STATE OF WASHINGTON
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE EMPLOYMENT SECURITY DEPARTMENTIN RE: BARBARA KABRICK ) Docket #: 04-2000-08642
On August 31, 2000, Administrative Law Judge Edward S. Steinmetz (AU) entered an Initial Order affirming the denial of Claimant's benefits. For the reasons set forth below, the claimant hereby Petitions for Review of that decision.
Ms. Kabrick is a cab driver. She applied for benefits with Employment Security, alleging she was an employee of Spo-Cab, Inc. Her benefits were denied, on the basis that she was an independent contractor, not an employee, citing RCW 50.04.140. This was theonly basis for the denial. The Initial Order, referred to above, addresses whether the claimant has earned enough wages in employment in the benefit year to qualify for benefits. It focuses on RCW 50.04.030, in effect ignoring the threshold question which must be addressed: whether the claimant is an employee or an independent contractor.
The subject of this matter is clearly employment:
"Employment", subject only to the other provisions of this title, means personal service, of whatever nature, unlimited by the relationship of master and servant as known to the common law or any other legal relationship, including service in interstate commerce, performed for wages or under any contract calling for the performance of personal services, written or oral, express or implied. RCW 50.04.100 (emphasis supplied).
The AU concluded that the "facts fail to establish that the claimant provides services to Spo-Cab Inc.wages or under contract." (Initial Order, P.5 (emphasis in original)).
Initially, it must be pointed out that the ALJ has placed the burden of proof on the claimant. This is legally incorrect. In this state, it is presumed that services performed by an individual are covered, unless the employer proves they are exempt.1 In other words, an employer must contribute to the compensation fund for workers in its employment unless the employer establishes that the workers are exempt.2 The requirements are stated in the conjunctive; a failure to satisfy one results in a failure to prove the exemption.3 Because the burdens have been reversed, the ALJ never addresses RCW 50.04.140 except in passing on page 2 of the Initial Order. This he cannot do.
Apparently the ALJ concludes that the contract between Spo-Cab, Inc and the claimant was not one for personal services. This is a fallacy. Clearly, the personal services of Ms. Kabrick are the most important factor of her employment. It is not her car which is important; in fact, if she had no car, she would be provided one by Spo-Cab. Ms. Kabrick is a taxi driver. She is clearly under the control and direction of her employer, Spo-Cab. Her employer testified that he has the ability to terminate the "agreement" between he and Ms. Kabrick for not maintaining good relations with the public or for any "problems" which may arise. He has established a dress code more stringent than that required by users of the taxicab business. He establishes shifts at which the drivers are to work. He owns the taxi meter and the radio in Ms. Kabrick's car. He requires daily reporting by his drivers. His agent, the dispatcher, tells drivers when and where to pick up fares. He paid for all advertising. He has the ability to terminate liability insurance for his drivers. The control is evident; the methods and details of the work are determined by Spo-Cab. Even the name that the claimant used for her license was determined by SpoCab. It must again be emphasized that it is not the claimant who has the burden of proving that she is an employee: the employer must prove that she is "free from control or direction" by the employer. That has clearly not been done.
In no way, shape or form is Ms. Kabrick an independent contractor. It is well established in this state, with certain specific exceptions, all services performed by an individual for remuneration are deemed to be employment.4
California has dealt with this issue head-on. At the hearing below, I submitted the California case of Santa Cruz Transportation. Inc. v. Unemployment Insurance Appeals Board, 235 CA 3d 1363; 1 Cal Rptr. 2d 64 (1991) for the purpose of elucidation. This case seems consistent with the rationale of our courts, and is an important analysis of the facts herein.
The State asserted at the hearing that the business of Ms. Kabrick is outside the usual course of business of Spo-Cab, Inc.5 This is not only ridiculous, it is patently false. Attached is the Business License for Spo-Cab, Inc. It bears the same code for type of business as Ms. Kabrick's: 4121 Taxicabs.
The ALJ, on two occasions, refers to "the credible testimony of [Mr. /Larry] Loncon". The credibility of Mr. Loncon is belied by the facts. Mr. Loncon testified he had no knowledge of the continued existence of the Driver Review Board. In fact, he attended Review Board meetings and reviewed minutes of those he did not attend. His own sworn testimony on cross-examination directly contradicts his sworn testimony on direct exam. When dealing with the claimant's testimony, the ALJ takes a different tack, requiring "independent proof" of her testimony.6 Thus, not only has the ALJ reversed the burden of proof, he has implicitly rejected credible testimony of the claimant and accepted incredible testimony of the employer. This places an insurmountable burden of proof upon the claimant.
The employer testified that he has contracts with the Spokane Airport for provision of taxicab service, yet would have the State believe he isnot in the taxicab business. He would further have the State believe that he is assigning these contracts to independent contractors, yet has contracted his company to provide taxicab service to the Airport and licensed his company in the taxicab business. The ESD UI Tax Specialist could have ascertained this information, had she obtained the master business license of the employer. However, she did not, yet concluded that Mr. Loncon was NOT in the taxicab business for purposes of RCW 50.04.140.
It is clear from the foregoing that the ALJ's decision is not supported by substantial evidence taken from the record as a whole. Further, his application of the law to the facts is flawed, and his procedure for arriving at the conclusions of law reverses the burden of proof in this case. The ALJ provides undue weight to the agreements between the claimant and her employer, ignoring facts which establish the employer-employee relationship. This is reversible error.7
The Employment Security Act exemption for independent contractors is narrowly construed to favor application of the Act.8 This was not done in this matter.
As noted above, the employer must prove all three of the exemptions in RCW 50.04.140. Not only has the employer failed to prove all three, he is unable to prove even one.
It is clear from the foregoing that the decision denying Ms. Kabrick's claim should be overturned.
Respectfully Submitted this 2ndof October 2000.
The Law Offices of Thomas L. Doran
By: Thomas L. Doran, WSBA# 11250
2In re All-State Constr. Co. V. Gordon1 70 Wn.2d 657, 665, 425 P.2d 16 (1967) (citing In re Persons Employed at St. Paul &Tacoma Lumber Co., 7 Wn.2d 580, 110 P.2d 877 (1941)).
3Penick V. Employment Sec. Dept., 82 Wn. App. 30, 917 P.2d 136 (1996); Miller V. Employment Sec. Dept., 3 Wn. App. 503 505, 476 P.2d 138 (1970).
5This is a requirement of RCW 50.04.140(1). Penick supra, page 7.
6See finding of fact #6.
7penick, supra, page 31
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