This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
Terra Firma Estates, Inc.,
Department of Employment and Economic Development,
Filed December 6, 2006
Department of Employment and Economic Development
File No. 9940 05
Lee B. Nelson, Linda A. Holmes, Minnesota Department of Employment and Economic Development, First National Bank Building, 332 Minnesota Street, Suite E200, St. Paul, MN 55101-1351 (for respondent)
Considered and decided by Willis, Presiding Judge; Peterson, Judge; and Ross, Judge.
U N P U B L I S H E D O P I N I O N
In this appeal from a decision of an unemployment-law judge (ULJ) that services performed for relator by two individuals were performed in employment rather than as independent contractors, relator argues that the ULJ erred in concluding that (a) roofing materials are a main expense related to the roofing work that the two individuals performed for relator; and (b) the evidence does not support the ULJ’s determination that the individuals do not meet all nine statutory conditions required to show that they are independent contractors. We affirm.
Relator Terra Firma Estates, Inc. is a roofing-contractor business for which Stephan Allie and Cynthia James do roofing jobs. Allie and James use the business names Cynthia James Construction and Stephan Ross Allie, Inc., and both businesses have federal tax-identification numbers and carry their own liability insurance. James does administrative work, including soliciting general contractors for jobs, invoicing, and assigning crews to jobs. James works from a home office and does not do roofing work at job sites. Allie works at job sites; he supervises crew members, makes sure that work is done according to code, and also does some roofing work himself. Terra Firma is one of several contractors for which James and Allie do jobs.
James testified that when doing a job for Terra Firma, she would negotiate a price with Edwin Maki, Terra Firma’s president, based on the size and pitch of the roof and the type of work that was done. The agreements between James and Allie and Terra Firma were oral. James and Allie were paid based on invoices submitted to Terra Firma for work completed.
James and Allie own equipment that they use in their roofing business, including air compressors, tools, ladders, scaffolding, dump trucks, trailers for debris removal, and a flatbed trailer for hauling equipment. Terra Firma provided the materials, such as tar paper, shingles, and plywood, for each roofing job. If additional materials were needed, James and Allie would buy them and submit an invoice to Terra Firma for reimbursement.
The Department of Employment and Economic Security issued a determination that employer/employee relationships existed between Terra Firma and Allie and James. Terra Firma appealed to a ULJ, and following an evidentiary hearing, the ULJ affirmed the department determination. Terra Firma filed a request for reconsideration. The ULJ modified some findings of fact but affirmed the determination that employment relationships existed. This certiorari appeal followed.
D E C I S I O N
This court may
affirm the ULJ’s decision, remand it for further proceedings, or reverse or
modify it if the relator’s substantial rights “may have been prejudiced because
the findings, inferences, conclusion, or decision are
. . . affected by . . . error of law” or
“unsupported by substantial evidence in view of the entire record as
submitted.” Minn. Stat. § 268.105, subd.
7(d) (Supp. 2005). We view the
factual findings in the light most favorable to the decision. Lolling
v. Midwest Patrol, 545 N.W.2d 372, 377 (
[W]hether a worker is an employee or independent contractor is a mixed question of law and fact. This mixed standard is similar to that applied in employee misconduct cases, in which determining whether the evidence supports the findings of fact is a question of fact, but then determining whether the facts rise to the level of misconduct is a legal issue upon which this court exercises independent judgment.
. . . .
. . . When the facts are undisputed, we move directly to step two, and the determination of whether an employment relationship exists is purely a legal question.
v. Austin Daily Herald, 552 N.W.2d 45, 47-48 (
Minn. Stat. § 268.035, subd. 9 (2004), states:
A worker doing commercial or residential building construction or improvement, in the public or private sector, performing services in the course of the trade, business, profession, or occupation of the employer, shall be considered an employee and not an “independent contractor” unless the worker meets all the following conditions:
(1) maintains a separate business with the independent contractor’s own office, equipment, materials, and other facilities;
(2) holds or has applied for a federal employer identification number;
(3) operates under contracts to perform specific services or work for specific amounts of money under which the independent contractor controls the means of performing the services or work;
(4) incurs the main expenses related to the service or work that the independent contractor performs under contract;
(5) is responsible for the satisfactory completion of work or services that the independent contractor contracts to perform and is liable for a failure to complete the work or service;
(6) receives compensation for work or service performed under a contract on a commission or per job or competitive bid basis and not on any other basis;
(7) may realize a profit or suffer a loss under contracts to perform work or service;
(8) has continuing or recurring business liabilities or obligations; and
(9) the success or failure of the independent contractor’s business depends on the relationship of business receipts to expenditures.
Under the plain language of this statute, if Allie and James do not meet all nine of these conditions, they are considered to be employees, rather than independent contractors. The ULJ considered whether Allie and James met all nine conditions with respect to the jobs they did for Terra Firma and found that
Allie and James use their own equipment when performing roofing services for Terra Firma. This equipment includes a dump truck and two trailers, ladders, air compressors and attachments, and other hand tools.
All other materials required for the roofing jobs are provided by Terra Firma. If Allie and James need to purchase any additional material for the completion of a job, Allie and James bill Terra Firma for the additional items purchased.
These findings are supported by substantial evidence. James described the equipment that she and Allie own and use when doing roofing work, and Terra Firma’s president testified that Terra Firma paid for 95% of the materials for each job and that if additional materials were needed, Terra Firma reimbursed James and Allie for their cost.
Based on these findings, the ULJ determined that because Terra Firma provides all of the materials used in the jobs completed by Allie and James and because the materials are among the main expenses related to the work that Allie and James performed for Terra Firma, “Allie and James do not meet the requirements for being an independent contractor and are considered to be employees.”
Terra Firma argues that the statute does not define “main expenses” and that the testimony before the ULJ did not clarify what materials are main expenses of a roofing job. But Terra Firma has not provided any plausible definition of the “main expenses” related to a roofing job that does not include the roofing materials, and James testified that the materials for a job are on the job site when she and Allie arrive, and they do not buy the materials. Because we cannot conceive of a definition of the “main expenses” related to a roofing job that does not include the roofing materials, we conclude that the ULJ did not err in concluding that Allie and James did not meet the statutory condition that they incur the main expenses related to the roofing work that they performed under their contracts with Terra Firma and, therefore, under Minn. Stat. § 268.035, subd. 9, they are considered to be employees of Terra Firma, rather than independent contractors.