\
COLORADO COURT OF APPEALS
______________________________________________________________________________
Court of Appeals No.: 07CA2284
Industrial Claim Appeals Office of the State of Colorado
DD No. 11284-2007
______________________________________________________________________________
Long View Systems Corporation USA,
Petitioner,
v.
Industrial Claim Appeals Office of the State of Colorado and Gino Lucero,
Respondents.
______________________________________________________________________________
ORDER SET ASIDE AND CASE
REMANDED WITH DIRECTIONS
Division I
Opinion by: JUDGE TERRY
Hawthorne and Rovira*, JJ., concur
Announced: October 30, 2008
______________________________________________________________________________
Sherman & Howard L.L.C., Heather Vickles, Brooke Colaizzi, Denver, Colorado,
for Petitioner
John W. Suthers, Attorney General, Laurie Rottersman, Assistant Attorney
General, Denver, Colorado, for Respondent Industrial Claim Appeals Office
No Appearance for Respondent Gino Lucero
*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2008.
In this unemployment compensation case, petitioner, Long
View Systems Corporation USA (Long View), seeks review of an
order of the Industrial Claim Appeals Office (Panel) affirming a
hearing officer’s decision that services performed for Long View by
Gino Lucero (Lucero) and other similarly situated individuals
constituted “employment” under the Colorado Employment Security
Act, sections 8-70-101 to -143, C.R.S. 2008. We set aside the
Panel’s order and remand for additional findings.
Lucero signed a “Consulting Services Agreement” with Long
View, in which he agreed to provide computer and information
systems operating and consulting services. The agreement provided
that Lucero’s work would commence on January 2, 2007, “and may
end as late as March 31, 2007.” Lucero was assigned by Long View
to work for one of its clients, Anadarko Petroleum (Anadarko). Long
View paid Lucero $18 per hour for his work, and Lucero averaged
forty hours of work per week.
Following Lucero’s completion in April 2007 of work under the
consulting agreement, he filed a claim for unemployment benefits.
In July 2007, a deputy issued a decision concluding that under
section 8-70-115, C.R.S. 2008, Lucero and other similarly situated
workers were engaged in “employment” with Long View.
Accordingly, Long View was responsible for reporting wages paid to
all workers in Lucero’s class and for paying unemployment
insurance taxes on those workers.
Long View appealed the deputy’s decision. Following a
hearing, the hearing officer found that “[b]ased on a totality of the
facts . . . direction and control existed in [Lucero’s] performance of
services.” The hearing officer also found there was “no evidence
that [Lucero] did work for other companies during [the time he
worked for Long View].” Accordingly, the hearing officer affirmed
the deputy’s decision that, under the statutory scheme, Lucero was
employed by Long View.
Long View then sought administrative review of the hearing
officer’s decision. The Panel first concluded, contrary to Long View’s
contention, that the consulting agreement did not create a
rebuttable presumption of an independent contractor relationship.
The Panel further concluded that the hearing officer’s findings were
not contrary to the weight of the evidence, and that, although the
evidence of Lucero’s alleged independence was conflicting and
subject to contrary inferences, there was “no error in the conclusion
that [Lucero] was not an independent contractor and that he was in
covered employment.”
I.
Long View contends the Panel erred in affirming the hearing
officer’s decision that Lucero was engaged in “employment” under
the statutory scheme. We agree, and therefore set aside the Panel’s
decision and remand for additional findings.
A. Applicable Law
Under section 8-70-115(1)(b), C.R.S. 2008, services performed
by an individual for another are deemed to be “employment” unless
the putative employer can demonstrate both that (1) the individual
is free from control and direction in the performance of the service,
both under the contract and in fact, and (2) the individual is
customarily engaged in an independent trade, occupation,
profession, or business related to the service performed. Speedy
Messenger & Delivery Serv. v. Indus. Claim Appeals Office, 129 P.3d
1094, 1096 (Colo. App. 2005).
The statute places the burden of proof on the putative
employer to demonstrate that both conditions exist. See id.; see
also Home Health Care Prof’ls v. Colo. Dep’t of Labor & Employment,
937 P.2d 851, 853 (Colo. App. 1996). The determination as to
whether a putative employer has met this burden is a question of
fact, and we will not disturb the Panel’s determination on appeal if
it is supported by substantial evidence. See Allen Co. v. Indus.
Comm’n, 762 P.2d 677, 680 (Colo. 1988); Locke v. Longacre, 772
P.2d 685, 686 (Colo. App. 1989).
B. Consulting Agreement
Long View contends the consulting agreement created a
rebuttable presumption of an independent contractor relationship.
We disagree.
