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L.A. McMahon Building Maintenance, Inc. v. The Department of Employment Security

Court of Appeals of Illinois, First District, Fourth Division

May 7, 2015

L.A. McMAHON BUILDING MAINTENANCE, INC., d/b/a L.A. McMahon Window Washing, Plaintiff-Appellant,
THE DEPARTMENT OF EMPLOYMENT SECURITY, and JAY ROWELL, Director, the Department of Employment Security, Defendants-Appellees

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Appeal from the Circuit Court of Cook County, Illinois. No. 11L51189. Honorable Robert Lopez Cepero, Judge Presiding.

FOR APPELLANTS: Ryan A. Haas, Chuhak & Tecson, P.C., Chicago, IL.

FOR APPELLEE: Lisa Madigan, Attorney General, Carolyn E. Shapiro, Solicitor General, Gary Y. Chyi, Assistant Attorney General, Chicago, IL.

PRESIDING JUSTICE FITZGERALD SMITH delivered the judgment of the Court, with opinion. Justices Howse and Cobbs concurred in the judgment and opinion.


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Justices Howse and Cobbs concurred in the judgment and opinion.


[¶1] Plaintiff L.A. McMahon Window Washing (McMahon) sought administrative review in the circuit court of Cook County of a decision by defendants Illinois Department of Employment Security (IDES) and its director, Jay Rowell (the Director) (together, the Department), which affirmed

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the decision of IDES that window washers who performed services for McMahon were employees for purposes of the Illinois Unemployment Insurance Act (the Act) (820 ILCS 405/212 (West 2010)). Pursuant to an audit and a fact-finding hearing, the Department determined that McMahon failed to establish that the exemptions from " employment" in section 212 of the Act apply to the workers in question. The circuit court upheld the Director's decision. McMahon appeals, contending the Director and the circuit court erred in their determination that the McMahon workers were " employees" and not " independent contractors" under section 212 of the Act. For the following reasons, we affirm.


[¶3] McMahon provides window washing services for clients.[1] In 2009, the Department initiated an audit for the years 2006, 2007, and 2008 (the audit period) to determine whether McMahon was required to make unemployment contributions for its window washers. Following the audit, in January 2010, the Department issued a determination that McMahon's window washers were employees and ordered an assessment against McMahon for $64,051 in unpaid employer contributions for the audit period, as well as $35,773 in unpaid interest.

[¶4] McMahon then filed a protest to the determination and assessment in February 2010, in which it requested an administrative hearing. In its protest, McMahon described itself as " in the business of window washing." It stated:

" In the context of its business, McMahon utilizes the services of certain independent contractors to wash its customer's windows. In general, McMahon has contractual agreements in place with Workers, specifically identifying the relationship between McMahon and individual Workers as that of 'Employer' and 'Independent Contractor' (the 'Agreements'). The Agreements are non-exclusive, and remain in effect until terminated either by completion of a project, or upon cancellation of a project by any party other than McMahon, or by McMahon if either (i) reasonable notice *** is delivered to the Contractor; or (ii) reasonable evidence exists that the services provided by the Contractor are either unsatisfactory, incompetent, unprofessional, or untimely. McMahon does not prevent the Workers from working with any person or entity in addition to, or instead of, McMahon.
The actual work-relationship of McMahon and the Workers functions as follows: First, Workers who are interested in obtaining work from McMahon either call McMahon or go to McMahon's office to see if there are any appointments set. McMahon does not call any Workers, nor contact Workers in

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any other manner, to arrange for work to be completed. The Workers solicit McMahon for window washing appointments of their own volition. McMahon will then tell an inquiring Worker of any relevant appointment, and offer the Worker the opportunity to take the appointment.
Workers are free to decline any appointment for any reason, whether it be because the Worker does not care for the location of the home, size of the home, the time of the appointment, or any other reason. In fact, Workers often do decline appointments. When this happens, McMahon offers the appointment to the next inquiring worker. The frequency in which the Workers contact McMahon for work varies by worker; some contact McMahon daily, some contact McMahon weekly, some contact McMahon yearly, and some are more sporadic. McMahon has no requirement for the Workers to contact McMahon at any certain volume or on any certain time table.
After agreeing to work at a specific appointment, a Worker travels to the customer's home within the timeframe quoted to the customer. Workers utilize their own vehicles for transportation, and use their own supplies to complete the work. Workers are not reimbursed for any travel or supply costs. McMahon provides no training to the Workers, and does not direct a specific method of cleaning. Workers are not required to wear a uniform. Workers have their own business cards and advertise their own services in the yellow pages and elsewhere. Workers also hire their own helpers and/or employees, for whom McMahon provides no reimbursement nor supervision or training.
When the work is completed, the Worker invoices the customer. If the customer pays the Worker on-site, the Worker submits the payment to McMahon either in person or through the mail. Otherwise, the customer mails payment to McMahon directly. McMahon then generally splits the payment equally (fifty-fifty) with the Worker. ***
* * *
McMahon also employs workers, separate and apart from the Workers at issue, which it classifies as employees *** [as] office personal. McMahon makes appropriate withholdings with respect to these employees ***."

[¶5] In September 2010, a representative of the Director conducted an administrative hearing on the protest and objections to the determination and assessment. At the outset of the hearing, the representative told the parties he was looking for answers to three inquiries: (1) the nature of the business; (2) the nature for the services performed by the individuals at issue; and (3) the nature of the relationship between McMahon and the individuals at issue. McMahon presented evidence and testimony from general manager Mark Crane, as well as from two window washers, Henry Garduno and Leon Juarez.

[¶6] Counsel for McMahon opened his argument saying, " McMahon Window Washing is an Illinois corporation in the business of providing window washing services primarily to residential customers."

[¶7] McMahon general manager and part owner Mark Crane explained that McMahon has a call center in Schaumburg where mostly residential customers call in to request window washing and yard cleaning services. He explained McMahon takes incoming calls from prospective clients and gives out work to " independent contractors" when those contractors call in and are available for work. There are five employees who work in the Schaumburg office and who are issued W-2 forms, receive

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employee benefits, vacation, and sick pay. These employees do not perform any window washing. McMahon is a seasonal business, and each year it performs work for 10,000 to 11,000 customers. Crane described the McMahon window washers as independent contractors. The window washers did not receive employee benefits, and their incomes were reported on 1099 forms, used for independent contractors, to the Internal Revenue Service. However, McMahon keeps a workers' compensation and general liability insurance policy that covers the window washers. The cost to McMahon for that policy was based on the amount of work performed by all window washers. Crane explained that the window washers are required to carry their own policies in addition to the policy carried for them by McMahon.

[¶8] Crane described McMahon's methodology regarding clients: customers who request window washing services from McMahon call the Schaumburg office and are given a twohour time slot that is convenient for the customer during which the window washer and possibly his assistants will arrive and begin work. No specific start or end time for the work is given the customer. When the customer calls, Crane gives a price estimate over the phone based on the customer's description of the work to be done. Upon arrival at the customer's home, the window washer ...

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