September 29, 2011
ROBERT J. HICKEY, PETITIONER,
MARY BOMERS, RESPONDENT.
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:
Submitted June 29, 2011
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.
I. Standard of Review
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 that Bomers worked for Hickey, she did not work for anyone else and she used his equipment when she worked.
In January 2009, Hickey informed Bomers by letter that he had "decided to replace [her] contract with another contract server immediately." Final Order I at 4. Bomers' last day of work was December 11, 2008.
The ALJ analyzed the foregoing factual findings (which Hickey does not
contest) in light of the factors identified in Spackman. Final Order I
at 6--8. Regarding Bomers' selection and engagement, the ALJ found
that Hickey "hired Claimant directly" (rather than, for example,
arranging for her services through an agency), id. at 7, a finding
that is supported by the record and that weighs in favor of a
conclusion that Bomers was Hickey's employee.*fn2 With
regard to the second Spackman factor, "the payment of wages," the ALJ
found that the facts that Hickey issued Forms 1099*fn3
to Bomers and "paid none of her taxes" "argue[d] in favor of finding"
that she was an independent contractor.*fn4 Id. We
agree with that assessment but also note that "use of a
1099 tax form does not [necessarily] undermine the conclusion that a
worker is an employee and not an independent contractor."*fn5
In addition, we note that the ALJ's finding that Bomers was
paid an hourly rate based on the hours she worked weighs at least
slightly on the side of her having been an employee rather than an
independent contractor. Cf. Spackman, 590 A.2d at 517 (upholding
determination that petitioner was not an employee where evidence
showed that "despite working varying hours of rehearsal and
performance each week, [he] received the same weekly installment" of
$500 per week).
The ALJ devoted her lengthiest analysis to the third Spackman factor, which she termed the "critical factor of the amount of control [that Hickey] exercised over Claimant." Final Order I at 6. The ALJ found that Hickey "gave [Bomers] tasks to accomplish - preparing monthly reports, preparing checks for his signature, [and] filing finished documents with the court"; that Bomers "d[id] not direct the course of her actions," and that Hickey "controlled [her] performance on a day-to-day basis." Id. at 6. These conclusions are supported by Hickey's testimony that at the beginning of every week, he "would write up a list" of work to be done that week and "if something had to be done that week, I would say this has priority over the others . . . ." Although the ALJ credited Hickey's testimony that he repeatedly told Bomers that she could pick her own works hours, Hickey's further testimony that Bomers "had to be there . . . at least a portion of the [regular work] day"to get his work done indicates that Hickey reserved the right to control the time and place of Bomers' work, and thus supports a conclusion that Bomers was actually an employee rather than an independent contractor.*fn6
Considering the fourth Spackman factor, the ALJ concluded that the typing, telephone answering and other secretarial services that Bomers performed were part of Hickey's regular business. Final Order I at 7. Citing Penick v. Emp't Sec. Dep't, 917 P.2d 136 (Wash. Ct. App. 1996), the ALJ also took into account that Bomers had no separate business office and did not work for anyone other than Hickey. We agree that these facts support a conclusion that Bomers was Hickey's employee.*fn7 While Hickey takes issue with the ALJ's finding that he "would not allow" Hickey to do some of her work at home, Final Order I at 3, and argues that "[t]here was no restriction on Bomers doing work outside the office," Petitioner's Brief at 14, he testified at the hearing that Bomers "didn't want to be contacted at home . . . and . . . was very emphatic about that." This testimony weighs against a conclusion that Bomers performed her work as part of an independent business rather than as part of Hickey's regular business.
As already described, the ALJ recognized that Bomers "knew there would be no taxes taken out of her paychecks" when she and Hickey discussed her employment and was responsible herself for preparing the forms that listed her pay from Hickey as "contract compensation." The ALJ also acknowledged Hickey's testimony about "the fact that [Bomers] knew she was an independent contractor from the beginning of the relationship." Final Order I at 9. The ALJ concluded, however, that the "label" the parties gave to the relationship was not determinative. Final Order I at 8. That conclusion was legally correct, as the intent of the parties is only one factor among many to consider when assessing the nature of an employer-employee relationship.*fn8
Our review confirms that, in each aspect of her analysis, the ALJ applied the correct legal principles. We discern no error in her application of any of the Spackman factors, and while we agree with her that there was evidence that weighed on both sides of the employee versus independent contractor issue,*fn9 we also agree that the critical "right to control [the] employee in the performance of [her] tasks" factor supports a conclusion that Bomers was not an independent contractor, despite Hickey's intention to treat her as such. Accordingly, upon "consideration of all of the circumstances surrounding the work relationship,"*fn10 we affirm the ALJ's ruling that Bomers was an employee.*fn11
III. Termination for Misconduct Vel Non
We now turn to a review of the ALJ's finding that Hickey failed to prove by a preponderance of the evidence that Bomers was terminated for misconduct. We review de novo OAH's legal conclusion about whether a terminated employee's actions constituted misconduct.
