Petition for Review of Final Orders of the District of Columbia Office of Administrative Hearings (Nos. ESP-112779-09 & ESP-113273-09)
The opinion of the court was delivered by: Thompson, Associate Judge:
Before THOMPSON, Associate Judge, RUIZ, Associate Judge, Retired,*fn1 and KING, Senior Judge.
On February 16, 2009, respondent Mary Bomers, having been discharged from work as a legal secretary for petitioner Robert Hickey, applied for unemployment compensation benefits. The District of Columbia Department of Employment Services ("DOES") initially denied the claim on the basis of information provided by Hickey that Bomers had been an independent contractor rather than an employee. Bomers appealed that determination to the Office of Administrative Hearings ("OAH"). After a hearing on April 17, 2009, the OAH Administrative Law Judge ("ALJ") found in an order dated April 28, 2009, (in OAH Case No. ESP-112779-09) ("Final Order I") that Bomers had been an employee of Hickey and was eligible to receive unemployment benefits. Hickey petitioned to this court for review of that OAH order.
In the meantime, after DOES notified Bomers that she was qualified to receive benefits, Hickey filed a second petition for review by OAH, contending that even if, as OAH had earlier found, Bomers was eligible for benefits as a discharged employee, she did not qualify for benefits because she had been discharged for misconduct. After a hearing on June 12, 2009, the OAH ALJ found in an order dated July 9, 2009 (in OAH Case No. ESP-113273-09) ("Final Order II") that Hickey had "failed to prove, by a preponderance of the evidence, that he discharged [Bomers] for acts that are misconduct," and therefore concluded that Bomers qualified for benefits. Final Order II at 2. Hickey again petitioned for review by this court, and we consolidated the two petitions for review.
Hickey contends that the ALJ's finding that Bomers was an employee and her determination that Bomers was not terminated for misconduct are not supported by substantial evidence in the record. He contends that the ALJ's rulings that Bomers is eligible and qualified to receive unemployment benefits must be reversed. We affirm the ALJ's ruling that Bomers was an employee, concluding that it is supported by substantial evidence and comports with applicable law. We hold, however, that the ALJ's conclusion that Bomers was not discharged for misconduct does not flow rationally from the ALJ's findings and the supporting substantial evidence in the record that the ALJ credited, and therefore that the order awarding Bomers benefits must be reversed.
Our standard of review of OAH orders is as stated in Morris v. United States Envtl. Prot. Agency, 975 A.2d 176, 180 (D.C. 2009): We "must affirm an OAH decision when (1) OAH made findings of fact on each materially contested issue of fact, (2) substantial evidence supports each finding, and (3) OAH's conclusions flow rationally from its findings of fact." Id. (quoting Rodriguez v. Filene's Basement, Inc., 905 A.2d 177, 180 (D.C. 2006) (internal quotation marks omitted)). "Substantial evidence is 'more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'" Chase v. District of Columbia Dep't of Emp't Servs., 804 A.2d 1119, 1123 (D.C. 2002) (citation omitted). "Factual findings supported by substantial evidence on the record as a whole are binding on the reviewing court, although this court may have reached a different result based on an independent review of the record." McKinley v. District of Columbia Dep't of Emp't Servs., 696 A.2d 1377, 1383 (D.C. 1997) (citation omitted).