Under section 8-70-115(1)(c), C.R.S. 2008, a putative employer
may “evidence” the “control and direction” and “independent trade”
conditions of subsection (1)(b) by producing a written document,
signed by both parties, that satisfies the applicable enumerated
factors demonstrating those conditions. See Speedy Messenger,
129 P.3d at 1096; see also § 8-70-115(1)(d), C.R.S. 2008 (document
may satisfy the requirements of subsection (1)(c) if it demonstrates,
by a preponderance of the evidence, the existence of the factors that
are appropriate to the parties' situation). Under section 8-70-
115(1)(c), a written document, signed by both the putative employer
and putative employee, will evidence that the latter is engaged in an
independent trade, occupation, profession, or business and is free
from control in the performance of the service if the document does
not:
(I) Require the individual to work exclusively for the person for
whom services are performed; except that the individual may
choose to work exclusively for the said person for a finite
period of time specified in the document;
(II) Establish a quality standard for the individual; except that
such person can provide plans and specifications regarding
the work but cannot oversee the actual work or instruct the
individual as to how the work will be performed;
(III) Pay a salary or hourly rate but rather a fixed or contract
rate;
(IV) Terminate the work during the contract period unless the
individual violates the terms of the contract or fails to produce
a result that meets the specifications of the contract;
(V) Provide more than minimal training for the individual;
(VI) Provide tools or benefits to the individual; except that
materials and equipment may be supplied;
(VII) Dictate the time of performance; except that a completion
schedule and a range of mutually agreeable work hours may
be established;
(VIII) Pay the individual personally but rather makes checks
payable to the trade or business name of the individual; and
(IX) Combine his business operations in any way with the
individual’s business, but instead maintains such operations
as separate and distinct.
§ 8-70-115(1)(c)(I)-(IX), C.R.S. 2008; see also Speedy Messenger,
129 P.3d at 1097 (setting forth factors that satisfy requirements of §
8-70-115(1)(c)).
We perceive no error in the Panel’s conclusion that the
consulting agreement Lucero signed did not create a rebuttable
presumption under the statute. As the Panel noted, the agreement
did not satisfy the factor set forth in section 8-70-115(1)(c)(III)
because Long View paid Lucero an hourly rate rather than a fixed or
contract rate. Also, the agreement did not satisfy the factor set
forth in section 8-70-115(1)(c)(VIII) because Long View paid Lucero
personally rather than paying him through a trade or business
name.
Long View argues that the Panel should have disregarded
these two factors because they were “not appropriate to the parties’
situation,” and contends that (1) it “discussed and negotiated the
hourly rate” with Lucero, and (2) “[a] business name is largely a
formality.” However, we disagree that these assertions, even if true,
rendered the two factors inappropriate to the parties’ situation in
considering whether the writing created the statutory rebuttable
presumption.
In its reply brief, Long View also asserts that it is “common
practice” in the information technology industry to pay contractors
at an hourly rate and that “many contractors work in their
[personal] name only.” However, it did not make these assertions,
or present any evidence supporting them, at the hearing.
Accordingly, we will not consider them on appeal. See Goodwill
Indus. v. Indus. Claim Appeals Office, 862 P.2d 1042, 1047 (Colo.
App. 1993).
Although we agree with Long View’s assertion that a writing
need not necessarily satisfy all nine factors enumerated in
subsection (1)(c) to create the rebuttable presumption, it must
satisfy those factors that are applicable or potentially applicable.
See Speedy Messenger, 129 P.3d at 1096 (putative employer “may
produce a written document that satisfies all the applicable factors
set forth in [section] 8-70-115(1)(c)”). Contrary to Long View’s
contention, a factor is not rendered inappropriate or inapplicable to
the circumstances simply because an agreement fails to satisfy the
factor, or because the factor is alleged to be a mere “formality.”
Because the consulting agreement did not satisfy two
appropriate factors under section 8-70-115(1)(c), we perceive no
error in the Panel’s conclusion that the agreement did not establish
a rebuttable presumption of an independent contractor relationship
under section 8-70-115(2). See Speedy Messenger, 129 P.3d at
1097.
C. “Independent Trade” and “Control and Direction”
Long View also contends the record and the hearing officer’s
evidentiary findings do not support the ultimate findings regarding
the issues of “independent trade” and “control and direction.” We
agree, and therefore conclude that the matter must be remanded for
additional findings.
1. Independent Trade
The hearing officer made no express determination whether
Long View had shown, under section 8-70-115(1)(b), that Lucero
was customarily engaged in an independent trade, occupation,
profession, or business related to the services performed under the
consulting agreement. However, to the extent the hearing officer
implicitly determined Long View failed to satisfy this condition, we
conclude that the limited evidentiary findings failed to support such
a determination and that additional findings are necessary.
