Court of Appeals of Missouri, Western District, First Division
Appeal from the Labor and Industrial Relations Commission
Before: Mark D. Pfeiffer, Presiding Judge, and Lisa White Hardwick and Karen King Mitchell, Judges
Karen King Mitchell, Judge
Gateway Taxi Management d/b/a Laclede Cab Company (Laclede) appeals the Missouri Labor and Industrial Relations Commission's decision that taxicab drivers "performed services for wages in employment" for Laclede. Laclede raises two points on appeal. In its first point, it contends that the Commission erred in applying the section 288.034.5 presumption to conclude that Laclede employed taxicab drivers and that fares paid by customers to drivers were subject to unemployment taxation in that section 288.090.2 expressly limits the imposition of unemployment taxation to wages paid by employers, and the overwhelming weight of the evidence does not support the conclusion that Laclede paid drivers anything, much less wages, given that the undisputed testimony established that the funds at issue were paid to drivers by taxicab customers, not by Laclede.
In its second point, Laclede alternatively contends that the Commission erred in finding that the taxicab drivers are employees in that the overwhelming weight of the evidence establishes that the drivers are independent contractors in that the factors weigh almost uniformly in favor of independent contractors, including particularly the facts that Laclede does not retain the right to control the manner and means by which drivers perform their jobs and does not exercise pervasive control exceeding to any significant degree the scope of control imposed by the Missouri legislature in the Metropolitan Taxicab Commission Vehicle for Hire Code.
Factual and Procedural Background
Laclede operates a taxi dispatch service in St. Louis, Missouri. The cab drivers who use the dispatch service may lease cabs from Gateway Taxi Service or use their own vehicles. There are two different leasing arrangements available to drivers who lease cabs from Gateway: shift and open shift. Shift drivers pay a daily fee (known as a "pro fee") to lease the cab for twelve-hour shifts. They also pick up and drop off the cabs for a designated shift (4:00 a.m. until 4:00 p.m. or 4:00 p.m. until 4:00 a.m.). Open shift drivers pay a higher pro fee than shift drivers, and they lease their cabs for a 24-hour period. Open shift drivers may work hours of their choosing and are not limited to any particular shift. Shift drivers may choose the hours they work during the shift for which they lease the vehicle, although they are obviously limited to working the hours within the lease period. Drivers who use their own vehicles pay a flat weekly fee to Laclede. Regardless of which lease arrangement the drivers choose or whether the drivers use their own vehicles, the drivers keep all of the fares they receive; they do not share any fares with Laclede. Furthermore, the drivers do not provide Laclede with any information about the fares they receive. The only payments drivers make to Laclede are security deposits, the pro fee, and a ten percent charge for processing of credit card charges and cashing in of vouchers provided by customers who have ongoing arrangements with Laclede. Laclede pays for insurance and maintenance of the vehicles, and the drivers pay for cleaning and gasoline for the vehicles.
On May 10, 2012, a Commission deputy determined that certain taxicab drivers "performed services in employment as defined in Section 288.034" for Laclede, and that the drivers "received remuneration for services which constitutes wages as defined in Section 288.036." The deputy further determined that "[i]t has not been shown to the satisfaction of the Division that these individuals are independent contractors."
On May 22, 2012, Laclede timely appealed the deputy's determination, contending as follows:
Gateway disputes the Division's findings that those who have performed services as taxi cab drivers since January 1, 2009, have performed services in employment as defined in section 288.034 of the Missouri Employment Security Law. Gateway maintains its position that the aforementioned individuals are not employees, but are instead, independent contractors.
On August 27, 2012, the Appeals Tribunal held a hearing on Laclede's appeal. Four witnesses testified at the hearing: David McNutt, chief executive officer of Laclede; Gregory Parent and Mario Berry, former cab drivers for Laclede; and Renee Rodrique, the deputy who made the initial determination of tax liability in this case. In addition to the testimony of the four witnesses, other evidence before the Commission included: the Metropolitan St. Louis Taxicab Commission's Vehicle for Hire Code, the code of regulations governing provision of taxi service in St. Louis; a record of Field Reports of Wages for the relevant periods; the Worker Relationship Questionnaire, a form provided by the Division and completed by Laclede's controller; and the independent contractor agreement, which Laclede required the drivers to sign.