Badawi v. Hawk One Sec., Inc., 21 A.3d 607, 613 (D.C. 2011).
At the evidentiary hearing, Hickey asserted that he had fired Bomers for a variety of reasons. In her Final Order, the ALJ discussed these under the headings "Fraud" (related to Bomers' having allegedly billed Hickey for time when she was out of the office and not working, and to her claiming "employee" status when she applied for unemployment benefits); "Claimant's Inability to Perform Duties"; alleged "Harassment"; and "Absenteeism." Final Order II at 8, 9. The ALJ found that fraud and inability to perform duties "were not factors in [Hickey's] decision" to terminate Bomers, id. at 9, and that Hickey's testimony indicated that harassment also "was not the basis for firing [Bomers]."*fn12 Id. at 10. The ALJ found that Hickey did terminate Bomers for "absenteeism" and that this was an independent basis for the termination decision,*fn13 but that Bomers' "absenteeism" did not amount to misconduct. Id. at 9, 12, 13.
We are satisfied that substantial evidence supports the ALJ's conclusions that alleged fraud, inability-to-perform-duties, and harassment were not the grounds for Bomers' termination.*fn14
However, we cannot sustain the ALJ's determination regarding Bomers'
conduct that the ALJ referred to as "absenteeism."*fn15
We conclude that the ALJ erred in ruling that Bomers was not
terminated for misconduct.
The ALJ found that the statements of days and hours worked that Bomers submitted for payment from December 16, 2007, through November 30, 2008, established that she "worked 181 days out of the 241 work days possible in that time frame." Final Order II at 3. Thus, the ALJ found, "Claimant's own statements indicate that she had missed a significant number of work days over the course of 2008," and she was "absent with increasing frequency starting in October 2008." Id. at 11. The ALJ also found that Hickey complained to Bomers that when she called to say that she would be absent from work, she did so by leaving messages late at night on Hickey's office voice mail. Hickey would "get the messages in the morning when it was too late to get a temporary secretary to cover for the day." Id. at 11. Hickey spoke to Bomers on December 10, 2008, and "itemized his concerns," telling Bomers that he "did not want to have the conversation again with her." Id. The next day, December 11, 2008, Bomers left work at noon and never returned. She called Hickey on December 12 and left a message on his office voice mail stating that she was either "in the hospital or going into the hospital." Bomers had unplanned surgery on December 13 and thereafter was hospitalized and then returned home for several weeks.*fn16 At the end of December, Bomers and Hickey spoke and Hickey asked Bomers to call him "on or about" January 8 ("the next Thursday after their conversation")*fn17 to discuss her return. Id. at 6, 11. However, Bomers did not call. Id. Bomers also "did not provide [Hickey] with any medical documentation of her illness or specific information about its nature." Id. at 6. This was information that Hickey asserted that he "needed to know . . . to evaluate whether . . . [Bomers] would return to work." Id. at 11. On January 11, 2009, Hickey sent Bomers a letter discharging her. The letter stated in pertinent part:
I was disappointed when you did not call me last Thursday to discuss your situation. I did receive the call you made late Friday stating you would not be working this week. From the content of that call it appears that you do not know when, if ever, you would be able to return to work, or that, even if you return, how long you would be able to continue to work.
You have now been away from work for over a month. This combined with other work absences and problems, has created a very undesirable situation for me. Accordingly, I have decided to replace your contract with another contract server immediately. . . .
It is possible that, there maybe [sic] limited part time work available in the future, particularly in assisting your replacement contractor.
I hope that your health improves soon.
In general, a terminated employee is presumed to be eligible for benefits. Morris, 975 A.2d at 181; D.C. Code § 51-109 (2001). However, "[t]hat presumption is rebutted, and the employee becomes ineligible for benefits, when the employer proves by a preponderance of the evidence that the employee was fired for misconduct." Id.; D.C. Code § 51-110. The unemployment statute distinguishes between "gross misconduct" and "misconduct, other than gross misconduct," also referred to as "simple misconduct."*fn18 "[I]mplicit in [the] definition of 'misconduct' is that the employee intentionally disregarded the employer's expectations for performance." Bowman-Cook, 16 A.3d at 135 (citation, internal quotation marks, and emphasis omitted); see also Chase, 804 A.2d at 1124 n.12 (noting that a finding that the employee's misconduct was intentional "may be required even for a finding of simple misconduct"). To prove gross misconduct, "the employer must prove that the employee's actions were willful and deliberate." Morris, 975 A.2d at 182; see 7 DCMR § 312.3. Thus, for example, while "[a]ttendance at work is an obligation which every employee owes to his or her employer, and poor attendance, especially after one or more warnings, constitutes misconduct sufficient to justify the denial of a claim for unemployment benefits," "[t]he fact of absences or tardiness alone cannot suffice as proof of gross misconduct, without consideration of the bases for such absences or tardiness." Id. (citing Shepherd v. District of Columbia Dep't of Emp't Servs., 514 A.2d 1184, 1186 (D.C. 1986)). "This is so even if the absences or tardiness are repeated, although such a factor might be relevant in assessing the ultimate fact of willfulness or deliberateness." Id. (citing Larry v. Nat'l Rehab. Hosp., 973 A.2d 180, 183 (D.C. 2009)); see also id.("Genuine illness that prevents an employee from coming to work negates the willfulness and deliberateness of her absenteeism, thereby preventing a finding of gross misconduct.").
