Summary
In Mississippi Employment Security Commission v. Logan, 248 Miss. 595, 159 So.2d 802, the court sustained an employer's unemployment assessment where he operated a barbershop, notwithstanding a chair leasing agreement which attempted to establish an independent relationship and provided that either party could terminate the agreement within ten days.
Summary of this case from Sanders v. Oklahoma Employment Security Com'nOpinion
No. 42861.
January 20, 1964.
1. Employment Security Law — employment — test of employer-employee relationship.
The contract between reputed employer and employee is relevant, but is only one of numerous elements to be considered in determining question of employer-employee relationship under Employment Security Law, and true test incorporates a consideration of all facts and economic realities. Sec. 7440(i)(5), (n), Code 1942.
2. Employment Security Law — employment — modern tendency is to find employment within meaning of the law.
The modern tendency is to find employment within Employment Security Law when work being done is an integral part of regular business of employer and when worker, relative to employer, does not furnish an independent business or professional service. Sec. 7440(i)(5), (n), Code 1942.
3. Employment Security Law — employment — courts consider actual practice of parties which supplements their written contract.
Courts ordinarily consider the actual practice of parties which supplements their written contract and if their actual relationship is such as to bring parties within scope of Employment Security Law, the courts will so hold. Sec. 7440(i)(5), (n), Code 1942.
4. Employment Security Law — employment — slight supervision or control on part of alleged employer.
For the purpose of Employment Security Law, one may be actually under slight supervision or control, but still be employee where right of control existed and service performed was a part of regular business of alleged employer. Sec. 7440(i)(5), (n), Code 1942.
5. Employment Security Law — employment — barbershop and barbers under lease agreement within Law.
Where barbershop was operated under owner's name and was known to the public as such, and owner was in control to extent that within ten days he could discharge any of barbers by merely cancelling their leases under which barbers paid a weekly rental, barbers were "employees" within Employment Security Law. Sec. 7440(i)(5), (n), Code 1942.
Headnotes as approved by Gillespie, J.
APPEAL from the Circuit Court of Hinds County; RUSSELL D. MOORE, Special Judge.
H.L. Hutcherson, Jackson, for appellant.
I. The facts fully support the appellant's finding that the relationship of employer-employee still existed between appellee and the barbers working in his shop.
II. The facts as applied to every criteria set down by this court clearly establish the existence of the employer-employee relationship.
III. The overwhelming weight of authority on this identical question decided by the Supreme Courts of states throughout the country holds that barbers after entering into this type of purported lease agreement are still in the employment of the owner and operator of the shop.
Collation of authorities: Copeland's Barber Shop v. Board of Appeals, C.C.H. (Md.) 8210; First National Bank of Oxford v. Mississippi Unemployment Compensation Comm., 199 Miss. 97, 23 So.2d 534; Hearst Publications v. United States, 70 F. Supp. 666, 168 F.2d 751; Litteral v. Unemployment Compensation Comm., 312 Ky. 505, 228 S.W.2d 37; McDermott v. State, 196 Wn. 261, 82 P.2d 568; Mississippi Employment Security Comm. v. Heidelberg Hotel Co., 211 Miss. 194, 51 So.2d 47; Mississippi Employment Security Comm. v. Plumbing Wholesale Co., 219 Miss. 724, 69 So.2d 814; State v. Gossmann, 13 Wn.2d 598, 126 P.2d 201; State v. Iden., 71 Ohio App. 65, 47 N.E.2d 907; Texas Co. v. Mills, 171 Miss. 231, 156 So. 866; Texas Co. v. Wheeless, 185 Miss. 799, 187 So. 880; Tharp v. Unemployment Compensation Comm., 57 Wyo. 486, 121 P.2d 172; Unemployment Compensation Comm. v. Elwood M. Brown, d.b.a. Brown's Barber Shop, C.C.H. (Ore.) 8149; Unemployment Compensation Comm. v. Harvey, 179 Va. 202, 18 S.E.2d 390; Union Dry Goods Co. v. Cook, 71 Ga. App. 708, 32 S.E.2d 190.
Ben H. Walley, Jackson, for appellee.
I. The order of the Circuit Court of the First Judicial District of Hinds County, Mississippi is correct and according to the law and the facts existing in this case, and should be affirmed in its entirety. Fox Park Timber Co. v. Baker, 53 Wyo. 467, 84 P.2d 736, 120 A.L.R. 1020; Henry Broderick, Inc. v. Squire, 163 F.2d 980; Kisner v. Jackson, 159 Miss. 424, 132 So. 90; McDermott v. Hendrickson, 45 F. Supp. 277; McDermott v. State, 196 Wn. 261, 82 P.2d 568; Mississippi Employment Security Comm. v. Plumbing Wholesale Co., 219 Miss. 724, 69 So.2d 814; Party Cab Co. v. United States of America, 172 F.2d 87; Texas Co. v. Mills, 171 Miss. 231, 156 So. 866; Tharp v. Unemployment Compensation Comm., 57 Wyo. 486, 121 P.2d 172; United States v. Selk, and Harrison v. Greyvan Lines, 67 S.Ct. 1468; Sec. 7440(i)(5), Code 1942.