The statutory requirement that the worker be “customarily
engaged” in an independent trade or business is designed to assure
that a worker, whose income is almost wholly dependent upon
continued employment by a single employer, is protected from the
vagaries of involuntary unemployment, irrespective of the worker’s
status as a “servant” or as an “independent contractor” under the
common law. See Speedy Messenger, 129 P.3d at 1096; see also
Home Health Care Prof’ls, 937 P.2d at 853; Carpet Exch. of Denver,
Inc. v. Indus. Claim Appeals Office, 859 P.2d 278, 282 (Colo. App.
1993).
Here, the hearing officer’s only finding addressing the
“independent trade” issue was that there was no evidence Lucero
had worked for other companies during the three-month period he
worked under the consulting agreement.
We acknowledge decisions holding that, to be engaged in an
independent trade, occupation, profession, or business, workers
must actually and customarily provide similar services to others at
the same time they work for the putative employer. See Speedy
Messenger, 129 P.3d at 1098; Barge v. Indus. Claim Appeals Office,
905 P.2d 25, 27 (Colo. App. 1995); Carpet Exch. of Denver, 859 P.2d
at 282. However, none of these decisions involved circumstances
such as those presented here, where a worker entered into an
agreement to work for a relatively short period of time.
We agree with the Speedy Messenger division that, to satisfy
the independent trade condition, a worker must be engaged in a
separate trade or business venture, other than provision of services
for the putative employer. Speedy Messenger, 129 P.3d at 1098.
However, in cases involving short-term contracts for services, we
are not persuaded that a lack of contemporaneous work for others
is dispositive of whether a worker maintained an independent trade
or business. See 8-70-115(1)(c)(I) (fact that “individual may choose
to work exclusively for [the person for whom services are performed]
for a finite period of time specified in [a written] document” does not
evidence “control and direction” and does not impede finding that
individual is engaged in “independent trade, occupation, profession,
or business”); see also Dep’t of Labor v. Fox, 697 A.2d 478, 485-86
(Md. 1997) (listing contemporaneous service provided to more than
one unrelated employer as only one of eight statutory factors used
in determining whether individual was customarily engaged in an
independent business or occupation).
Thus, we conclude the lack of evidence that Lucero also
performed similar services for others during the three-month period
of the consulting agreement was insufficient to support a
determination that Lucero was not customarily engaged in an
independent trade, occupation, profession, or business. Cf. Locke,
772 P.2d at 687 (affirming determination that, during period
claimant was performing services under three-year contract for
putative employer, she was not engaged in independent trade or
business where evidence showed that contract with putative
employer practically prohibited claimant’s conduct of any
independent profession or business).
Because the hearing officer failed to make any other
evidentiary findings regarding the “independent trade” issue, we
remand to the Panel, with instructions to remand to the hearing
officer, for additional findings on this issue. In making those
findings, the hearing officer should consider whether Lucero (1)
engaged in a trade, occupation, profession, or business that existed
separate and apart from any relationship with a particular employer
and that would survive the termination of that relationship; and (2)
by reason of his skill, engaged in his own economic enterprise such
that he bore the risk of his own unemployment. See Midland Atlas
Co. v. South Dakota Dep’t of Labor, 538 N.W.2d 232, 235-36 (S.D.
1995).
In addition to the factors listed in section 8-70-115(1)(c), other
relevant factors include whether Lucero maintained a business
card, business listing, business address, or business telephone
number. See Speedy Messenger, 129 P.3d at 1098; Barge, 905 P.2d
at 27. Additional pertinent factors may include whether Lucero (1)
had a financial investment such that he could be vulnerable to
suffering a financial loss in connection with performance of the
service, (2) had his own equipment needed to perform the service,
(3) determined the price of the service to be performed, (4) employed
others to perform the service, and (5) carried his own liability or
workers’ compensation insurance. See Fox, 697 A.2d at 485-86.
The hearing officer has discretion to take additional evidence
on these issues in order to make the required supplemental
findings.
2. Control and Direction
Long View contends the hearing officer’s evidentiary findings
do not support the determination that Long View had the right to
direct and control Lucero’s work. We agree.
a. Whether Long View Controlled Lucero’s Work
As a preliminary matter, we conclude that, in the absence of a
showing that Anadarko was Long View’s agent, evidence that
Anadarko controlled Lucero’s work is not dispositive of whether
Long View controlled his work.
The hearing officer specifically found that (1) Anadarko
oversaw Lucero’s work, (2) the tools used by Lucero were provided
by Anadarko, and (3) the hours or time frames Lucero was required
to work were agreed to by Lucero and Anadarko. These findings,
which are supported by the record, indicate that it was Anadarko,
and not Long View, that directed or controlled Lucero’s work. The
findings are also consistent with language in the consulting
agreement, which specifically provided that “Long View shall not
oversee the actual work or instruct [Lucero] as to how the work
must be performed.” Additionally, the hearing officer found that
Lucero was not required to work exclusively for Long View, and it
was undisputed that Long View did not provide any training to
Lucero.
