Mr. Johnson carpenters did not correct as to details performance expected their work and them to use their expertise carpenters carry remodeling project. out Mr. Johnson testified that he would tell Voeller and Pontdt his ideas for remodeling and the two him possible. would tell if it was words, In other Johnson told Voeller and Pontdt what he wanted done but not how to do it.
This Court has often reiterated the control test in these terms: “An is one who renders service occupation, course of an represents employer only the will of his *5 work, as to the result whereby of his and not as to the means it is accomplished, usually paid job.” and is for the St.Regis Co., Paper Kim 157 Mont. at (quoting P.2d at 526 ball v. Ind. Acc. Bd. (1960), 445, 448, 688, 690). 138 Mont. 375 P.2d merely It is evident that controlled the result of the work, carpenters’ not the methods Voeller and Pontdt used to ac complish the end result. factor, payment,
As to the second method of evidence showed carpenters that hourly both were usually on an basis and sub weekly. rule, mitted their hours general pay to the Johnsons As a strong ment on a time employment basis is evidence of status while payment completed with, on a project basis is consistent but not of, independent contractor status. Solheim v. Tom Davis conclusive Ranch 265, 273, 677 P.2d 1038. testimony There is payment that method of in the — industry accomplished ways bid, hourly one three on a or cost-plus basis. Mr. Voeller projects testified that he had done on hourly basis, both a bid usually jobs that he did smaller a bid basis. commonly larger Voeller stated that he jobs did on an and, Johnson, basis parties after discussion with all decided hourly pay that job would be best on the Johnson because the John- exactly sons did they not know what wanted done or how much could afford. regarding furnishing equipment third test preponderates
favor
independent
of an
status between Voeller and
Johnson.
the view of Larson’s Workmen’s
adopted
This Court has
—
Compensation Law,
Solheim,
1C,
44.34,
8-104,
pp.
Vol.
8-95
employment
that an
relationship usually
employer
exists
where
equipment,
furnishes
employee
but an
equip-
his own
Solheim,
preclude
ment
employment
does not
relationship.
In
we
furnishing equipment
concluded that
independent
indicates an
con-
Solheim,
tractor
relationship.
ing this final element the Larson treatise notes:
“The to terminate relationship liability without is not consistent concept contract, with under which the contractor should legal right complete project have the contracted any attempt prevent completion treat as a breach of contract.” Compensation Law, Workmen’s 1C, 44.35,
Larson’s pp. Vol. 8-149 — 8-158. oral, parties only Because contract between the was evi- hearings regard- dence before the District Court and the examiners ing testimony termination comes from the of Voeller and Johnson. testimony, Reviewing apparent it is that neither man cer- was rights ability tain of his as to the to terminate. When asked longer examiner if Johnson could have decided he no wanted Voel- services, replied “probably” ler’s Voeller that Johnson could have. ability Johnson’s answer when asked about his to fire the equally was as tentative: think, earlier, them,
“I I you like testified if it would have taken know, long time, long a real time. To me it seemed like a and not know, being carpenter, you really questionable long it’s what a *6 have, time is. I’m sure I yes.” somewhere the line could reply that, Johnson’s carpenters indicates his belief had the not up part lived bargain, justified to their of the he would have been terminating However, relationship. the business neither man was di- rectly asked if he believed Johnson could fire Voeller without liability. above,
As discussed three of the four control factors substanti finding ate independent of an relationship, between First, possess and Voeller. right Johnson did not to con accomplished trol how Voeller remodeling job, only carpenter homeowner to tell the what he wanted done as the house Secondly, was remodeled. Voeller and Pontdt furnished all of the equipment necessary complete job. Finally, Johnson’s carpenters fire the factor, was not absolute. As to the other method payment, hourly pay usually employment, while evidences custom industry basis, often working per finds on a hour and is not independent employ conclusive of either an contractor or ment status. It purpose must be remembered that of this test is not scope widen the ‘employment’ of the term
“[t]o as used the stat- included, ute so as to persons include therein . . not otherwise but. to exclude from ‘employment’ persons the definition of the term might, except who application tests, for the of these be included therein.” Regis Co., Paper
St.
552,
Na-
(quoting
We hold that portion under the A AB of the test of 39-51- 201(14), MCA, Voeller independent meets the definition of an contractor.
Thus, B portion requires we turn to the of the test which independent engaged in independently contractor to be estab occupation. Court, lished relationship District that the test, between part Voeller and Johnson A failed of the did not ad part dress B. clearly The record demonstrates that Voeller is en gaged independent in a trade of Johnson’s. Johnson is a food broker groceries who sells living. for a Contracting have no relation whatsoever to what living. Johnson does for a Voeller is a carpenter and has been since 1985. Accordingly, Voeller also satisfies portion the B independent of the contractor test.
Having statutory requirements 39-51-201(14), met the MCA, of § we hold that Voeller is an contractor rather than em- ployee we, therefore, of Johnson and reverse.
CHIEF JUSTICE SHEEHY, TURNAGE and JUSTICES WEBER and BARZ concur. McDONOUGH,
JUSTICE dissenting. majority have in essence They reviewed this case de novo.
have not proper judicial standard of review. The standard of review of this Board of Labor determina- tion 39-51-2410(5), is set out in MCA, as follows:
“(5) any In judicial proceeding under through 39-51-2406 39-51- facts, board as to the evi- fraud, dence and in the absence of shall be juris- conclusive and the diction of said court shall questions be confined to of law.” *7 This was the employed by standard in District Court as set out paragraph two of its Memorandum and Order.
