Opinion
C.A. No. 10A-10-019 FSS.
Submitted: May 4, 2011.
Decided: August 31, 2011.
Upon Appeal From the Department of Labor — AFFIRMED.
Donald L. Logan, Esquire.
Joseph C. Handlon, Esquire.
MEMORANDUM OPINION AND ORDER
The Department fined Appellant for violating the Workplace Fraud Act by treating an employee as an independent contractor, thereby denying the worker benefits to which he was legally entitled. The putative independent contractor provided nothing but labor. Appellant provided all materials and supervision. It even called him an employee. Thus, the Department determined the worker was an employee, not an independent contractor. And so, this administrative appeal challenges that determination, with Appellant now arguing that the Department read into the Act the requirement that an independent contractor must provide "both labor and materials."
I.
Kenneth Tielleman worked for Appellant, Flooring Solutions, Inc., until 2004. He returned in 2007 as "Tielleman Flooring, Inc.," a "subcontractor." Tielleman Flooring, Inc., was incorporated in 2000, it has a business license, and it has a "contract" with Appellant. But, as discussed below, that is all there is supporting a finding that it is an independent subcontractor, as Appellant claims.In 2010, the Department's inspector interviewed Tielleman at Appellant's job-site. Tielleman told the inspector that he and Appellant's employees were installing soft-floor material that Appellant provided. Further, Tielleman said he was working under the direction of Appellant's foreman.
The Department followed-up with a letter asking Appellant to provide, among other things, "[a]ny and all information important to establish a subcontractor relationship exists between Tielleman Flooring, Inc.'s and Flooring Solutions, Inc.," and the work project. Appellant submitted the contract between it and Tielleman, a 2010 business license for Tielleman Flooring and daily work logs. The work logs, however, listed Tielleman as an employee. And, as mentioned, Appellant explained that Tielleman "did not provide anything but time." Thus, based on Appellant's response, it is uncontroverted that Tielleman worked under Appellant's foreman's direction installing materials that Appellant provided.
Anyway, the Department determined that "Tielleman does not perform free from [Appellant's] control or direction, is not engaged in an independently established trade and does not perform work which is outside the usual course of business." Further, "Tielleman had no part in the planning, bidding or contract document process for the [project] and was not listed as a subcontractor on the Bid form [.]" Appellant was fined under the Workplace Fraud Act for improperly classifying Tielleman as an independent contractor.
II.
The Department has broad power to enforce the Workplace Fraud Act. To rebut the presumption that an emp loyer-employee relationship exists, the employer must demonstrate "to the satisfaction of the Department" that the worker is exempt from the Act or an independent contractor. To be exempt or an independent contractor, the worker must work "free from the employer's control and direction over the performance of the employee's service."
19 Del. C. § 35.
19 Del. C. § 3503(c).
19 Del. C. § 3501(a)(6); 19 Del. C. § 3501(a)(7).
Now, Appellant contends "it is clear that [the Department] has improperly limited the standard for independent contractor classification to exclude those supplying only labor." According to Appellant, the Act does not "limit[] independent contractor status to only those workers that provide both labor and materials and no such requirement should be read in." Alternatively, Appellant contends "Tielleman fits squarely within the definition of an "exempt person" under 19 Del. C. § 3501(a)(6), which overcomes the presumption under 19 Del. C. § 3503(c) that an employer-employee relationship exists." For support, Appellant points to a certificate of insurance and affidavits from its president and Tielleman that it impermissibly submits for the first time on appeal.
III.
Reviews of an agency's decision are on the record produced below. On review, the court must determine if the decision is supported by substantial evidence and free from legal error. Substantial evidence is evidence a reasonable person would accept as adequate to support the decision. Questions of law such as Appellant's interpretation of the Workplace Fraud Act are reviewed de novo. Finally, Appellant's evidentiary decisions are reviewed for abuse of discretion.
Vincent v. E. Shore Mkts., 970 A.2d 160 (Del. 2009).
Histed v. E.I. DuPont de Nemours Co., 621 A.2d 340 (Del. 1993).
LeVan v. Independence Mall, Inc., 940 A.2d 929 (Del. 2007).
The determination turns on whether Tielleman was under Appellant's control and direction. Appellant does not cite any case-law supporting its contention that Teilleman was an independent contractor. Rather Appellant submitted affidavits from Tielleman and Appellant's president purportedly testifying that Teilleman was not under Appellant's direction and control. As mentioned, the review is on the record produced below and the court will not consider evidence, such as new affidavits, presented for the first time on appeal. Thus, the question here is whether, based on what Appellant provided when it should have, the Department's determination is supported by substantial evidence and free from legal error.
Appellant's response to the Department's letter is more remarkable for what it left out than what it included. For example, Appellant provided nothing to controvert Teilleman's statement that Appellant provided the flooring materials, nor did Appellant produce evidence that Teilleman used his own tools, both of which are factors that help identify a worker as an independent contractor. Neither did Appellant take the opportunity to explain what type of direction and control its foreman had over Teilleman's work. Appellant did not even show whether it paid Tiellman personally or the corporation. Finally, Appellant did not provide copies of Teilleman Flooring, Inc.'s books or other such documents. The Department's determination, therefore, that Appellant failed to rebut the presumption that Teilleman was an employee was supported by substantial evidence and free from legal error.
See Falonci v. Coombs Coombs, Inc., 902 A.2d 1094, 1099-1100 (Del. 2006) (setting out factors in the Restatement (Second) of Agency § 220).
Implicitly, the Department also determined Tielleman was not an "exempt person." Similar to an independent contractor, an exempt person "[p]erforms services free from direction and control over the means and manner of providing the services, subject only to the right of the person or entity for whom the services are provided to specify the desired result." As discussed, the scant record Appellant produced below failed to establish that Tielleman was truly an independent contractor.
19 Del. C. § 3501(a)(6)(b).
In closing, Appellant's fear "that [it] can never subcontract any work that is in any way related to `soft flooring'" is, at most, theoretical. In reality, it is unfounded and exaggerated. In light of the record Appellant made below, as far as the court can tell, Kenneth Tielleman of Tielleman Flooring, Inc., appears to be little more than a solitary workman who simply installs flooring under someone else's supervision. Appellant's "contract" with "Tielleman Flooring, Inc.," therefore, may be nothing more than a dodge.
IV.
For the foregoing reasons, the Department of Labor's decision that Kenneth Tielleman was improperly classified as an independent contractor is AFFIRMED.IT IS SO ORDERED.