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El Sid's Hair Fashion, Inc. v. Employment Division

Oregon Court of Appeals
Dec 4, 1986
729 P.2d 8 (Or. Ct. App. 1986)

Summary

In El Sid's, we affirmed the referee's holding that an employment relationship existed under ORS 657.030 when hair styling operators paid 25% of their gross income for rent, utilities, and insurance, purchased hair products from the "lessor," shared cleaning, laundering and receptionist duties and were required to be present during regular business hours.

Summary of this case from Employment Division v. Shear Creations Salon

Opinion

85-T-033; CA A38587

Argued and submitted October 13, 1986.

Reversed and remanded with instructions December 4, 1986.

Judicial Review from Employment Division.

Douglas P. Cushing, Medford, argued the cause for petitioner. With him on the brief was Cushing Haberlach, Medford.

Christine Chute, Assistant Attorney General, Salem, argued the cause for respondent. On the brief were Dave Frohnmayer, Attorney General, Virginia L. Linder, Solicitor General, and Robert M. Atkinson, Assistant Attorney General, Salem.

Before Warden, Presiding Judge, and Van Hoomissen and Young, Judges.


WARDEN, P. J.

Reversed and remanded with instructions to delete the manicurist from the assessment.


Petitioner, an Oregon corporation licensed to operate a beauty shop, petitions for review of a referee's decision that affirmed an employment tax assessment. We reverse.

Petitioner claims to be only a lessor of space to individual operators. The referee's findings of fact include, inter alia, that the operators paid 25 percent of their daily gross incomes to petitioner, that petitioner furnished building utilities and insurance protection, that the operators shared cleaning, laundering and receptionist duties, and that petitioner maintained a supply of hair products and sold them at retail prices to the operators. Petitioner argues that the referee's conclusion that petitioner is an "employer" under ORS ch 657 does not follow from the facts found.

In a situation virtually identical to this, the Supreme Court held that there was an employment relationship. Unemp. Compensation Com. v. Brown, 225 Or. 306, 358 P.2d 502 (1960). By contrast, in Golden Shear Barber Shop v. Morgan, 258 Or. 105, 481 P.2d 624 (1971), the Supreme Court held that there was no employment relationship where a barber paid a flat rent for space, because the amount of business done by the lessee had no effect on the owner's income. 258 Or at 112. Here, the volume of business done directly affects the petitioner's income. It has a substantial interest in ensuring that a "lessee" produce income, as evidenced here by petitioner's requirement that operators be present during regular business hours. We therefore affirm the assessment, except for the manicurist, who paid a flat fee for the space she rented. The Division concedes that she should have been treated as an independent contractor.

Reversed and remanded with instructions to delete the manicurist from the assessment.


Summaries of

El Sid's Hair Fashion, Inc. v. Employment Division

Oregon Court of Appeals
Dec 4, 1986
729 P.2d 8 (Or. Ct. App. 1986)

In El Sid's, we affirmed the referee's holding that an employment relationship existed under ORS 657.030 when hair styling operators paid 25% of their gross income for rent, utilities, and insurance, purchased hair products from the "lessor," shared cleaning, laundering and receptionist duties and were required to be present during regular business hours.

Summary of this case from Employment Division v. Shear Creations Salon
Case details for

El Sid's Hair Fashion, Inc. v. Employment Division

Case Details

Full title:In the Matter of Notice of Tax Assessment and Notice of Deficiency…

Court:Oregon Court of Appeals

Date published: Dec 4, 1986

Citations

729 P.2d 8 (Or. Ct. App. 1986)
729 P.2d 8

Citing Cases

Employment Division v. Shear Creations Salon

Under ORS 657.030, only services performed for remuneration constitute employment. Division argues that…