701 N.E.2d 703 | Ohio Ct. App. | 1997
This is a consolidated appeal from three judgments of the Lucas County Court of Common Pleas, which found that type "B" day care providers are independent contractors as a matter of law, and are not eligible to receive unemployment compensation benefits.
On appeal, appellant, the Administrator of the Ohio Bureau of Employment Services ("OBES"), sets forth the following two assignments of error:
"Assignment of Error No. 1: The Lucas County Common Pleas Court erred by holding that R.C.
"Assignment of Error No. 2: The Lucas County Common Pleas Court erred by failing to affirm the Unemployment Compensation Board of Review's determinations, which were not unlawful, unreasonable, or against the manifest weight of the evidence."
The undisputed facts that are relevant to the issues raised on appeal are as follows.
Edith Peacock became a "type B" day-care provider for the Lucas County Department of Human Services ("LCDHS"), on October 1, 1993. Peacock was certified as a type B provider pursuant to R.C.
"INDEPENDENT CONTRACTORS: Providers and employees of the Provider will act in performance of this contract in an independent capacity, and not as officers, employees, or agents of the State of Ohio or the Department. NOTE: Individuals who provide child care services are not employees of the Department, but are considered to be self-employed and, as such, are responsible for payment of any local, state or federal tax obligations on income earned through this agreement as well as for other requirements of self-employment which include, but are not limited to: reporting of income to the Internal Revenue Service; payment of social security taxes; purchasing insurance; establishing a retirement plan and other self-employment benefits, if desired. Individual home Providers may provide child day care in their homes for children who are not receiving publicly funded child day care benefits. However, home Providers must maintain compliance with Section
Peacock operated a type B day-care facility in her home, in which she provided day care for only her five grandchildren, until October 10, 1994, when her daughter no longer needed day-care assistance.
On July 6, 1995, Peacock applied for unemployment compensation benefits. After initially denying Peacock's claim for benefits, OBES vacated its decision and, on August 12, 1995, issued a new determination of benefits, in which it allowed her claim. On August 15, 1995, appellee, the Lucas County Auditor, filed a written request for further reconsideration, in which it asserted that Peacock was an"independent contractor and not an employee of Lucas County Human Services." On September 1, 1995, OBES issued an "Administrator's Reconsideration Decision" in which it affirmed its earlier determination that Peacock was entitled to unemployment benefits. On September 11, 1995, appellee appealed the Administrator's decision to the OBES Board of Review ("board"). Attached to appellee's notice of appeal was a copy of Peacock's services contract.
On October 6, 1995, a review hearing was held before the board, at which Peacock testified that, as a type B day-care provider, she was allowed to care for only her own five grandchildren. She further testified that LCDHS dictates to her what hours she may care for her grandchildren, depending on her daughter's work and school schedules, and that she turns in invoices for payment on a monthly basis. Peacock stated that in order to be certified she had to have a physical examination, and her home was subjected to a fire and safety inspection. She also stated that, in her opinion, she is appellee's employee, because "they pay me a salary and I paid federal and state taxes out that [sic] salary and I file a *240 federal income statement check — federal income file [sic] with my earned income."
On October 11, 1995, the hearing officer issued a decision in which she found, based on the facts that Peacock had to be certified, worked only when appellee told her she could work, and had taxes taken out of her paycheck, that Peacock was LCDHS's employee for purposes of unemployment compensation. Accordingly, the hearing officer affirmed the Administrator's decision granting Peacock unemployment benefits. On December 12, 1995, the board disallowed appellee's request for further reconsideration of the hearing officer's decision, and on December 20, 1996, appellee filed a timely notice of appeal in the Lucas County Court of Common Pleas.
On appeal, the case was submitted to the court on the record of the administrative proceedings, which included a transcript of the October 6, 1995 hearing, and the parties' briefs. On October 21, 1996, the trial court filed a judgment entry in which it found:
"Ms. Peacock signed an agreement knowing that as a Type `B' day-care provider she was an independent contractor. Furthermore, R.C.
Accordingly, the trial court reversed the board's decision, on the basis that it was "unlawful." On November 21, 1996, OBES filed a timely notice of appeal to this court (case No. L-96-374).
Mary Franklin became a type B day-care provider for the Lucas County Children's Services Board ("LCCSB")2 on January 7, 1991. Franklin was certified as a type B provider pursuant to R.C.
"I am considered self-employed, therefore, I am not an employee of the county agency. As a self-employed person, I am responsible for payment of any local, state, or federal tax obligations on income earned through this agreement as well as for other requirements of self-employment which include, but are not limited *241 to: reporting of income to Internal Revenue Service; payment of social security taxes; purchasing insurance, if desired; establishing a retirement plan and other self-employment benefits, if desired."
Franklin operated a type B day-care facility in her home until January 24, 1996, when the agency began an investigation of a reported biting incident involving the children in her care, and informed her that her services were not needed until the investigation was completed.
