Connecticut’s Supreme Court settled a dispute over independent contractor status that began in 2008, in a ruling published last month. The top court found technicians and installers used by Standard Oil of Connecticut were independent contractors and not employees under the “ABC Test,” according to court records. However, Court was divided with three of seven justices dissenting.
The decision reverses an earlier trial court ruling that found the workers were not independent contractors.
Roots of the case began in June 2008 when the Department of Labor did an audit of Standard Oil and found that installers and technicians of home heating, cooling and alarm systems were independent contractors. Standard Oil was told it owed $41,501 in unemployment contribution taxes plus interest for 2007 and 2008. Standard Oil appealed the decision with the appeals process ultimately moving to the courts.
In its decision published last month, the state Supreme Court found the workers were independent contractors under the first two prongs of the ABC Test.
To test for independent contractor status, the ABC Test has three prongs, according to the court:
- ‘‘[A] such individual has been and will continue to be free from control and direction in connection with the performance of such service, both under his contract for the performance of service and in fact.”
- “[B] 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.”
- “[C] 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.”
The Supreme Court cited the “A” prong in that Standard Oil did not supervise the work and workers were free to accept or reject jobs without consequences. In addition, installers and technicians had their own business cards, advertising and earned income from sources other than the plaintiff. Workers were not required to wear clothes with Standard Oil’s logo.
Standard Oil also did not provide an employee handbook or pay for training. In addition, the top court noted the company did not own the tools, workers signed independent contractor agreements and were paid on a piece rate basis.
Justices also found workers were independent contractors under the “B” prong of the ABC Test. The top court said the work took place at the homes of customers, which were not Standard Oil’s places of business.
While the ruling favored Standard Oil’s treatment of workers as independent contractors, the three dissenting justices argued the company did not meet the “B” portion of the ABC Test. They wrote in their dissent that installation of heating, cooling and alarm systems were done in the usual course of business for Standard Oil — even though sales and installation of such systems accounted for only 10% of its business.
“The plaintiff did not provide the services at issue in isolated instances, but rather, did so on a regular and continuous basis,” according to the dissenting opinion. “It is of no moment that the work comprised a minority of the plaintiff’s business activities overall. The plaintiff, through its public-facing advertisements and dealings with its customers, held itself out as a seller and installer of heating and cooling equipment and security systems.”
The dissenting opinion also found that customers’ homes could qualify as places of work.
“By their very nature, these services needed to be provided in customers’ homes and could not occur at the plaintiff’s physical plant,” according to the dissenting opinion. “The plaintiff contracted directly with the homeowners for installation and ongoing services, thereby authorizing the plaintiff to have a significant, business related presence in the customers’ homes.”
Because Standard Oil did not meet the “B” portion of the ABC Test, it did not matter whether it met the “A” portion, according to the dissenting opinion.
For more on this case, see the Connecticut Employment Law Blog.