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Ride Auto Co. v. Department of Employment and Economic Development

Court of Appeals of Minnesota

November 25, 2013

Ride Auto Co., Relator,
v.
Department of Employment and Economic Development, Respondent.

UNPUBLISHED OPINION

Department of Employment and Economic Development File No. 30351255-2.

Robert J. Bruno, Robert J. Bruno, Ltd., Burnsville, Minnesota (for relator)

Lee B. Nelson, Christine Hinrichs, Department of Employment and Economic Development, St. Paul, Minnesota (for respondent)

Considered and decided by Hooten, Presiding Judge; Schellhas, Judge; and Stauber, Judge.

HOOTEN, Judge

Relator-employer challenges the determination of an unemployment law judge (ULJ) that certain workers are employees rather than independent contractors. Because the totality of the circumstances demonstrates that the workers are independent contractors as a matter of law, we reverse.

FACTS

Relator Ride Auto Co., is a used-car dealership based in Burnsville, Minnesota, and owned by Reza Shakibi. Relator hired five individuals, described by the ULJ as "marketers, " to prepare used vehicles and advertise them for sale. Respondent Minnesota Department of Employment and Economic Development (DEED) audited relator's records for the years 2008 to 2012, determined that the marketers were misclassified as independent contractors, and computed that relator owed $1, 169 in taxes. Relator appealed, and the ULJ held a hearing. Reza Shakibi and his son Arash Shakibi, who participates in the business, appeared with counsel for relator and were the only witnesses.

Reza testified that he purchases used vehicles from auctions across the country. In selecting vehicles for his inventory, he studies the online condition reports and estimates the repair costs, revenues, and profit margins. After purchasing vehicles from an auction, Reza sends the condition reports to the marketers, who then, using their own laptops and cell phones, order repair parts, procure mechanics, and arrange for transportation of the vehicles from the auction site to the mechanic. The marketers determine among themselves who handles a particular vehicle and use their own judgment in deciding which mechanic to hire. After repairs, the vehicles are transported to relator's office, and the marketers, using their own cameras and laptops, take pictures and videos of the reconditioned vehicles and post them on relator's website and Craigslist.com. Because Reza lacks the computer skills to design and code the online ads, he does not direct the marketers how to take pictures or set up the ads. Once the vehicles are advertised, Reza alone communicates and negotiates with potential buyers. After he sells the vehicles, the marketers are paid $50 or $65 per vehicle.

Relator finds the marketers on Craigslist.com. The marketers work for relator under an "Independent Contractor Agreement, " in which the parties agree that the marketer "is an independent contractor, and not an employee." The agreement provides that the marketers "will have the exclusive right to determine the method, details, and means of performing the [s]ervices." Arash testified that Reza can choose not to give any more jobs to the marketers at any time. He further testified that the marketers, as a result of their experience in working for relator, may open up their own dealerships.

The marketers do not have set hours and are not required to work at relator's office. Each marketer rents a desk at relator's office under a "Monthly Rental Agreement" for $40 per month. The marketers each have a key for their own desk and can work for other dealerships while using their rented desks. They are not required to rent a desk, but they all do. Reza testified that he does not track when the marketers work in the office and does not know when they will be at the office because he attends auctions during most of the week. Arash testified that he works at the office about 20 hours per week and that "most of [the marketers] come and go at their own time."

Following the hearing, the ULJ determined that the marketers are employees rather than independent contractors, and that the remuneration of the marketers is considered wages for the purposes of taxation and unemployment insurance benefits. The ULJ affirmed the decision upon relator's motion for ...


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