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Vermont Institute of Community Involvement, Inc. v. Department of Employment Security

Supreme Court of Vermont
Sep 1, 1981
140 Vt. 94 (Vt. 1981)

Summary

holding that a college was liable for unemployment fund contributions for its adjunct faculty who taught courses within the college's business territory, but at locations often not chosen by the college and rarely provided by it

Summary of this case from Bay Constr. Co. v. Dolan

Opinion

No. 183-80

Opinion Filed September 1, 1981

1. Unemployment Compensation — Employer Contributions — Liability

For an employer to satisfy the provision exempting service performed by an individual for wages from assessment for unemployment compensation contributions, all three conditions of the statutory test (customarily called the "ABC" test) must be met, and an inability to satisfy any one will result in the conclusion that the relationship constitutes employment for purposes of the statute. 21 V.S.A. § 1301(6)(B).

2. Unemployment Compensation — Employer Contributions — Liability

Provision of statute exempting service performed by an individual for wages from assessment for unemployment compensation contributions where the individual has been and will continue to be free from control or direction over the performance of services does not require actual control be exercised by the employer; the mere right of control is all that is contemplated. 21 V.S.A. § 1301(6)(B)(i).

3. Unemployment Compensation — Employer Contributions — Liability

Where faculty of college was required to follow an approved course description, teach a certain number of hours, evaluate each student at the course's end, and the college theoretically required each teacher to attend a pre-semester orientation session and three faculty meetings per session, faculty was not free from college's control within the contemplation of statute exempting service performed by an individual for wages from assessment for unemployment compensation contributions where the individual is free from control or direction over performance of services. 21 V.S.A. § 1301(6)(B)(i).

4. Unemployment Compensation — Employer Contributions — Liability

Under provision of statute exempting service performed by an individual for wages from assessment for unemployment compensation contributions where the service performed is either outside the usual course of the business for which the service is performed or is performed outside of all places of business of the enterprise for which the service is performed, the terms "outside the usual course of business" or "outside of all places of business" do not mean simply the home office or headquarters of the company; the places of business include not only those places but also, include the business territory within which it operates, the entire area in which it conducts the business. 21 V.S.A. § 1301(6)(B)(ii).

5. Unemployment Compensation — Employer Contributions — Liability

Where college contended that it was engaged in the business of an educational broker and, as such, not in the business of providing courses, but rather of arranging courses to be provided so that services performed by its faculty were not part of the employer's business nor were they performed within the employer's place of business since the courses were taught in localities away from the home offices, but evidence indicated that college was created to employ teachers, administer educational programs and confer degrees and place of business was to be regarded as including the entire area in which the college conducted its business of educating students, services performed by the college's faculty were within the usual course of the business of the college and conducted within the college's place of business for purposes of provision exempting service performed by an individual for wages from assessment for unemployment compensation contributions where the service performed is either outside the usual course of the business for which the service is performed or is performed outside all places of business of the enterprise for which the service is performed. 21 V.S.A. § 1301(6)(B)(ii).

6. Unemployment Compensation — Employer Contributions — Liability

In order to satisfy provision exempting service performed by an individual for wages from assessment for unemployment compensation contributions where the individual performing the service is customarily engaged in an independently established trade, occupation, profession or business, the employees must be independently established providing the same or similar services as they provide for the employer. 21 V.S.A. § 1301(6)(B)(iii).

7. Unemployment Compensation — Employer Contributions — Liability

Teachers who were employed by college, but were not employed as full-time teachers and were otherwise engaged primarily in nonteaching trades, but were not independently established providing the same or similar services as they provided for employer, were not regularly engaged in independently established occupations within meaning of provision exempting service performed by an individual for wages from assessment for unemployment compensation contributions where the individual performing the service is customarily engaged in an independently established trade, occupation, profession or business. 21 V.S.A. § 1301(6)(B)(iii).

Appeal from levy of assessment for contributions owed to State Unemployment Compensation Fund. Employment Security Board, Huber and Wall, members, present. Affirmed.

Bing, Bauer Gravel, and Blodgett McCarren, Burlington, for Plaintiff.

Matthew R. Gould, Montpelier, for Defendant.

