FROM THE ARKANSAS BOARD OF REVIEW [NO. 2015-BR-4 EC]
Gunter, Witherspoon & Galchus, P.C., by: Carolyn B.
Witherspoon and Joseph A. Ramsey, for appellant.
Phyllis Edwards, for appellee.
WAYMOND M. BROWN, Judge
Rabbit Services, LLC ("JRS"), appeals from the
Arkansas Board of Review's ("Board") decision
finding that it is required to pay unemployment-insurance
taxes for the services performed by Orlando Mosley and
similarly situated individuals. On appeal, JRS argues that
the Board's decision is not supported by substantial
evidence. We affirm.
December 2, 2014, the Arkansas Department of Workforce
Services ("Department") issued an unemployment-tax
determination letter of liability to JRS, concluding that
Orlando Mosley, a roadside-assistance provider under contract
with JRS, and all other similarly situated individuals, were
employees of JRS for purposes of unemployment-insurance
taxes. On December 15, 2014, JRS filed a request for
determination of coverage by the Department director
("Director"), and a hearing was held on March 12,
Jennings, a 515 Unit Supervisor with the Department's
Wage Investigation Unit, testified that JRS failed the first
two elements of Ark. Code Ann. § 11-10-210(e),
"free from control and direction" element, as well
as the "services performed outside the usual course of
business" element. Jennings testified that his decision
that JRS's place of business included the roadways was
premised on his presumption that JRS actually provided
dispatch services. He stated that he was unsure if Mosley
owned his own business, but that Mosley indicated on the
questionnaire that he advertised his services.
Hain, JRS's sole managing member, testified that JRS
(located in Louisville, Kentucky) finds laborers and entities
and then enters into a contractual agreement. He stated that
JRS is a broker or labor finder and that it does not provide
dispatch services. He said that Mosley did not work a set
schedule designated by JRS, and that Mosley and other
contractors were able to work when and how they wanted.
According to Hain, Mosley was not required to work at all,
and Mosley was free to accept or decline any service call or
job. He testified that JRS did not supervise Mosley and that
the contractors supervised themselves. He stated that Mosley
was not instructed on how to perform his job, and that JRS
was not involved until Mosley billed JRS for the service
call. He testified that Mosley was not required to furnish a
time record, and that JRS did not pay based on the amount of
time spent on a job, but on the services the workers bill JRS
for the completed service or for "gone on
arrivals." He stated that JRS pays the independent
contractor even if the driver is gone when the contractor
shows up. He testified further that
[a]n independent contractor of JRS would receive a service
call from a dispatch company, which JRS does not have any
direct affiliation. JRS provides the independent
contractor's information to a third-party dispatch
company that is not affiliated with JRS. The dispatch company
then uses the contact information to send out service calls.
JRS has no control over the dispatch service. JRS does not
pay the dispatch company. JRS does not control what the
dispatchers say to an independent contractor.
Mr. Mosley, to my knowledge, did not wear a badge, but he
might have worn a reflector vest that stated he was an
"independent contractor" or "contracted
by." JRS was not representing to the public that Mosley
was an employee. If a contractor were representing himself or
herself as an employee of JRS, I would ask the contractor to
stop. JRS does not secure the location where the worker
to Hain, Mosley had an investment in the services Mosley
provided because he had to have a mode of transportation,
tools and other equipment, and a cell phone. Hain said that
Mosley was not reimbursed for any expenses. Hain also stated
that Mosley could suffer a profit or loss while under
contract with JRS. Hain testified that Mosley would not have
been discharged by advertising his own business or for having
his own business. He said that the amount of money a
contractor was paid per job was negotiable.
stated that JRS does not advertise for roadside services, and
that it is not in the business of providing
roadside-assistance services. He testified that JRS does not
have a website, and that no member of the public can just
call up JRS and receive roadside assistance. Hain admitted
that it was possible for JRS to receive documentation from
the third-party dispatch company to confirm information
regarding the validity of a service call and whether the
contractor actually went on a service run. According to Hain,
the dispatch log would reflect occurrences such as originally
accepting a service call and then later declining to provide
the service. Hain stated that it was the contractor's
right to refuse a service call. He also stated that the
contractor did not have to obtain a statement from the person
receiving the services.
testified that to his knowledge, JRS had never exercised any
control over Mosley. He said that JRS had never provided
training to the contractors. He stated that the contract
prohibits texting while driving, which is against the law.
Hain testified that contractors were required to wear
identifying material so that "the person stranded on the
side of the road is comfortable when the worker pulls up; it
is important that the stranded motorist knows that the
individual showing up is supposed to be there." He said
that JRS has a contract with Jack Rabbit USA
("JRU") and that under that contract JRS finds
labor and provides information regarding the labor to JRU. He
stated that he did not have an interest or stake in JRU. He
said that his compensation was not based on service calls but
on JRS's overall costs and expenses. He stated that
JRS's expenses would still get paid if there were no
independent contractors accepting service calls. He testified
that he does not know who the person receiving roadside
assistance actually pays, but that JRS pays the contractors
regardless of whether the person needing roadside assistance
or his/her insurance company actually paid for the service.
When asked about paragraph seventeen of the contract, Hain stated
that it had never been enforced and that it was included to,
primarily, avoid types of liability.
Board found that JRS failed to satisfy all three exemption
requirements found in Arkansas Code Annotated section
11-10-210(e). Because JRS was unable to satisfy the
requirements, the Board ruled that JRS was liable for
unemployment-insurance taxes for the services performed by
Orlando Mosley and similarly situated individuals.
argues that the Board erred in finding that it failed to meet
its burden on the three-prong test in section 11-10-210(e).
To establish the exemption set forth in section 11-10-210(e),
an employer must prove each of the three requirements in
subsections (1)-(3).If there is sufficient evidence to support
the Board's ...