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Life Force Caregivers, Inc. v. Unemployment Ins. Appeal Board

Superior Court of Delaware, New Castle

August 15, 2012

LIFE FORCE CAREGIVERS, INC., a Delaware corporation, Appellant,
v.
The UNEMPLOYMENT INSURANCE APPEAL BOARD, and GJ POUR, Appellees.

Submitted: May 23, 2012.

Upon Consideration of Appeal From the Unemployment Insurance Appeal Board.

Michael W. Arrington, Esquire.

Thomas H. Ellis, Deputy Attorney General.

ORDER

Joseph R. Slights, III, Judge.

1. The issue before the Court is whether Life Force Caregivers, Inc. ("Life Force") is exempt from insurance tax assessments under Delaware's unemployment insurance statute.[1] On December 15, 2010, the Unemployment Insurance Appeal Board (the "Board") affirmed the Appeals Referee's determination that Life Force is subject to insurance tax assessments.[2] The Board found that Life Force failed to prove that it is exempt from insurance tax assessments pursuant to the three-pronged test of 19 Del. C. § 3302(K)(10). The appellant, Life Force, denies liability for the tax, maintaining that G.J. Pour ("Claimant") is an independent contractor who is not engaged in covered employment pursuant to the three-pronged statutory test.

2. Because the Board in its initial decision failed to address the initial threshold question of whether Claimant performed "services" for "wages" within the definition of "employment" under 19 Del. C. § 3302 (10)(K), the Court remanded the case for a detailed factual determination on that issue.[3] The Board provided its second decision on the requested issue, dated April 25, 2012, in which it concluded that Claimant performed "services" for "wages." Life Force provided a supplemental memorandum of law in response arguing that the Board's decision is not supported by substantial evidence and reiterating that both of the Board's decisions are legally deficient.[4] The Court is now satisfied that the Board applied the correct legal standards and its decision was supported by substantial evidence. The decisions of the Board dated December 15, 2012 and April 25, 2012 are, therefore, AFFIRMED.

3. On appeal from the decision of an administrative agency, this Court's scope of review is limited to determining whether the Department's decision was supported by substantial evidence and free from legal error.[5] Substantial evidence is defined as "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion."[6] The Court does not weigh evidence, assess credibility, or make independent factual findings.[7] "As such, if substantial evidence exists for the decision and there is no mistake of law, the decision must be affirmed."[8] Issues of statutory construction are subject to plenary review.[9] "A reviewing court may accord due weight, but not defer, to an agency interpretation of a statute administered by it."[10]

4. The main question before the Board was whether Life Force was exempted from paying insurance assessment taxes as provided in 19 Del. C. § 3302. The Board correctly cited the applicable statute and Delaware case law to support its decision. Unemployment insurance taxes are governed by the definitions in 19 Del. C. § 3302. Pursuant to these definitions, "employment" encompasses:

[S]ervices performed by an individual for wages, unless and until it is shown to the satisfaction of the Department that:

(i) Such individual has been and will continue to be free from control and direction in connection with the performance of such service, both under the individual's contract for the performance of services and in fact; and
(ii) Such service is performed either outside the usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and
(iii) Such individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.[11]

Under this framework, the first determination to be made by the Board is whether the individual was in a relationship of employment with the company, i.e., whether the individual performed services for wages.[12] This relationship must be established by the party implementing the statute for purposes of unemployment tax assessments (usually the Department of Labor), at which point the burden then shifts to the party seeking the benefit of the statutory exemption (usually the employer) to prove each of the three enumerated criteria.[13] Simply put, wages are "all remuneration for personal services...."[14] As the Board noted, in most cases, ...


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