News & Information

CCH® UNEMPLOYMENT INSURANCE — 11/25/14

Truck driver was employee despite wage assignment

The court affirmed a determination by the Board that an employer was subject to the payment of unemployment insurance taxes. The issue presented involved the relationship between the employer, the claimant, and a third business entity. The employer and the claimant entered into a “lease purchase contract” where all income derived from the operation of the vehicle was assigned to the employer. The claimant then leased the vehicle to the third business entity, the only trucking company that would agree to the income-assignment requirement. The lease was terminated after an accident that resulted in the truck being totaled. The court held that there was substantial evidence to support the Board’s finding that the employer exercised “significant control” over the claimant and that the employer failed to rebut the statutory presumption. The employer would not sell the claimant the truck unless he leased it to a third-party trucking company that would agree to a wage assignment. As the business entity was the only company that would agree to that kind of assignment, the claimant was limited to working only with that entity, a company with whom the employer had a separate financial arrangement for the leasing of trailers. Also, the claimant’s paycheck was directly controlled by the employer; the employer deducted payments for the truck and other expenses from the claimant’s check; and if the claimant did not earn a paycheck by working for the entity, and thus missed payments on the truck, the employer would repossess the vehicle (Clifton Services, Inc. v. DWS, Ark. Ct. of App., DIVISION I, No. E-13-1204, October 22, 2014).