employment subject to this chapter irrespective of whether the com- mon law relationship of master and servant exists, unless and until it is shown to the satisfaction of the director that:
(1) Such individual has been and will continue to be free from control and direction in connec- tion with the performance of the service, both under his or her contract for the performance of service and in fact;
(2) The service is performed either outside the usual course of the business for which the service is performed or is performed out- side all the places of business of the enterprise for which the service is performed; and
Courts have broadly defined both “the usual course of business” and “the places of business” in cases involving the trucking industry. In a case involv- ing a “drive-away” services company, which contracted drivers to deliver large vehicles to its customers, the Court of Appeals found that the driver and the company were both in the business of driving and delivering vehicles. The Court noted that the company
did not get paid until the drivers per- formed their service. The dissenting opinion argued that this conclusion was “like saying that the Earth is exactly the same as Saturn because they are both planets,” and that the company’s busi- ness was matching the owners of large vehicles that needed to be moved with drivers capable of moving them and there was no evidence that the company actually moved the vehicles.
FREE OF CONTROL Less cumbersome than the second,
the first qualification in the previ- ous law is a “right to control” factor. Arkansas Courts have designated “con- trol” as the primary factor under the common law independent contractor- employee test. However, trucking com- panies can still face problems proving their independent contractors are free to do the job as they wish. For one, Arkansas Courts have
viewed truck purchase agreements between companies and independent contractor owner-operators with skepti- cism. In a 2014 decision, the Arkansas Court of Appeals found that a company that entered into a lease purchase agree- ment with an owner-operator exercised “significant control” over the owner- operator. Specifically, the Court noted that
UNDER THE REVISED STATUTE, EMPLOYERS PRESUMABLY NEED TO PROVE ONE LESS
QUALIFICATION TO OVERCOME THE STATUTORY PRESUMPTION OF EMPLOYEE STATUS.
(3) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.
OUTSIDE USUAL PLACES OF BUSINESS When an employer had to meet
all three qualifications to prove an independent-contractor relationship, one qualification, in particular, was almost impossible to meet. The second qualification requires an employer to show that a contractor’s work was either “outside their usual course of the busi- ness” or “outside all their places of busi- ness.” This is tricky because Arkansas
40 What are the places of business
for a trucking company? The Court of Appeals found that roadways on which the vehicles were moved were the “places of business” of the “drive- away” services company. That decision was appealed to the Arkansas Supreme Court, who while disagreeing with the Court of Appeals, had the equally expansive view that the “enterprise took place inside the trucks, rather than on the roadways.” In sum, it appears that any trucking company with a driver driving a truck on a road cannot meet the second element of the “ABC test.” How can a trucking company do busi- ness outside of the roadways or the insides of trucks?
although the agreement provided that the owner-operator could work for any- one, it also provided that the company would not sell the owner-operator the truck unless he leased it to a truck- ing company that would agree to an assignment of his wages. As a result of the assignment, the selling company controlled the owner-operator’s wages, deducting truck payments and other expenses from his pay. Further, the only trucking company that would agree to such an assignment was a trucking company with which the leasing com- pany had a separate financial arrange- ment regarding the leasing of trailers. Additionally, Courts have justified
their findings of employer “control,” in part, on the control that is required by regulations in the trucking industry. Though not in an unemployment tax case, the Arkansas Court of Appeals recently acknowledged the effect of reg- ulations on the right to control factor. It remains to be seen if this wisdom will be applied in unemployment insurance cases.
ARKANSAS TRUCKING REPORT | Issue 3 2015
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