Applying the ABC test, the Indiana Supreme Court ruled that a company did not misclassify its drivers as independent contractors.
In a unanimous decision, the Indiana high court determined on Wednesday, Jan. 23, that Q.D.-A., a business that connects drivers with customers who need too-large vehicles driven to them, established all three prongs of the ABC test to show that its drivers were not employees.
The ABC test presumes that worker is an employee unless and employer can establish that:
- A. The individual has been and will continue to be free from control and direction in connection with the performance of such service, both under the individual’s contract of service and in fact.
- B. The service is performed outside the usual course of the business for which the service is performed.
- C. 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, or the individual is a sales agent who receives remuneration solely upon a commission basis and who is the master of the individual’s own time and effort.
The Indiana Supreme Court determined that Q.D.-A. established all three prongs by proving that the driver was not under the company’s control or direction, that the driver performed a service outside the company’s usual course of business, and that the driver ran an independent business.
“Q.D.-A. gave no guidance to driver on how he should perform his work and never evaluated or monitored him,” the court wrote. “Driver could refuse jobs with no repercussions, work for as many drive-away companies as he wanted, negotiate his per-trip pay, and call in at his own convenience for jobs.”
According to court documents, a driver, who was not named signed a contract with Q.D.-A. that referred to him as an independent contractor, filed for unemployment with the Indiana Department of Workforce Development after parting ways with the company.
Because Q.D.-A. did not pay unemployment taxes for the driver, the department investigated to determine if the driver should have been classified as an employee. After the investigation, the department decided that Q.D.-A. failed to prove any of the prongs under the ABC test.
Q.D.-A. protested the decision and eventually took the case to the Court of Appeals, which reversed the decision and said that the company satisfied the ABC test.
The Indiana Supreme Court agreed that the company proved the driver was an independent contractor.
“Driver had total control over how – and even if – he completed his work,” the court wrote. “No evidence shows Q.D.-A., in fact, controlled driver in a way that would make him an employee.”
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