Present: Larrow, Billings, Hill and Underwood, JJ., and Daley, J. (Ret.), Specially Assigned


Vermont Institute of Community Involvement, Inc., now know as Burlington College, appeals an assessment levied by the Department of Employment Security pursuant to 21 V.S.A. §§ 1329, 1330 for contributions owed to the State Unemployment Compensation Fund.

The College employs eleven full-time, mainly administrative staff, for whom the College contributes to the fund. This controversy involves the College's employment relationship with its faculty members, who are primarily adjunct and have written contracts with the school. Time and place of instruction is set without the College's supervision, and rarely at a location provided by the employer. A minimum number of hours of instruction is required for each course. The College's articles of association indicate that the school was created to: receive and administer funds for education; employ qualified persons to teach and administer academic programs; and confer degrees as authorized by the Board of Education.

Faculty members are paid according to the size of student enrollment in their classes. Prior to approving a course, the College requires a faculty member to submit a course description and resume of qualifications for teaching. At the end of a course, a faculty member must submit a written evaluation of each student's work.

21 V.S.A. § 1326 requires employers to contribute to the State's Unemployment Compensation Fund a sum equivalent to a certain percentage of the taxable wages paid to employees. The College first became aware in 1973 that it might be liable for contributions based upon the remuneration paid to its adjunct faculty members. However, following correspondence in 1973 and 1974, the Department of Employment Security concluded, although not in a formal decision, that the services performed for the College by appellant's adjunct faculty members did not constitute " employment" within the meaning of 21 V.S.A. § 1301(6)(B), so the College was not liable for payment. See also 21 V.S.A. § 1301(12). During that time, adjunct faculty members' claims for unemployment compensation benefits were consistently rejected, apparently because the individuals had not performed services in covered "employment."

The Department in 1977 or 1978 reconsidered the issue of the status of the services performed by the College's faculty members and concluded that their work was covered "employment" within the meaning of the Vermont Unemployment Compensation Statute, and that the College consequently was an "employer" within 21 V.S.A. § 1301(5). An audit followed and the Department issued an Assessment for Contribution and Interest which is the subject of this appeal.

The College's initial challenge to the assessment resulted in a finding by the appeals referee that the employer was liable for the amount levied. The Employment Security Board then heard an appeal and sustained that portion of the referee's decision finding the services performed by the adjunct faculty members were covered "employment," and holding the employer liable for payment of contributions. However, in balancing the equities of the case, the Board vacated assessment for the years 1978 and before, based upon the Department's previous assurances that the College would not be liable under Title 21.

One question was certified pursuant to V.R.A.P. 13(d) for our consideration on appeal:

Whether the conclusions of the Vermont Employment Security Board, that the services performed by individuals called adjunct faculty constituted "employment" within the meaning of 21 V.S.A. § 1301(6) and that, accordingly, the appellant was an "employer" within the meaning of 21 V.S.A. § 1301(5), is supported by the record and correct as a matter of law.

I.

A service performed by an individual for wages is deemed employment and thus subjects the employer to the Title 21 assessment unless it can be shown that:

(i) Such individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact; and

(ii) Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

(iii) Such individual is customarily engaged in an independently established trade, occupation, profession or business.

21 V.S.A. § 1301(6)(B). See also In re Bargain Busters, Inc., 130 Vt. 112, 117, 287 A.2d 554 (1972); Vermont Securities, Inc. v. Unemployment Compensation Commission, 118 Vt. 196, 200, 104 A.2d 915 (1954). For an employer to satisfy the provision, all three conditions of this test (customarily called the "ABC" test) must be met, and an inability to satisfy any one will result in the conclusion that the relationship constitutes employment for purposes of the statute. Bluto v. Department of Employment Security, 135 Vt. 205, 208, 373 A.2d 518 (1977); Vermont Securities, Inc., supra, 118 Vt. at 200, 104 A.2d at 917.

The employer in the case at bar, in fact, is unable to satisfy any of the three provisions.

II.

