Idaho’s High Court Analyzes 15 Factors for Determining Whether a Worker is an Independent Contractor or an Employee

Excell Constr., Inc., v. Idaho Dep’t of Commerce and Labor, 145 Idaho 783, 186 P.3d 639 (2008)

This appeal arises out of an Idaho Industrial Commission finding that certain sheetrock workers hired by Excell Construction were employees rather than independent contractors.  At issue was whether Excell would be required to pay $6,353 in unemployment insurance taxes and penalties.  On appeal, the Idaho Supreme Court held the workers were independent contractors and reversed the Commission’s finding.

Excell gave the sheetrock workers the option of becoming employees or working as independent contractors.  Later, the Idaho Department of Commerce and Labor audited Excell and determined the workers who had elected to be independent contractors were actually employees and were subject to unemployment insurance taxes.  For the workers to qualify as independent contractors, Excell would have had to satisfy the two-part test in Idaho Code § 72-1316(4) and show (a) that the workers had been and would continue to be free from control or direction in the performance of their work, both under their contracts and in fact, and (b) that they were engaged in an independently established trade, occupation, profession, or business.

In analyzing the second prong of the test, the court discussed 15 factors listed in Idaho Administrative Code § 9.01.35.112.04 used to determine whether the workers were engaged in an independently established business. Those factors are:

1. Skills, qualifications, and training required for the job;
2. Method of payment, benefits, and tax withholding;
3. Right to negotiate agreements with other workers;
4. Right to choose sales techniques or other business techniques;
5. Right to determine hours;
6. Existence of outside businesses or occupations;
7. Special licensing or regulatory requirements for performance of work;
8. Whether the work is part of the employer’s general business;
9. The nature and extent of the work;
10. The term and duration of the relationship;
11. The control of the premises;
12. Whether the worker has the authority to hire subordinates;
13. Whether the worker owns or leases major items of equipment or incurs substantial unreimbursed expenses
14. Whether either party would be liable to the other party upon peremptory or unilateral termination of the business relationship; and
15. Other factors which, viewed fairly in light of all the circumstances in a given case, may indicate the existence or lack of an independently established trade occupation, profession or business

The court engaged in a very fact-driven analysis of each factor and ultimately found the sheetrock workers were independent contractors.  The court did not give one factor more weight than another, and criticized the Commission for not analyzing every factor.  The court ultimately found that the workers in question satisfied enough of the 15 factors and therefore concluded the workers were independent contractors.  Excell was not required to pay the $6,353 in unemployment insurance taxes and penalties and was awarded its costs and attorney fees on appeal.

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