On January 31, 1996, Franklin applied for unemployment compensation benefits. On February 2, 1996, OBES issued a "Notice of Determination of Benefits Rights" in which it allowed Franklin's claim for benefits. On February 6, 1996, appellee filed a written request for reconsideration, in which it asserted that Franklin was not entitled to apply for unemployment compensation because she was under investigation, and because she "is an independent contractor." In support thereof, appellee attached a copy of the vendor agreement executed by Franklin. On April 17, 1996, OBES issued an "Administrator's Reconsideration Decision" in which it found that "[t]he determination dated February 02, 1996, is affirmed," and allowed Franklin's claim for benefits. On April 23, 1996, appellee appealed the Administrator's decision to the board.
On May 28, 1996, a review hearing was held before the board, at which testimony was presented by Franklin and David Bruns, coordinator of appellee's Specialized Services Department.
Franklin testified at the hearing she does not "have a lot of input" into how her job is performed, although she can state what hours she is willing to work and whether she wants to have children in her home. She stated that she is limited to caring for six children at a time, and that LCCSB finds the children to be placed in her care. She stated that LCCSB began deducting taxes from her pay in 1993, and that she is issued a W-2 wage and tax statement for income tax purposes. Franklin further testified that she does not have to submit reports to the agency; however, her home is inspected twice yearly by LCCSB personnel. She also stated that the agency provides car seats for her to transport children to and from day care, and that she is required to feed the children breakfast, lunch, and sometimes dinner, in addition to a snack each day. Finally, Franklin testified that her vendor agreement has never been officially terminated, and that the children were temporarily removed from her care because of the investigation of a biting incident.
Bruns testified at the hearing that the vendor agreement signed by Franklin is "typical" for type B day-care providers. He also testified that LCCSB looks to state regulations to determine whether an individual is properly certified as a type B day-care provider. He stated that the state of Ohio requires fire and safety inspections of type B facilities, and sets forth policies on discipline, *242 services, and programs to be provided for children in those facilities. Bruns also testified that type B providers must sign a new vendor agreement each year, and that LCCSB certifies such providers on behalf of the state. Finally, Bruns stated that the local office of the Internal Revenue Service requires Lucas County to withhold taxes from the pay of type B day-care providers and to issue them W-2 wage and tax statements instead of 1099 statements for income tax purposes.
On June 19, 1996, the hearing officer filed a decision in which she found, based on the facts that taxes were deducted from Franklin's pay and she was issued a W-2 wage and tax statement, that Franklin was LCCSB's employee for purposes of unemployment compensation, and affirmed the Administrator's decision granting her unemployment benefits. On August 6, 1996, the board disallowed appellee's request for further reconsideration of the hearing officer's decision and, on August 16, 1996, appellee filed a timely notice of appeal in the Lucas County Court of Common Pleas.
On appeal, the case was submitted to the court on the record of the administrative proceedings, which included a transcript of the May 28, 1996 hearing, and the parties' briefs. On November 13, 1996, the trial court filed a judgment entry in which it found, based on the earlier decision involving Peacock, LucasCty. Auditor v. Ohio Bur. of Emp. Serv. (Oct. 21, 1996), Lucas C.P. No. 95-3587, that Franklin was an independent contractor, and not an employee of LCCSB. Accordingly, the trial court reversed the board's decision. On December 13, 1996, OBES filed a timely notice of appeal to this court (case No. L-96-398).
LaTonda Appleberry became a type B day-care provider for LCDHS on March 20, 1995. Appleberry was certified as a type B provider pursuant to R.C.
On November 22, 1995, Appleberry applied for unemployment compensation benefits. On November 30, 1995, OBES issued a determination of benefits in which it allowed her claim. On December 5, 1995, appellee filed a written request for reconsideration, in which it asserted that Appleberry was "self-employed and considered to be a [sic] independent contractor." On January 3, 1996, OBES issued an "Administrator's Reconsideration Decision" in which it affirmed its earlier determination that Appleberry was entitled to unemployment benefits. On January 10, 1996, appellee appealed the Administrator's decision to the board. Attached to the notice of appeal were copies of Appleberry's service contract and 1987 Ohio Atty.Gen.Ops. No. 87-073, in which Ohio's Attorney General concluded *243 that "[c]ertified type B family day-care home providers and in-home aides with whom a county department of human services contracts for child day-care services are not in the 'employment"' of the department for purposes of unemployment compensation.
On January 29, 1996, a review hearing was held before the board, at which Appleberry testified that LCDHS told her which children she would care for, and how many she could care for at one time. She stated that she was required to fill out attendance reports and accident forms for the children in her care. Appleberry also testified that she was never told that she was self-employed, although she admitted signing the services contract which stated that she was an independent contractor. Appleberry argued in closing that she is LCDHS's employee, because she received a paycheck from which taxes had been deducted.
