The opinion of the court was delivered by: P. Kevin Brobson, Judge
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE P. KEVIN BROBSON, Judge (P.)
Petitioner Stage Road Poultry Catchers, a joint venture (Stage Road or the Joint Venture), petitions for review of a final decision and order of the Department of Labor and Industry (the Department) dated November 9, 2010, which denied the Joint Venture's petition for reassessment of unemployment compensation tax assessed by the Department's Office of Unemployment Compensation Tax Services (Tax Services).*fn1 We now reverse the Department's order.
At the outset, we begin by noting that the Joint Venture is organized pursuant to two agreements, the first agreement effective January 6, 2003 (the 2003 Joint Venture Agreement), and the second agreement effective November 1, 2006 (the 2006 Joint Venture Agreement) (collectively the Joint Venture Agreements).*fn2 (Reproduced Record (R.R.) at 675a-78a.) The stated "purpose of the joint venture is to conduct on a job-by-job basis, as co-owners for profit, the business of providing the service to poultry growers of catching their poultry for shipment to market." (Id.) John W. Snook and Jane E. Snook are designated as the "General Agents" of the Joint Venture. (Id.) Although the Joint Venture Agreements provide that the members of the joint venture each "shall have an equal voice in the affairs of the joint venture and an equal share in its net profits and net losses," the agreements also provide that the General Agents are appointed to do every act and thing which either of them deems necessary or desirable to advance the interests of [the Joint Venture], . . . including, but not limited to, . . . representing [the Joint Venture] to poultry growers, providing transportation to and from catching jobs, providing a fork lift with an operator whenever needed, collecting all amounts due and payable to [the Joint Venture], paying all expenses incurred in connection with [the Joint Venture's] business, and distributing net profits among [the Joint Venture's members] as soon as feasible after each poultry catching job.
The Joint Venture Agreements provide that "[th]e General Agents shall receive a guaranteed payment of $0.006 per pound for each job where 60,000 live pounds of poultry or less are caught and of $0.003 per pound for each job where more than 60,000 pounds of live poultry are caught." (Id.) The guaranteed payment, which is deducted to determine net profits for each job, is applied first to expenses and then for the General Agents' services. (Id.)
On September 30, 2008, Tax Services filed a notice of assessment against the Joint Venture members (Catchers) for wages paid for poultry catching services performed by the Catchers from the first quarter of 2004 through the fourth quarter of 2006, based on Tax Services' determination that the Catchers were employees of the Joint Venture.*fn3 On January 11, 2010, Tax Services filed an additional notice of assessment against the Joint Venture for wages paid to the Catchers for poultry catching services performed from the fourth quarter of 2006 through the fourth quarter of 2008, again based on its determination that the Catchers were employees of the Joint Venture.*fn4 The Joint Venture petitioned the Department for reassessment of the September 30, 2008 assessment and the January 11, 2010 assessment (collectively referred to as the Assessments), on October 15, 2008 and January 20, 2010, respectively. In its petitions for reassessment, the Joint Venture maintained that Tax Services improperly deemed the Catchers to be employees of the Joint Venture.
The Department conducted a combined fact-finding hearing for both reassessment petitions on March 3, 2010, at 9:30 a.m., during which Jeffrey Frey, an unemployment compensation tax agent employed by Tax Services, Jane Snook, a general agent of the Joint Venture, and Robert Church, the Joint Venture's accountant, testified.
Of particular relevance to the matters now before the Court, Mrs. Snook testified to the manner in which Stage Road operates its chicken catching business. Mrs. Snook explained that chicken processors own the chickens, chicken farmers raise the chickens, and Catchers catch the chickens so that the chickens may be delivered to the processors. (R.R. at 79a-80a.) The processors pay the Catchers for their catching services based on the total number of pounds of chickens that are caught at a particular facility at a particular time. (R.R at 80a.)
As to how Stage Road gets Catchers for each job, Mrs. Snook testified that Stage Road does not have a set group of Catchers, and she explained that the group of Catchers could be different for each job. (Id.) She receives at least seven or eight calls a day from new individuals, inquiring about chicken catching opportunities. (Id.) She explained the process as follows:
Q. But how do they know to call you? Do you go out there and advertise and say I'm in the business of catching chickens, or do people just communicate with one another?
A. Yeah. They know, and they tell each other. Like not everybody even calls me.
Q. Is this by word -- I'm sorry.
A. Yeah. So I might not know exactly -- I can't even keep a list who calls me because they tell each other, and that person don't even call in sometimes.
Q. So you get one of these faxes in, and you're also receiving phone calls throughout the day?
Q. From these catchers. How long do you take these phone calls to? Is there a point where you stop taking the phone calls?
Q. But is there a point where you have enough people for a job though where you would say --
A. Oh, yes, yes, yes. Sometimes it happens because they don't always call in, we might get -- see, we leave our house, and everybody knows our route. So we usually have a store that we stop at, and we tell the people ‗cause a lot of people that we work with don't have a license, they don't just have jobs, and they come, and they know where we're going to be at.
And we might get there, and there might be twelve of them there. And they don't want to go with twelve people, because if they get -- if we only catch 30,000 pounds, and say you get a cent a pound, $300; that ain't going to give much to twelve people for a job. So some of them will offer to go home then, like we're not going. We're not going to make no money to do this.
Q. Did you ever have an example where not enough people called in?
Q. What did you do in those circumstances?
A. It just makes it tough. It makes it for a long night.
Q. Because you're doing the same job, just with less people?
A. Yes. The chickens have to be caught. There is never a time you can say I can't catch those chickens because the processor plants need them.
Q. Whose decision was it if someone works or does not work? Do you decide if someone works or they don't work, or is it the catchers who just make the decision whether they want to work one day?
Q. So they can just call up and say I just don't feel like working today.
Q. Or they just don't call. (R.R. at 86a-88a.)
Mrs. Snook testified that once at the farm, the group of Catchers work together to determine the different jobs that each will perform. She explained the various tasks and division of labor among the Catchers as follows:
Q. Are there different jobs the catchers do?
A. Yes. Sometimes we -- if we catch for Penfield, they provide a forklift, so everybody catches in the barn. But if we catch for Clark's Feed, they have us load chicken trucks with crates, so some people have to go out in the truck, and some in the chicken house.
Q. Some people are loading, some people are just catching?
Q. Do you make that determination and say catcher 1, 2, 3 is going to load, catcher 4, 5, 6 is going --
Q. Who makes that determination?
A. Just the whole group. ...