Although the consulting agreement contained a limited non-
competition provision, that provision did not affect the manner in
which Lucero performed his work during the term of the agreement,
and we are not persuaded that it conclusively demonstrated
Lucero’s status. See Colo. Supply Co. v. Stewart, 797 P.2d 1303,
1305 (Colo. App. 1990) (concluding that section 8-2-113, C.R.S.
2008, addressing non-compete agreements, applies to independent
contractors); see also Electrolux Corp. v. Commonwealth, 705 A.2d
1357, 1361 (Pa. Commw. Ct. 1998) (mere existence of non-compete
clause did not outweigh other factors showing lack of control).
Thus, although the hearing officer determined that “direction
and control existed in [Lucero’s] performance of services,” the
overwhelming evidence, as reflected in the hearing officer’s own
findings of evidentiary fact, established that such direction and
control came primarily from Anadarko rather than Long View.
Moreover, insofar as the hearing officer sought to impute or
attribute Anadarko’s direction and control over Lucero to Long View
based upon some form of agency relationship between the two
entities, we find no evidence in the record to support the existence
of such a relationship. Consequently, we perceive no basis for
attributing Anadarko’s direction and control over Lucero to Long
View. See Freedom Labor Contractors of Florida, Inc. v. State, 779
So. 2d 663, 665 (Fla. Dist. Ct. App. 2001) (given lack of record
evidence to support agency relationship between putative employer
and its customers, presumed control by customer over mode or
details of claimant’s work would not be imputed to putative
employer).
b. Whether Control by Anadarko Precludes Application of Section
8-70-115(1)(b)
Section 8-70-115(1)(b) provides a mechanism for a putative
employer to demonstrate that it is not, in fact, an employer. As
relevant here, it states:
Notwithstanding any other provision of this subsection (1) . . .
service performed by an individual for another shall be deemed
to be employment . . . unless and until it is shown to the
satisfaction of the division that such individual is free from
control and direction in the performance of the service, both
under his contract for the performance of service and in fact;
and such individual is customarily engaged in an independent
trade, occupation, profession, or business related to the
service performed.
We have already concluded that additional findings must be
made regarding whether Lucero was customarily engaged in an
independent trade, occupation, profession, or business related to
the services performed under the consulting agreement. Because it
may arise on remand, we address the further question that would
necessarily arise if he were found to be so engaged: whether Long
View has met its burden under section 8-70-115(1)(b) of proving
that Lucero was not an employee.
We requested supplemental briefing to allow the parties to
address the following question:
Assuming a putative employer has satisfied its burden under
section 8-70-115(1)(b) . . . of proving that the claimant is
customarily engaged in an independent trade, occupation,
profession, or business related to the services performed, does
the putative employer satisfy its further burden under that
section to prove that the claimant is free from control and
direction in the performance of the service, by proving that the
putative employer did not control or direct the performance of
the service, even if a third party does provide such control or
direction?
We conclude that the plain language of that section does not
support a conclusion that control and direction over a putative
employee by someone other than the putative employer renders the
situation one of employment, unless the person providing control
and direction is shown to be an agent of the putative employer.
Thus, given the absence of evidence that Anadarko – which
was found to provide control and direction to Lucero – was Long
View’s agent in so doing, the mere fact that it did so would not
require a finding that Lucero was an employee.
We are not persuaded otherwise by the Division of
Employment and Training’s citation to section 8-73-105.5, C.R.S.
2008. That statute addresses temporary help contracting firms.
The Division argues that the statute establishes that Long View
subjected Lucero to direction and control, and he was therefore
Long View’s employee. However, the Division did not raise this
statute before the hearing officer or the Panel, and did not present
evidence that Long View was a temporary help contracting firm.
Even if it had, however, the potential applicability of section 8-73-
105.5 to Long View is not conclusive as to whether Lucero was an
employee, and would not, by itself, preclude Long View from proving
a defense under section 8-70-115(1)(b).
We therefore remand for the Panel to direct the hearing officer
to make findings as to the applicability of section 8-70-115(1)(b), in
accordance with this opinion. The hearing officer has discretion
whether to take additional evidence pertinent to this determination.
II.
In light of our decision, we need not address Long View’s
contention that the hearing officer’s decision was based solely upon
unreliable hearsay evidence in violation of the rule set forth in
Industrial Claims Appeals Office v. Flower Stop Marketing Corp., 782
P.2d 13, 18 (Colo. 1989).
The order is set aside, and the case is remanded to the Panel
with instructions to remand to the hearing officer for additional
findings, as specified herein.
JUDGE HAWTHORNE and JUSTICE ROVIRA concur.