“Supported by evidence”
sup-
has been held
this Court to mean
ported by
(1943),
Craighead
substantial evidence. Jordan v.
114
337,
Mont.
136
A finding
P.2d 526.
of fact under the circumstances
here
binding
is
on the
“supported by
Court if it is
substantial evi-
dence, regardless of whether there is substantial evidence or even a
preponderance of
contrary.” Gypsy Highview
evidence to the
Gath-
ering System,
(1986),
Inc.
11,
620,
v. Stokes
221 Mont.
716 P.2d
Jordan,
quoting
337,
114 Mont.
296
Is there more than a scintilla supporting of evidence here the fac- tual of the Board of hearing Labor and the examiner? appellant
The burden here is on the to show that is the worker an independent statutory contractor and there is a test to determine 39-51-201(4), MCA, provides: the worker’s status. Section “(14) ‘Independent contractor’ means an individual who renders in occupation service the course of an and: “(a) has been and will continue be from free control or direction performance services, over the both under his contract fact; and
“(b) engaged independently trade, occupation, established profession, or business.” “(a)”. only
We part, need to discuss As to that we have cited four in determining degree factors compensation of control workers’ 1) which are applicable right also here: direct evidence of or exercise 2) control; 3) 4) of payment; furnishing equipment; method of of right Sharp (1978), to fire. v. Corp. See Hoerner 178 Mont. Waldorf (1978), 1298 and Solheim v. Tom Davis Ranch P.2d Sharp: P.2d 1034. We said in
“Larson’s treatise enumerates four factors to consider when at- tempting right to determine given of control in a situation. Those (1) (2) factors are: control; direct evidence of or exercise of (3) payment; (4) method of furnishing equipment; Larson, 44.31., fire. p. points 8-35. The treatise further out that given pro- consideration to be balancing these factors is not a cess, independent rather ‘. . . contractorship ... is established usu- ally only by convincing tests, accumulation of these and other employment while . necessary solidly . . can if proved often be strength Larson, of one of the four supra. items [above].” From the above it is clear that all four factors are needed show a worker independent is an contractor.
Looking at the equipment, factor of the the facts are clear the worker equipment furnished his own tools or and this was (No. 5) a Finding by appellant examiner. The has met his bur- den as required to this factor the worker an contractor.
Second, payment as the paid by method of here the worker was hour. “It is strong employee. indication” the status was that Sharp, Larson, 44.33, p. P.2d at 1302. 8-41. The workers here paid weekly were payment by for the hours worked that week. This *8 appellant the hour is more a than scintilla of evidence. The claims hourly appel- the reason the method was was selected because the they lants were unclear as to the extent of what wanted done and money they spend. ap- were limited as to the amount of could The pellant weight given did decide what work was to be done. The to be of hourly payment “strong to the fact and its indication” and the given it, weight appellant’s doing to be to reason for is within the province finder, way. of the fact neither one is conclusive either control,
Relative to direct of or evidence exercise of this also question is a of Is supporting fact. there a scintilla of evidence direct Changes by control? appellant during were made the course of the by appellant paid work. Workers did as changes. directed The expected Ap- rate and do workers to what he wished. pellant day day made to to decisions as materials used and directly supplier $15,000.00). them to (amounting Appellant to over approve transcript p.32, had to the work. See lines 11-15 as follows: — er,
“BAY: upon, upon inspection, You were done like the did he inspect any changes it and have made or what? ya, it, way you
“VOELLER: Oh he changes through had all the know, done, know, but finally you when we were it was He done. looked at it and it was done.” appellant power push also felt he had the to them
insist certainly work faster. is This more than of a scintilla evi- prima case, dence direct control and it make would facie Find- ings 3 and 4 of the examiner are this evidence.
Even there was not support substantial evidence of the examiner payment, factors control and method of question there no there is more than a scintilla evidence to support Finding 6 of the which examiner is as follows: “Either the appellant or the relationship could terminate the work liability.” without only There no agreement, was written oral. Voeller, worker, In the hearing examination of Mike ex- following questions aminer the following were asked and the answers given: During project you
“EXAMINER: the course of the have de- could you anymore cided didn’t stop? want to do Ya, “VOELLER: I could have. right. All
“EXAMINER: just Could Mr. Johnson decided he have was . . . employ you anymore didn’t want to or be associated with you anymore you somebody and tell he wanted else do it? wanted, ya.” probably if he’d “VOELLER: He could’ve place appellant following discourse also took between attorney respondent. *9 Johnson, happy if with the work or felt “BAY: Mr. weren’t yqu you working enough, these weren’t fast could have fired workers them? earlier, think, taken I I testified it would have
“JOHNSON: like time, them, know, you long long a real time. To me it seemed like a know, carpenter, you really questionable what being and not it’s a. have, yes.” long I’m line I time is. sure somewhere could testimony principal participants This is more than a two of evidence that either one could have terminated the rela- scintilla tionship liability. testing quite clear taken without Mr. Voeller’s “probably” precise as a whole. It is not because of the word as to his understanding appellant’s right. The witness is not a user of certainly quit. words but is a felt he could trademan. Voeller one, by appellant only Of the four factors to be met equipment, has been met. The determinations the examiner against appellant supported questions of the other three are fact by substantial evidence. 39-51-2410(5),MCA, requires accept
Section find- that courts ings agency of fact of the if those substan- are tial evidence. The District the standard and so should Court we. joins
JUSTICE HUNT in the dissent of JUSTICE McDONOUGH.