In this case, the ALJ found that Hickey "failed to meet [his] burden to show that Claimant's absence from work after December 11, 2008, was deliberate rather than medically necessary" given that "Employer's discharge letter notes the problems her absence was causing him but does not accuse her of malingering." Final Order II at 12. The ALJ therefore concluded that Bomers was not discharged for "gross misconduct." The ALJ also addressed whether Bomers' conduct constituted "simple misconduct" and concluded that it did not. She reasoned that Bomers' absences did not "adversely affect a material employer interest," 7 DCMR § 312.5, since Hickey "did not argue that [Bomers'] services were difficult to replace." Final Order II at 13. The ALJ also reasoned that Hickey did not argue that Bomers' absence "violated an Employer policy of which [Bomers] was aware," Id. (i.e., Hickey did not prove a "breach of the employment agreement or contract"). Id. The ALJ concluded that "[w]ithout some additional factor, . . . absences based on illness do not constitute simple misconduct." Id. She did not specifically consider whether Bomers' conduct"breach[ed] . . . the employee's duties or obligations to the employer." Id.
Hickey argues that the ALJ focused only on Bomers's absences - which Bomers claimed but never documented to be based on illness - and failed to take into account Bomers' "failure to provide evidence of her illness and when she could return to work, when requested by Hickey." He argues that this failure constituted "willful misconduct" or, at a minimum, "disregard of the employer's interest." He emphasizes that by January 11, 2009, the date when he sent the termination letter, "he still had not heard from [Bomers] or her doctor as to either  her condition or when she would be returning to work." "[T]he relevant factor," he argues, is Bomers's "willful and deliberate action in refusing to provide any information on her illness or when she could return to work."
While we do not agree that Bomers' behavior amounted to gross misconduct,*fn19 we are persuaded that it did amount to simple misconduct and that the ALJ erred in concluding otherwise. The ALJ's analysis reflects an assumption that Hickey terminated Bomers because of her absence beginning in December 2008 (following on the heels of her "significant" absences earlier in 2008). Indeed, the ALJ concluded that "[t]he final incident precipitating [Bomers'] discharge was her absence beginning on December 11, 2008." Final Order II at 11. But that conclusion overlooks the ALJ's finding that Bomers "did not call" Hickey on the appointed date (January 8) to give him an idea about when he could expect her to return, and the undisputed evidence that Hickey terminated Bomers only after that omission and after Bomers failed to provide Hickey with any information about when she might return*fn20 (through a date-of-return estimate, or information about her illness from which he might estimate her return date, or a statement from her doctor about when she would be able to work again).*fn21 Both in his testimony at the hearing (testimony that the ALJ appears to have credited) and in the termination letter, Hickey emphasized (1) Bomers's failure to timely advise him of expected absences (i.e., her leaving office voice mail messages late at night saying that she would not be in the next day, when it was too late for Hickey to arrange for a replacement secretary), and (2) Bomers' failure to give Hickey any idea about when she expected to return to work after her hospitalization (as to which she had given Hickey no documentation). Bomers acknowledged that she did not provide Hickey with "any doctor's certificate or statement indicating what [her] illness was, what [her] work situation would be, [or] when [she] could return to work." Hickey testified that Bomers' omissions led him to conclude that "I can't carry on like this," and to turn to a contract service for secretarial assistance.
We are constrained to agree with Hickey that, taken together, Bomers' repeated failure timely to (1) apprise Hickey about days of expected absence throughout her employment and (2) respond meaningfully to his request for information about the expected duration of her absence following her December hospitalization constituted a breach of Bomers' duty to Hickey as her employer, and thus constituted simple misconduct.*fn22 See Morris, 975 A.2d at 183 n.6 (citing cases from other jurisdictions upholding a denial of benefits even though the employee has shown that her absence was due to sickness because the employee failed to notify the employer of his or her impending absence from work).*fn23 The ALJ's conclusion that Hickey failed to prove that he fired Bomers for misconduct does not flow rationally from the ALJ's factual findings and the supporting substantial evidence in the record that was credited by the ALJ.*fn24
For the foregoing reasons, the Final Order in OAH Case No. ESP-112779-09, concluding that respondent Bomers was an employee rather than an independent contractor, is affirmed. The Final Order in OAH Case No. ESP-113273-09, concluding that Bomers was not terminated for misconduct and is entitled to unemployment benefits, is reversed.