Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Bourbeau Custom Homes, Inc.

Supreme Court of Vermont

June 23, 2017

In re Bourbeau Custom Homes, Inc.

         Supreme Court On Appeal from Employment Security Board

          Maureen Tivnan, Chair Claudine C. Safar and Anthea Dexter-Cooper of Monaghan Safar Ducham PLLC, Burlington, for Appellant.

          Dirk Anderson, Department of Labor, Montpelier, for Appellee.

          PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Eaton, JJ.

          ROBINSON, J.

         ¶ 1. This case presents a challenge to the Employment Security Board's classification of several carpenters, including one single-member LLC, an installer of cement siding, and a painter as employees of Bourbeau Custom Homes, Inc. for the purposes of Vermont's unemployment compensation system. First, Bourbeau contends that it is not liable for unemployment taxes on monies paid to a single-member LLC because an LLC is not an "individual" under the unemployment tax statute and therefore not subject to the ABC test established by 21 V.S.A. § 1301(6)(B). Second, it argues that the Board erred in applying the ABC test with respect to all of the workers whose remuneration is the subject of this appeal. We agree with Bourbeau on the first point and hold that an LLC is not an "individual" for the purposes of assessing unemployment taxes. However, we affirm the Board's determination that the remaining four individuals are employees for purposes of Vermont's unemployment compensation system.[1]

         ¶ 2. Based on the administrative law judge's (ALJ) findings of fact, and its own hearing, the Employment Security Board found the following facts. Bourbeau is based in Swanton, Vermont and is engaged in the custom design and construction of new homes. At issue in this case is the proper classification of an LLC whose single owner-member helped build the homes sold by Bourbeau, as well as four individuals who were also paid for services in connection with the construction. On its website, Bourbeau advertises itself as a business that will build a customer's "dream home." Bourbeau gives potential customers a bid for the proposed project, supplies all the materials for its projects, [2] and offers a "total finished package" to its customers. It aims to complete customers' homes within twelve to sixteen weeks, and its website allows customers to track the progress of the home throughout the construction process. It strives for complete customer satisfaction, and guarantees its work for one year after completion.

         ¶ 3. Bourbeau employs a foreman who visits its job sites to monitor progress on the homes. The owner of the company, Mr. Bourbeau, establishes the project schedules, which are largely driven by the customers' demands. However, the workers at issue in this appeal control their own hours at the job sites and provide their own hand tools. The workers at issue all signed agreements with Bourbeau that specified that they were independent contractors, although most of these agreements did not contain specific information about reimbursement for services. The contract allowed Bourbeau to terminate the agreement if the subcontractor breached or failed to perform to Bourbeau's satisfaction.

         ¶ 4. Beginning in January 2013, the Department of Labor conducted an audit of Bourbeau that eventually covered the third quarter of 2010 through the first quarter of 2013. The auditor first identified sixty-one individual entities that received payments from Bourbeau during that time and determined that fifty-two were properly classified as independent contractors. The auditor determined, however, that nine, including the five at issue in this appeal, should have been classified as employees and therefore Bourbeau was liable for unemployment taxes on their wages. Accordingly, the Department issued an assessment in October 2013 for $7032.96, which included unpaid taxes from 2010 until 2013, a penalty, and interest. Bourbeau appealed the assessment in November.

         ¶ 5. An ALJ at the Department held a hearing and issued a written decision on the appeal in May 2015. The ALJ sustained the auditor's determination that six of these nine individuals were employees.[3] Five of these workers are at issue in this appeal[4]: Chris Parent, Shawn Phillips, John Simon, Timothy Putzier, and John Parah. Parent and Phillips did carpentry and siding work, Simon did painting work, and Putzier installed cement siding. Parah contracted with Bourbeau through his single-member LLC, John Parah Construction, LLC, to do carpentry, flooring, and finish work. Simon and Parah are the only two workers in question who completed and returned questionnaires sent by the auditor.

         ¶ 6. The ALJ applied the ABC test, codified in 21 V.S.A. § 1301(6)(B), which requires the employer to show that: (A) the individual is free from the employer's control or direction; (B) the individual's service is either outside the employer's usual course of business or performed outside the employer's place of business; and (C) the individual is independently established. The ALJ concluded that Bourbeau failed to show that the five workers met part A of the test because it "retains substantial control over the various worksites." The ALJ placed weight on the facts that Bourbeau handles all the scheduling for the projects, a foreman monitors progress at the worksites, the workers' contracts stipulate that Bourbeau has a unilateral right of termination, and the homeowners' contracts with Bourbeau require them go to Bourbeau, not the hired workers, if there are any problems with the construction work.

         ¶ 7. The ALJ also determined that Bourbeau failed to meet part B of the test for all five workers. The ALJ concluded that Bourbeau did not prove that the subcontractors performed services outside Bourbeau's place of business because their services were all performed at Bourbeau's worksites. In addition, the subcontractors' work was not performed outside the usual course of Bourbeau's business because Bourbeau is in the business of building homes and the subcontractors' work was "integral to the process of building a home."

         ¶ 8. Lastly, the ALJ concluded that Bourbeau failed to meet part C of the test for all the workers except Parah. Parah was found to be independently established because he operates through a registered LLC. The ALJ found that three of the other workers, Parent, Phillips, and Putzier, had received "wages from covered employers, " which indicated that they were not independently established. The ALJ did not analyze whether Simon was independently established in the written decision. Overall, the ALJ decided that Bourbeau failed to meet its burden in meeting this part of the test for Parent, Phillips, Putzier, and Simon. Because Bourbeau did not satisfy all three parts for any of the workers, the ALJ concluded that the five workers were employees.

         ¶ 9. Bourbeau appealed to the Employment Security Board in June 2015. The Board affirmed the ALJ's determination in April 2016, relying on the same facts and reasoning as the ALJ. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.