II. The ALJ's Conclusion That Bomers Was an Employee
"When the relationship of a worker to a company is that of an independent contractor rather than that of an employee as defined by the common law, that worker is not entitled to benefits under the District of Columbia Unemployment Compensation Act [the 'Act']." RosExpress, Inc. v. District of Columbia Dep't of Emp't Servs., 602 A.2d 659, 661 (D.C. 1992). Under the Act, "employment" is defined as service by "[a]ny individual who, under the usual common-law rules applicable in determining the employer-employee relationship, has the status of an employee." D.C. Code § 51-101 (2)(A)(i)(II) (2001). Under our common-law principles, "[w]hether one who performs work on behalf of another is an employee or an independent contractor depends on the particular facts of each case." Schecter v. Merchants Home Delivery, Inc., 892 A.2d 415, 422--23 (D.C. 2006). The factors that are "determinative of whether an employment relationship existed" are "(1) the selection and engagement of the individual hired, (2) the payment of wages, (3) the power of the one who hires over the other whom he has hired, and (4) whether the service performed by the person hired is a part of the regular business of the one who hired." Spackman v. District of Columbia Dep't of Emp't Servs., 590 A.2d 515, 516 (D.C. 1991). "While no single factor is controlling, the decisive test is whether the employer has the right to control and direct the servant in the performance of his work and the manner in which the work is to be done." Schecter, 892 A.2d at 423 (internal ellipses and quotation marks omitted; emphasis in original); see also id. at 423 (emphasizing that "the right to control means the right to control an employee in the performance of a task and in its result, and not the actual exercise of control or supervision" (citation and internal quotation marks omitted)). "In analyzing an employer's right to control, we look to the actual relationship between the parties and the language of any agreement between them, if any." Id. (citing District of Columbia v. Hampton, 666 A.2d 30, 38 (D.C. 1995)).
"The determination of whether an employer-employee relationship exists involves a mixed question of law and fact." Spicer Accounting, Inc. v. United States, 918 F.2d 90, 92 (9th Cir. 1990); see also Gordon v. District Unemployment Comp. Bd., 402 A.2d 1251, 1258 (D.C. 1979) (unemployment insurance coverage involves mixed questions of fact and law); Carpetland U.S.A., Inc. v. Ill. Dep't of Emp't Sec., 776 N.E.2d 166, 177 (Ill. 2002) (explaining that "whether certain workers are independent contractors under [the unemployment compensation statute] is . . . a mixed question of law and fact"). We review mixed questions of law and fact "under our usual deferential standard of review for factual findings (applying either the 'clearly erroneous' or 'substantial evidence' standard of review) and [apply] de novo review to the ultimate legal conclusions based on those facts." Scolaro v. District of Columbia Bd. of Elections & Ethics, 717 A.2d 891, 894 (D.C. 1998).
In this case, the ALJ made the following findings of fact regarding the employee/independent contractor issue: On January 16, 2006, Hickey, who has a solo law practice, hired Bomers as his legal secretary. Prior to hiring Bomers, Hickey had used an individual supplied through a temporary agency as his secretary. When Hickey and Bomers discussed her employment, they settled on an hourly rate of $18 per hour, which was less than the $24 per hour that Hickey had been paying to the temporary agency. At the time Bomers took the job, she knew that there would be no taxes taken out of her paychecks and that she would be filing quarterly tax returns with the IRS. Hickey believed that the relationship would be "advantageous to [him] because [he] was paying less than the agency fee" and also advantageous to Bomers "since she was receiving more than [the agency employee] had been paid through the agency." Final Order I at 3-4.
Hickey sublet two offices within a suite of offices owned by a business called Capitol Inquiry; he occupied one office and Bomers occupied the other, and the offices were not contiguous. Bomers's work schedule was 8:30 a.m. until 5:00 p.m. with a half-hour for lunch, Monday through Friday, althoughHickey told Bomers several times that "she could work the hours that she pleased as long as she got the work done and he was billed only for the hours worked." Final Order I at 2. Bomers was paid twice a month on an hourly basis, and she submitted billing statements to Hickey that reflected the hours worked each day of the pay period. Hickey provided no benefits and paid no taxes for Bomers; she received IRS Forms 1099 for the years she was employed (2006 through 2008). Bomers prepared her own IRS Form 1099 for 2006 and 2007. On the office monthly financial forms, Bomers listed her salary under the category "contract compensation." Bomers also prepared Hickey's IRS Form 1040 for tax years 2006 and 2007, on which her salary was reported as a "contract labor" expense.
Bomers' job entailed a variety of secretarial duties, and Hickey "gave [Bomers] work assignments." Final Order I at 2. Hickey did not use the computer, and Bomers' primary job was typing legal documents that Hickey drafted longhand. Bomers also answered the telephone, screened calls, prepared monthly financial reports, and performed other clerical duties, including preparing checks for Hickey's signature. During the time ...