BNA Constr. Ltd. v. Ohio Dept. of Job & Family Servs.

2017 Ohio 7227, 96 N.E.3d 838
CourtOhio Court of Appeals
DecidedAugust 15, 2017
Docket16AP-317
StatusPublished
Cited by12 cases

This text of 2017 Ohio 7227 (BNA Constr. Ltd. v. Ohio Dept. of Job & Family Servs.) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
BNA Constr. Ltd. v. Ohio Dept. of Job & Family Servs., 2017 Ohio 7227, 96 N.E.3d 838 (Ohio Ct. App. 2017).

Opinions

DORRIAN, J.

{¶ 1} Appellant, BNA Construction, Ltd., ("BNA") appeals a decision of the Franklin County Court of Common Pleas issued March 24, 2016 affirming a decision of the Unemployment Compensation Review Commission ("commission"). For the reasons that follow, we affirm.

{¶ 2} On September 30, 2015, the commission affirmed a decision issued by the director of the Office of Unemployment Compensation at the Ohio Department of Job and Family Services ("ODJFS"), specifically the November 20, 2014 "Director's Reconsidered Decision." Following an audit, the director issued her decision concluding that workers performing services for BNA were employees and not independent contractors.

I. FACTS AND PROCEDURAL HISTORY

{¶ 3} Acting on a tip that BNA was involved in some sort of alleged fraud, ODJFS conducted an employment audit of BNA. 1 According to activity logs of the auditor assigned to the case, the matter was opened on December 2, 2013. Following a series of discussions between the attorney for BNA, the accountant for BNA, and Brandi Vaught, ODJFS' auditor ("the auditor"), on March 20, 2014 the accountant for BNA met with the auditor.

{¶ 4} At that meeting, the auditor reviewed a number of records and completed a pre-audit questionnaire. The same day, after a preliminary review of the records, the auditor informed the accountant that because BNA had not provided proof of exclusion from unemployment compensation taxation, she would be reclassifying all workers, who had formerly been classified as 1099 independent contractors, as employees; she issued some preliminary numbers on what the company would likely owe.

{¶ 5} Six days after the initial audit meeting, the auditor participated in a telephone call that would eventually become the subject of disagreement at later hearings. It is at least undisputed that on March 26, 2014, a telephone call took place between the auditor and the owner of BNA, Horatio Lucero. The duration, contents, and identities of other participants in that call are disputed by the parties.

{¶ 6} Following additional internet research about the persons who performed work for BNA and to ascertain whether they had their own businesses as evidenced by federal tax ID numbers, registration with the secretary of state, or online advertising presence, the auditor issued a letter on September 19, 2014 informing the parties of the audit results. The auditor concluded that numerous workers should have been classified as employees rather than independent contractors. The auditor concluded that BNA underreported total wages by approximately 1 million dollars. The next day, the Office of Unemployment Compensation issued a tax notification containing BNA's computed liability and contribution rate.

{¶ 7} BNA requested reconsideration of the rate determination. On November 20, 2014, the director of the Office of Unemployment Compensation, acting through a designee, reconsidered the matter with no change in the outcome. BNA appealed the reconsidered decision on December 15, 2014 to the commission.

{¶ 8} Through a hearing officer, the commission held a hearing spread across several dates. Oral hearings ultimately took place on April 2, May 12, June 11, July 20, and August 19, 2015. The auditor, Lucero, and three workers for BNA, Fidel Campuzano, Jose Rivera, and Fabiano Santos, testified over the course of the hearings.

{¶ 9} The auditor testified that she had been an auditor for approximately 5 years, that she had been a "quality audit reviewer" for over 2000 audits, and that she had personally conducted on the order of 400 audits, mostly in the last two years. (May 12, 2015 Tr. at 23.) She admitted that she lacked a formal education in accounting, she had been an English major at Eastern Michigan University, and that she had failed to obtain a degree. However, she claimed to have taken a number of online courses in bookkeeping and accounting and stated she had experience working in a family business.

{¶ 10} The auditor testified that as part of her audit she was required to conduct four tests: a W-2 verification, a payroll validation, a reported wage comparison, and a search for potential misclassified workers and wages. However, because BNA produced no W-2s, payroll records, or reported wage records, the auditor was unable to complete any tests except the test for potential misclassified workers and wages. After her preliminary review, she informed BNA's accountant that ODJFS would be reclassifying all workers from 1099 independent contractors to employees and gave BNA's accountant preliminary numbers on unpaid unemployment compensation taxes.

{¶ 11} The auditor further testified that she held a follow-up telephone call on March 26, 2014 with BNA's owner, Lucero. She testified that she offered interpreting services at the beginning of the call and was told they would not be needed at that time. 2 She testified that BNA's attorney was present during the telephone call and that the attorney helped to re-explain or interpret some of the questions for Lucero. The auditor testified however, that "most of the questions, [Lucero] was able to answer me directly." (Apr. 19, 2015 Tr. at 102.) On cross-examination and using telephone records during the hearings, the auditor admitted that this follow-up telephone call with Lucero and his attorney took approximately 23 minutes, although she had marked in her own records that it lasted one hour. The auditor testified that even though the call was short, she covered with Lucero his employees' standing according to each of the 20 factors set forth in R.C. 4141.01(B)(2)(k), which are used to differentiate between employee and independent contractor status. She testified that because she was not provided proof of independence for the individual workers listed, she did a "general question or the twenty factors on framing services, which [she] was told these individuals provided." (June 11, 2015 Tr. at 46.) The auditor testified that she did not complete the 20-factors test as to each individual employee, but, rather, generally as to all employees based on Lucero's responses. Based on this conversation, the auditor filled out a questionnaire on the 20 factors and her completed questionnaire was introduced as an exhibit at the hearing. The questionnaire reads in relevant part:

[One] Who directs or controls the manner or method by which instructions are given to the individual(s) performing services?
The employer rcvs a contract through a large company like 84 Lumber. They give him the details and the specs/blueprints. He then tells the workers what needs completed and the time frame for it to be completed.
[Two] What training is required for the individual(s) performing services?
The employer only hires people who have prior experience with framing and construction. He may have to show someone how to operate the heavier, more expensive equipment when it is needed.
[Three] How are the services provided integrated into the regular business functions?
This is a framing company. Without framers/carpenters it would cease to exist.
[Four] By whom does the business require that services be provided?

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BNA Constr. Ltd. v. Ohio Dept. of Job & Family Servs.
2017 Ohio 7227 (Ohio Court of Appeals, 2017)

Cite This Page — Counsel Stack

Bluebook (online)
2017 Ohio 7227, 96 N.E.3d 838, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bna-constr-ltd-v-ohio-dept-of-job-family-servs-ohioctapp-2017.