The Employment Security Commission, appellant, assessed Charles F. Logan, doing business as Logan's Barber Shop, for contributions (employment security tax) under the Mississippi Employment Security Law, based on the Commission's finding that certain barbers performing services in appellee's place of business were employees of appellee. The period covered by the assessment began January 1, 1961. On review by the Circuit Court the order of the Commission was reversed and that Court held that appellee was not liable for the assessment of contributions because he did not have any employees within the meaning of the Act.
Appellee has owned and operated a barber shop in the City of Jackson since May 1957. Prior to January 1, 1961, appellee employed barbers who worked on a commission basis, each barber receiving seventy percent of his gross intake and the appellee paid the three percent social security tax, leaving appellee a net of twenty-seven percent of the gross earnings or intake of each barber.
Effective January 1, 1961, appellee entered into a contract with each of the four barbers, under the terms of which appellee leased to each a certain chair in the barber shop, together with the right and privilege to allow the customers of the lessee to use the chairs, waiting room and other facilities within said barber shop. The contracts ran for twelve months and the rental paid by each barber was $5.40 per week, payable weekly, which covered the rental due on the first $20 of gross receipts taken in by the lessee and in addition thereto, twenty-seven percent of all gross receipts in excess of the first $20. Appellee, as the lessor, agreed to furnish lessee heating, lighting, water, cooling system, proper hair tonics, shaving soaps, lathers, shampoo, and other materials commonly used by lessee in operating as a barber. The lessees furnished their own tools such as scissors, hair clippers, combs and brushes. Either party could terminate the agreement within ten days. The proof showed that the amount of net received by appellee from each barber and the amount of net earned by the barbers was substantially the same after January 1st under the lessee agreement as it had been prior thereto when they were employees of appellee. The principal difference was that the lessees paid social security tax after January 1st.
The sole question for decision is whether the barbers under said lease agreement are employees of appellee within the meaning of the Mississippi Employment Security Law. We hold that the barbers leasing said chairs are employees of appellee.
The applicable part of the statute is Subsection 10(i) (5), Chap. 412, Laws of 1948 (Sec. 7440, Miss. Code of 1942), which defines an employer, and wherein it is provided that employment means:
"Services performed by an individual for wages shall be deemed to be employment subject to this act unless and until it is shown to the satisfaction of the commission that such individual has been and will continue to be free from control and direction over the performance of such services both under his contract of service and in fact; and the relationship of employer and employee shall be determined in accordance with the principles of the common law governing the relation of master and servant."
Under another subsection of the statute wages is defined as meaning "all remuneration for personal services including commissions and bonuses. . . ." (Hn 1) In Miss. Employment Security Commission v. Heidelberg Hotel Co., Inc., 211 Miss. 104, 57 So.2d 47, we held that the contract between the reputed employer and employee is relevant but is only one of the numerous elements to be considered in determining the question of employer-employee relationship under the Mississippi Employment Security Law, and that the true test incorporates a consideration of all the facts and the economic realities. (Hn 2) The modern tendency is to find employment when the work being done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish an independent business or professional service. Miss. Employment Security Com. v. Plumbing Wholesale Company, 219 Miss. 724, 60 So.2d 814. (Hn 3) Courts ordinarily consider the actual practice of the parties which supplements their written contract and if their actual relationship is such as to bring the parties within the scope of the act, the courts will so hold. 14 Am. Jur. 523. In Texas Company v. Wheeless, 185 Miss. 799, 187 So. 880, this Court said that the test is whether the service is subject to the right of control by the alleged master. (Hn 4) One may be actually under slight supervision or control, but still be an employee where the right of control existed and the service performed was a part of the regular business of the alleged employer. Miss. Employment Security Commission v. Plumbing Wholesale Co., 219 Miss. 724, 60 So.2d 814. In Texas Company v. Mills, 171 Miss. 231, 156 So. 866, the Court set forth certain matters which determine whether the employer-employee relationship exists.
(Hn 5) We are of the opinion that the Commission was fully justified in finding that the barbers under the leasing arrangement with appellee are employees of appellee. The business is operated under appellee's name and is known and held out to the public as such. Appellee is in control to the extent that within ten days he can discharge any of the barbers by merely cancelling their leases. These barbers are performing a part of the regular business being conducted by appellee; their services are an integral part of appellee's business. We are of the opinion that there is no substance to the contention that the barbers leasing chairs from appellee operate independent businesses of their own. For all practical purposes the written contracts changed nothing. The law considers substance rather than form.
We are, therefore, of the opinion that the judgment must be reversed and judgment entered here reinstating the order of the Commission.
Reversed and judgment here reinstating the order of the Commission.
Lee, P.J., and McElroy, Jones and Brady, JJ., concur.