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Law Alert: Unemployment Tax IC Status Decision Q.D.-A., Inc. v. Indiana Dept. of Workforce Development

by Shannon M. Cohen, Gregory M. Feary, Steven A. Pletcher, Rebecca S. Trenner

January 24, 2019

 

Unemployment Tax IC Status Decision Q.D.-A., Inc. v. Indiana Dept. of Workforce Development

On January 23, 2019, the Indiana Supreme Court issued a unanimous opinion in Q.D.-A., Inc. v. Indiana Department of Workforce Development (to read the full opinion click here) finding drive-away drivers who deliver recreational vehicles or trucks under the authority of Q.D.-A., Inc. (“QDA”) to be independent contractors for purposes of Indiana’s unemployment tax law. The Court applied the ABC test (a test made notable by the California Supreme Court last year in the controversial Dynamex decision) and found that the drivers were free from QDA’s direction and control-satisfying the A prong. In so doing the Court was unpersuaded that QDA’s assurance that drivers complied with laws was evidence of control, citing a US Court of Appeals decision holding “[g]overnment regulations constitute supervision not by the employer but by the state.”  Other factors noted by the Court included no guidance to drivers on how to perform the work; drivers’ freedom to refuse loads, work for others, negotiate pay, hire other drivers, provide their own tools, and work at their own convenience. The Court also found neither party disputed that the drivers were engaged in an independently established business of transporting commodities—satisfying the C prong.

Of possibly greatest interest to transportation industry stakeholders was the Court’s B prong analysis in finding that the drivers performed services outside QDA’s usual course of business. The Court clarified that if a “company regularly or continually performs an activity, no matter the scale, it is part of the company’s usual course of business.” While QDA may have advertised delivering vehicles and may also have US DOT authority to do so, it actually only engaged the independent contractor drivers to make such deliveries. The Court also recognized the difference between arranging for the delivery of commodities and actual delivery of commodities, thus setting the stage for further similar rulings for transportation and logistics companies, including within the broker-carrier context.

If you have questions about the impact of the Court’s holding, you can reach out to Scopelitis attorneys Greg Feary, Steven Pletcher, Rebecca Trenner, or Shannon Cohen.

 

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Scopelitis Transportation Law Alerts are intended as a report to our clients and friends on legal developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.

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