Appeal from the Circuit Court of Cook County. The Honorable William Caisley, Judge Presiding.
Petition for Leave to Appeal Denied April 3, 1996.
The Honorable Justice DiVITO delivered the opinion of the court: Hartman and Burke, JJ., concur.
The opinion of the court was delivered by: Divito
The Honorable Justice DiVITO delivered the opinion of the court:
Following administrative proceedings, defendant Loleta A. Didrickson, Director of the Illinois Department of Employment Security (the Director), found that United Delivery Service, Ltd. (UDS), which operates a package delivery service, owed unemployment insurance contributions for wages paid to its delivery drivers pursuant to the Unemployment Insurance Act (Ill. Rev. Stat. 1989, ch. 48, par. 300 et seq. (now 820 ILCS 405/100 et seq. (West 1992))). On administrative review, the circuit court reversed the Director's assessment. For the following reasons, we affirm the judgment of the circuit court.
An audit by the Illinois Department of Employment Security (the Department) was prompted by a former UDS driver filing a claim for unemployment benefits. The audit found UDS liable for unemployment insurance contributions for payments made to its delivery drivers in 1990.
On June 24, 1992, an administrative hearing was held before the Director's representative, and testimony about the business practices of UDS was received from UDS's general manager, vice-president, president, and from several delivery drivers. The testimony revealed that UDS hired drivers to pick up packages from one location and deliver them to another. Each driver entered into an equipment lease with UDS, for the use of the driver's automobile, and an independent contractor's agreement, for the provision of package delivery services. Both agreements specified that the lessor/driver would receive 50% of all revenue generated by the deliveries.
Some drivers received assignments by initiating calls to UDS; others carried pagers and radios, which could be rented from UDS. Drivers were free to accept or decline delivery jobs without repercussion. Some drivers waited as long as five months between deliveries. UDS did not enforce quotas or mandatory work schedules. Drivers were free to determine their own method and route for delivering packages, and they could hire helpers. Drivers were also permitted to work for other delivery companies, and some did. Uniforms were not required, yet some drivers rented or purchased uniforms from UDS.
Drivers were compensated after making deliveries and returning customer-completed delivery tickets to UDS. While no time restraints existed, drivers could earn extra money if packages were delivered within 1 1/2 hours. Drivers did not receive paid vacations, sick leave, or expense accounts. Drivers were not required to report to UDS offices. No mandatory meetings were held, and all business, including the return of delivery tickets, could be transacted by mail.
Drivers paid their own expenses, such as gas and tolls, and were required to show proof of liability insurance. If drivers did not possess worker's compensation coverage, UDS provided the insurance through a paycheck deduction. The fleet of drivers included individuals and corporations from Illinois and Indiana. Some drivers ran a business of their own and possessed letterhead and business cards.
On December 18, 1992, the Director's representative issued a report recommending that UDS be assessed $5,198.40 for unpaid unemployment contributions for wages paid to the 26 individual drivers employed in Illinois. The report stated that UDS failed to prove that its drivers qualified as independent contractors under section 212 of the Unemployment Insurance Act (Ill. Rev. Stat. 1989, ch. 48, par. 322 (now 820 ILCS 405/212 (West 1992))). Following an objection from UDS, the Director reviewed and endorsed her representative's report. UDS appealed the judgment to the circuit court. The court found that the drivers were independent contractors, and it reversed the Director's holding.
The Unemployment Insurance Act (the Act) defines employment as any service performed by an individual for an employing unit. (Ill. Rev. Stat. 1989, ch. 48, par. 316 (now 820 ILCS 405/206 (West 1992)).) An employer is required to make unemployment contributions with respect to wages payable for employment. (Ill. Rev. Stat. 1989, ch. 48, par. 550 (now 820 ILCS 405/1400 (West 1992)).) Section 212 provides an exception to the contribution requirement for the work of independent contractors. Ill. Rev. Stat. 1989, ch. 48, par. 322 (now 820 ILCS 405/212 (West 1992)).
UDS contends that this court need not conduct a section 212 analysis because UDS was not responsible for unemployment contributions as it did not pay any wages. Wages are renumeration for personal services. (Ill. Rev. Stat. 1991, ch. 48, par. 344 (now 820 ILCS 405/234 (West 1992)).) UDS argues that the money paid ...