On October 9, 2012, an Appeals Tribunal reversed the deputy's determination, finding that the drivers "did not perform services for wages in employment" by Laclede. Specifically, the Appeals Tribunal determined that the remuneration received by the drivers constituted "wages" under section 288.036, but that the drivers were independent contractors.
On October 26, 2012, the Division of Employment Security timely appealed the decision of the Appeals Tribunal. The Division contended that the Appeals Tribunal erred in reversing the deputy's determination that the drivers "performed services for „wages' in „employment' by Gateway . . . within the meaning of those terms as defined in Sections 288.034 and 288.036." The parties filed briefs, and the Commission held a hearing. On August 22, 2013, the Commission, in a divided opinion, entered its final decision, reversing the decision of the Appeals Tribunal and finding that the "drivers performed services for wages in employment by Gateway." The Commission's decision became final for purposes of appeal ten days later, under section 288.200.2. On September 19, 2013, Laclede timely filed its notice of appeal with the Commission.
Standard of Review
This court reviews final decisions of the Commission pursuant to section 288.210, which provides:
The court, on appeal, may modify, reverse, remand for rehearing, or set aside the decision of the commission on the following grounds and no other:
(1) That the commission acted without or in excess of its powers;
(2) That the decision was procured by fraud;
(3) That the facts found by the commission do not support the award; or
(4) That there was no sufficient competent evidence in the record to warrant the making of the award.
"Decisions of the Commission „which are clearly the interpretation or application of the law, as distinguished from a determination of facts, are not binding upon us and fall within our province of review and correction.'" K & D Auto Body, Inc. v. Div. of Emp't Sec., 171 S.W.3d 100, 102 (Mo. App. W.D. 2005) (quoting Merriman v. Ben Gutman Truck Serv., Inc., 392 S.W.2d 292, 297 (Mo. 1965)). "„We independently review such questions without giving any deference to the Commission's conclusions.'" Id. at 103 (quoting CNW Foods, Inc. v. Davidson, 141 S.W.3d 100, 102 (Mo. App. S.D. 2004)). "Moreover, where the Commission's „finding of ultimate fact is reached by the application of rules of law instead of by a process of natural reasoning from the facts alone, it is a conclusion of law and subject to our reversal.'" Id. (quoting Merriman, 392 S.W.2d at 297).
Accordingly, in reviewing the correctness of the Commission's legal conclusion that, based on the facts found by the Commission, the drivers in question were employees . . . rather than independent contractors, we exercise our own independent judgment and do not defer to the Commission's conclusion, including the way in which it arrived at that conclusion by balancing, weighing, and applying the various facts it found.
On the other hand, we treat the Commission's factual findings deferentially. Id.; § 288.210. When reviewing the Commission's factual findings, we do not substitute our judgment for that of the Commission. K & D Auto Body, 171 S.W.3d at 103. "Rather, „[a]bsent fraud, the Commission's factual findings are conclusive on appeal if they are supported by competent and substantial evidence upon the whole record and are not clearly against the overwhelming weight of the evidence.'" Id. (quoting CNW Foods, 141 S.W.3d at 102).
"Pursuant to the Missouri Employment Security Law, [sections] 288.010-.390, employers are required to make unemployment tax contributions for their employees, but not for independent contractors." Nat'l Heritage Enters., Inc. v. Div. of Emp't Sec., 164 S.W.3d 160, 166 (Mo. App. W.D. 2005); §§ 288.020.1 and 288.034.5. Laclede argues that the Commission erred in finding that the taxicab drivers were its employees under section 288.034.5. Section 288.034 defines "employment." Subsection 5 of § 288.034 provides:
Service performed by an individual for remuneration shall be deemed to be employment subject to this law unless it is shown to the satisfaction of the division that such services were performed by an independent contractor. In determining the existence of the independent contractor relationship, the common law of agency right to control shall be applied. The common law of agency right to control test shall include but not be limited to: if the alleged employer retains the right to control the manner and means by which the results are to be accomplished, the individual who performs the service is an employee. If only the results are controlled, the individual performing the service is an independent contractor.
The first sentence of section 288.034.5 creates "a presumption that service performed by an individual for remuneration is „employment' subject to Missouri's Unemployment Law. The presumption is overcome by satisfying the Division „that such services were performed by an independent contractor.'" Higgins v. Mo. Div. of ...