The Indiana Court of Appeals affirmed an administrative law judge’s decision that certain workers were employees of a consulting business, and so the company was liable for additional unemployment taxes.
Circle Health Partners, a pre-claim cost-control consulting business, serves clients in various states who are typically employers that provide health insurance benefits to their employees. CHP regularly offers health screenings to its clients, in which it hires licensed registered nurses or certified phlebotomists to perform the screenings.
When the Department of Workforce Development audited CHP’s business for the years 2009, 2010 and 2011, it determined CHP had additional taxable wages for those years based on payments to the nurses and phlebotomists for services that constituted employment.
A liability administrative law judge held a hearing on the matter and affirmed the department’s decision, finding the people in question are employees under I.C. 22-4-8-1.
Under that statute, all workers are presumed to be employees until an employer demonstrates three factors: the individual has and will be free from control and direction in connection with performance of the service; the service is performed outside the usual course of the business for which the service is performed; and the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature in the service performed.
The Court of Appeals affirmed based on the first factor and dismissed CHP’s claim that its case is similar to that of Alumiwall Corp. v. Indiana Emp’t Sec. Bd., 130 Ind. App. 535, 541, 167 N.E.2d 60, 62 (1960), and Twin States Publ’g Co. Inc. v. Indiana Unemployment Ins. Bd., 678 N.E.2d 110 (Ind. Ct. App. 1997).
“The nurses and phlebotomists who contracted to work for CHP had more restrictions on them than just performing in a workmanlike manner, although they were required to so perform. They were not simply told to conduct a health screening or ‘collect biometric information,’ and then left to their own devices,” Judge Melissa May wrote. “Rather, they were given eighteen specific steps to complete.
“The workers in Alumiwall and TwinStates could hire others to complete the contracted work for them, but there is no indication those contracted to work for CHP could send others to complete the work. Nor could those nurses and phlebotomists conduct the screenings at times other than the hours scheduled for the screenings.
“The facts in this case are not like those in Alumiwall and Twin States, and we see no error in the LALJ’s conclusion the phlebotomists and nurses were not free of CHP’s direction and control. As a business must meet all three of the factors in Ind. Code § 22-4-8-1 in order to prove a worker is not an employee, CHP’s inability to prove the LALJ erred as to the first factor is sufficient to require us to affirm the LALJ’s decision.”
The case is Circle Health Partners, Inc. v. Unemployment Insurance Appeals of the Indiana Dept. of Workforce Development, 92A03-1503-EX-183.