On February 1, 1996, the hearing officer issued a decision in which she found that Appleberry was an employee, based on her findings that LCDHS assigned children to Appleberry's care, Appleberry had to prepare reports for LCDHS, and LCDHS "made regular payments" to Appleberry for her services, from which it withheld taxes and for which a W-2 wage and tax statement was issued. Accordingly, the hearing officer affirmed the Administrator's decision granting Appleberry unemployment benefits. On March 14, 1996, the board disallowed appellee's request for further reconsideration of the hearing officer's decision and on April 16, 1995, appellee filed a timely notice of appeal in the Lucas County Court of Common Pleas.
On appeal, the case was submitted to the court on the record of the administrative proceedings, which included a transcript of the January 29, 1996 hearing, and the parties' briefs. On February 24, 1997, the trial court filed a judgment entry in which it found that Appleberry was an independent contractor as a matter of law, pursuant to R.C.
On May 30, 1997, this court sua sponte ordered that "appeals No. L-97-1100 and L-96-374 be consolidated under appeal No. L-96-398 pursuant to App. R. 3 (B)."
OBES asserts in its first assignment of error that the trial court erred by determining that R.C.
This appeal is governed by R.C.
"Any interested party * * *, within thirty days after notice of the decision of the board * * * may appeal from the decision of the board to the court of common pleas * * *. If the court finds that the decision was unlawful, unreasonable, or against the manifest weight of the evidence, it shall reverse and vacate such decision or it may modify such decision and enter final judgment in accordance with such modification; otherwise such court shall affirm such decision. Any interested party shall have the right to appeal from the decision of the court as in civil cases."
The Supreme Court of Ohio recently held that R.C.
Accordingly, the board's role as a fact finder remains intact, and "a reviewing court may reverse the board's determination only if it is unlawful, unreasonable, or against the manifest weight of the evidence." Id. at 697,
It is undisputed in this case that Peacock, Franklin and Appleberry signed provider agreements, pursuant to ODHS forms 1224 and 1626, that specifically stated that they were independent contractors, and not employees. Further, all three were certified as type B day-care providers pursuant to R.C.
"(A) * * * An authorized provider of a type B family day-care home that receives a certificate pursuant to this section to provide publicly funded child daycare is an independent contractor and is not an employee of the county department of human services that issues the certificate."
Similarly, Ohio Adm. Code
"(K) All certified type B family day care home providers (including limited certified providers) and certified in-home aides (including limited certified in-home aides) shall not be considered employees of the CDHS [County Department of Human Services] but shall be considered independent employees responsible for requirements of self-employment including: payment of any local, state or federal tax obligations on earned income; reporting of earned income to the internal revenue service; payment of social security taxes and maintenance of any liability insurance that the provider deems necessary."
In addition, Ohio Adm. Code
"(I) An individual certified by the CDHS as a type B family day care home provider to provide publicly funded child care services is an independent contractor and is not an employee of the CDHS that issued the certificate."
R.C.
"Services performed by an individual for remuneration unless it is shown to the satisfaction of the administrator that such individual:
"(i) Has been and will continue to be free from control or direction over the performance of such service, both under a contract of service and in fact;
"(ii) That such service is outside the usual course of the business for which service is performed; and
"(iii) that such individual is customarily engaged in an independently established trade, occupation, profession, or business."
Ohio Adm. Code
In 1987, Ohio Atty.Gen.Ops. No. 87-073, Ohio's Attorney General extensively analyzed the employment status of certified type B family day-care home providers as then defined in R.C.
In making his determination, the Attorney General reviewed the nature of services provided by type B day-care home providers in the context of their provider agreements and the applicable statutes, including R.C.
"I understand that in addition to the children covered by this agreement, I may provide child day care in my home for children who are not covered by this agreement. I am considered self-employed; therefore, I am not an employee of the county agency. As a self-employed person, I am responsible for payment of any local, state, or federal tax obligations on income earned through this agreement as well as for other requirements of self-employment which include, but are not limited to: reporting of income to Internal Revenue Service; payment of social security taxes; purchasing insurance, if desired; establishing a retirement plan and other self-employment benefits, if desired."
In 1991, the Ohio legislature amended R.C.
As to whether the Administrator's authority to determine if type B day-care home providers such as Peacock, Franklin and Appleberry are in "employment" pursuant to R.C.
As to the meaning of the term "independent contractor" as used in R.C.
Upon consideration of the foregoing, this court finds that R.C.
OBES asserts in its second assignment of error that the Administrator correctly determined, based on R.C.
This court notes at the outset that virtually all of the factors listed by OBES as supporting the board's determination that Peacock, Franklin and Appleberry were appellee's employees are requirements imposed by the legislature on those who would be certified as type B day-care home providers. See Ohio Adm. Code
Upon consideration of the foregoing, and our determination as to OBES's first assignment of error, this court finds that R.C.
On consideration whereof, this court finds further that substantial justice has been done the party complaining, and the judgment of the Lucas County Court of Common Pleas is affirmed. Court costs of this appeal are assessed to appellant, OBES.
Judgment affirmed.
GLASSER, SHERCK and KNEPPER, JJ., concur.