The first provision, 21 V.S.A. § 1301(6)(B)(i), is referred to as the "control test." See In re Bargain Busters, supra, 130 Vt. at 117, 287 A.2d at 558. Appellant would have to prove that the adjunct faculty members are free from the College's control in performing its responsibilities. The statute does not require that actual control be exercised by the employer; the mere right of control is all that is contemplated. Id.

Appellant urges upon the Court the theory that the College's loose structure and innovative organization with maximum independence being given to faculty to structure courses signify that faculty members are free from control. We disagree. While the College may function in a manner assuring great academic freedom, faculty still must follow an approved course description, teach a certain number of hours and evaluate each student at the course's end. The College theoretically requires each teacher to attend a pre-semester orientation session and three faculty meetings per semester, and though not strictly followed, the College retains the right to enforce that requirement. The employer thereby has failed to demonstrate that the faculty is free from the type of control contemplated by 21 V.S.A. § 1301.

III.

With regard to 21 V.S.A. § 1301(6)(B)(ii), the College contends that it is in the business of an educational broker. As such, the school claims that it is not in the business of providing courses, but rather of arranging courses to be provided. Appellant consequently contends that the services performed by the faculty are not part of the employer's business, nor are they performed within the employer's place of business since the courses are taught in localities away from the home offices.

The appellant's articles of association, however, make clear that the College was created to employ teachers, administer educational programs and confer degrees. The College actively participates in performing those tasks and in supervising its employees who are hired to fulfill the College's stated goals. In addition, we stated in In re Bargain Busters, Inc., supra, 130 Vt. at 118, 287 A.2d at 558-59:

We do not construe "outside the usual course of business" or "outside of all places of business" to mean simply the home office or headquarters of the company. The places of business include these but also as well the business territory within which it operated . . . .

An employer's place of business includes not only the location of its offices, but also the entire area in which it conducts the business, in this instance the educating of students. The services performed by the College's faculty are conducted within the appellant's place of business for purposes of Title 21.

IV.

To satisfy 21 V.S.A. § 1301(6)(B)(iii), the College would have to demonstrate that the teachers are regularly engaged in independently established occupations. Appellant claims that since the faculty members are not full-time teachers and, in fact, are all engaged primarily in nonteaching trades, that that prong of the ABC test is satisfied.

However, our cases make clear that in order to satisfy this provision, the employees must be independently established providing the same or similar services as they provide for the employer. See Bluto, supra, 135 Vt. at 209, 373 A.2d at 521; In re Bargain Busters, Inc., supra, 130 Vt. at 119, 287 A.2d at 559; Vermont Securities, Inc., supra, 118 Vt. at 201, 104 A.2d at 917. By the College's own admission such is not the case here.

V.

The Department of Employment Security does not challenge the portion of the decision reversing the referee's assessment of liability, so we need not consider the propriety of that aspect of the case.

The certified question is answered in the affirmative, and the ruling of the Department of Employment Security is affirmed.


Summaries of

Vermont Institute of Community Involvement, Inc. v. Department of Employment Security

Supreme Court of Vermont
Sep 1, 1981
140 Vt. 94 (Vt. 1981)

holding that a college was liable for unemployment fund contributions for its adjunct faculty who taught courses within the college's business territory, but at locations often not chosen by the college and rarely provided by it

Summary of this case from Bay Constr. Co. v. Dolan

observing that an employer's place of business includes not only the location of its offices, but also the entire area in which it conducts business

Summary of this case from Mamo Transportation, Inc. v. Williams

In Vermont Inst. of Community Involvement, Inc. v. Dep't of Employment Sec., 140 Vt. 94, 436 A.2d 765 (1981), where one of the college's purposes was to provide educational programs, and adjunct faculty taught courses in localities away from the college's offices, the college was required to contribute to the unemployment compensation fund for adjunct faculty even though the time and place of instruction was set without the college's supervision and rarely at a location provided by the employer.

Summary of this case from MO. AS. OF REALTORS v. DIV. OF EMP. SEC
Case details for

Vermont Institute of Community Involvement, Inc. v. Department of Employment Security

Case Details

Full title:Vermont Institute of Community Involvement, Inc. v. Department of…

Court:Supreme Court of Vermont

Date published: Sep 1, 1981

Citations

140 Vt. 94 (Vt. 1981)
436 A.2d 765

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