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Quality Care Options v. Unemployment Compensation

December 14, 2012


The opinion of the court was delivered by: Robert Simpson, Judge

Submitted: September 21, 2012



The central issue in this unemployment compensation appeal is whether Jamal Mack (Claimant), who performed healthcare services to clients of Quality Care Options (Company), did so as an employee or as an independent contractor. The compensation authorities determined Claimant was an employee. On its appeal, Company questions whether the record supports the conclusion that Claimant was an employee. Upon review, we reverse.

I. Background

Claimant works in the healthcare industry as a "direct care worker." Reproduced Record (R.R.) at 57a. Company is a healthcare staffing agency that matches healthcare workers with its clients, which are various hospitals and nursing homes.

Claimant began his association with Company in May 2005, and, as of 2011, he continued to perform services for Company's clients.

In June 2011, Claimant applied for unemployment compensation. When compensation was granted, Company appealed, asserting Claimant was an independent contractor. A hearing ensued before a referee.

At the hearing, Company, represented by counsel, presented the testimony of Verna Pomar, its Director of Operations. Company also submitted an "Independent Contractor Agreement," signed by Claimant and a representative of Company. R.R. at 67a. Claimant did not appear at the hearing.

After the hearing, the referee issued a decision in which he affirmed the grant of unemployment compensation. In so doing, the referee made the following relevant findings:

1. Claimant worked from May 19, 2005 through the present and beyond as a direct care worker. He is paid $15 an hour.

2. Quality Care Options (hereafter Quality) has a number of clients who will occasionally require direct care workers.

3. Quality has a list of individuals who have signed independent contractor agreements with it.

4. The individuals are all required to carry and maintain their own certifications.

5. When a client is in need of a direct care worker, Quality will contact an individual on its list and offer the work to the individual.

6. The individual is free to accept or refuse the offer.

7. There is no adverse result for an individual who refuses a particular offer.

8. If an individual accepts an offer, the individual will report to work at the client location and perform direct care duties as instructed by the client.

9. The individual and the client confirm the number of hours the individual works and submit that statement to Quality.

10. After receiving the statement, Quality prepares an invoice and sends the invoice to the client.

11. The client pays Quality according to the invoice.

12. Quality keeps a share of the money it receives from the client and forwards the balance to the individual.

13. The individual is paid by the hour.

14. The individual performs duties as instructed by the client.

15. The individual is free to register with Quality or any of its competitors.

16. It is common for individuals to be registered with Quality and with other companies.

17. Quality pays the individuals without making any deduction for taxes or any other withholdings and reports income to the government on a Form 1099.

18. As part of his association with Quality, Claimant signed an independent contractor agreement.

19. A direct care worker is not an occupation that is normally independent.

Referee's Dec., 9/28/11, Findings of Fact (F.F.) Nos. 1-19. Further, in his discussion the referee stated:

There are two tests to determine whether somebody is or is not self-employed. The first deals with the degree of control Quality has over the individual over the way the individual performs their [sic] work. The second tests [sic] deals with whether the individual is independent. The second test also includes an element into whether the individual's work is something normally considered to be independent.

Turning to the first element, the Referee finds there are a number of factors that favor employment. First amongst them is the fact the direct care worker is subject to the orders of the client. Second is the fact the direct care worker is paid by the hour and not the project. Quality has a business model that is virtually identical to the traditional temporary employment agency model. The individuals with whom it contracts are offered work and are assigned as needed.

There are some differences. Principal amongst them is the fact that an individual may decline an assignment and does not need a reason for that. Also, the individual is not required to stay in contact with [Q]uality while the individual is not working. These differences are principally because Quality is attempting to set up a business model that would not make them [sic] responsible for unemployment compensation benefits or any other care for the individual when the individual is not working.

Quality does undertake to provide qualified individuals for its clients. That is a service it performs and also reflects to some extent a degree of control over the individuals.

The factors favoring control are slightly fewer in number than those favoring independence, but the factors favoring control are much more important. An individual paid by the hour is much more likely to be an employee than an individual who is paid by the project. The fact that Quality maintains a degree of control in deciding whom it offers assignments to insure they [sic] are qualified for the assignment also reflects a degree of control. Finally, the fact that the direct care worker ...

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