United States: Indiana Supreme Court: Driver For Large Vehicle Transportation Matching Service Properly Classified As Independent Contractor

Last Updated: February 15 2019
Article by Michael A. Moffatt, Emily L. Connor and Jennifer Romaniuk

Resolving split decisions among Indiana Court of Appeals panels, the Indiana Supreme Court ruled on January 23, 2019, that a transportation matching service properly classified a driver as an independent contractor.  Q.D.-A, Inc. v. Indiana Department of Workforce Development. In so holding, the court provided potentially valuable insight into Indiana's ABC test that may prove helpful to employers with independent contractor drivers.

Background

In Q.D.-A, a former driver for Q.D.-A filed for unemployment compensation with the Department of Workforce Development (DWD). Q.D.-A contracted with drivers to transport recreational and other non-towable vehicles, from manufacturers to dealerships and buyers.  After determining Q.D.-A had not paid unemployment taxes for the applicant driver, the DWD determined the driver should have been classified as an employee.

An administrative law judge (ALJ) affirmed the DWD's decision, but the Indiana Court of Appeals reversed, holding that the driver – who provided his own equipment, determined his own hours, negotiated his pay per trip, and could even outsource his work to other drivers – was an independent contractor. In a 5-0 decision, the Indiana Supreme Court agreed.1

Q.D.-A's Administrative Challenge

The Indiana Unemployment Compensation Act presumes a worker is an employee unless the employer can satisfy the so-called "ABC test": (A) the worker is free from the employer's control and direction; (B) the worker performs a service outside the usual course of the employer's business; and (C) the worker receives a commission or operates an independently established trade, occupation, or profession.

The ALJ found Q.D.-A did not satisfy the first two prongs of the ABC test. Specifically, the ALJ found Q.D.-A controlled the driver because it provided a two-day orientation to its independent contractors to train them on federal regulations, and required them to take a driving test. The ALJ further reasoned that the driver performed work within Q.D.-A's usual course of business because the company provided for transportation and the drivers provide that transportation.

Indiana Court of Appeals and Supreme Court Reverse Administrative Decision

Both the Indiana Court of Appeals and the Indiana Supreme Court rejected the ALJ's analysis. The Supreme Court concluded that the driver, "expressly understood and agreed" he was an independent contractor when he executed the contract, and had "total control over how – and even if – he completed his work."  The driver could refuse jobs without repercussions, work for competitors, and negotiate his per-trip pay. Notably, the court found Q.D.-A did not have control over the driver simply because it provided training on federal regulations the driver was required to follow independent of his relationship with Q.D.-A.2

The court next found the driver performed an activity outside Q.D.-A's usual course of business, reasoning that Q.D.-A's business was to arrange for transportation while the driver's business was to actually provide that transportation. As the middleman, Q.D.-A connected the driver to the customers and did not provide the drive-away service itself. Because the ALJ unreasonably concluded Q.D.-A failed to satisfy the ABC test, the court reversed the decision.

Takeaway for Businesses Operating in Indiana

The court's decision could have a much larger application.  First, the court found Q.D.-A did not exert control over the drivers by training them in the federal government transportation requirements.  Thus, businesses in Indiana do not fail the ABC test or lose the right to use independent contractors simply because the contractors are required to comply with federal regulations.  

Second, a key factor for the court was identifying the transportation-sharing business as a middleman that provided a service other than that directly offered by the contractor.  This finding is useful for other on-demand business models that are similarly the "middlemen" that facilitate others to provide the service and do not employ the service providers.   

It remains to be seen how the Indiana courts will analyze those arguments, but Q.D.-A is a step forward in the law's approach to the ever-evolving landscape of the gig economy. 

Footnotes

1 The Indiana Supreme Court granted the DWD's petition to transfer to resolve a split between the Court of Appeals finding in Q.D.-A and Company v. Indiana Dep't of Workforce Dev., 86 N.E.3d 204, 209 (Ind. Ct. App. 2017) (holding that an administrative law judge's conclusion that a drive-away driver was an employee was reasonable).

2 2019 Ind. LEXIS 33, at *10 (citing Local 777, Democratic Union Org. Comm., Seafarers Int'l Union of N. Am., AFL-CIO v. NLRB, 603 F.2d 862, 875 (1978) (noting "[g]overnment regulations constitute supervision not by the employer but by the state.")

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions