CONCORD ENTERPRISES OF KNOXVILLE, INC.
COMMISSIONER OF TENNESSEE DEPARTMENT OF LABOR & WORKFORCE DEVELOPMENT
November 16, 2016 Session
from the Chancery Court for Davidson County No. 14-664-III
Ellen H. Lyle, Chancellor
appeal arises from a determination by the Tennessee
Department of Labor and Workforce Development ("the
Department") that Concord Enterprises of Knoxville, Inc.
("Concord"), a pet grooming business, misclassified
certain employees as independent contractors from 2006
through 2011 and, therefore, was liable for unpaid
unemployment taxes from that period. Following a hearing, the
Appeals Tribunal concluded that unemployment taxes were due,
a decision affirmed by the Commissioner's Designee.
Concord petitioned for judicial review. The Chancery Court
for Davidson County ("the Trial Court") affirmed
the decision of the Commissioner's Designee and dismissed
Concord's petition. Concord appeals to this Court. We
find, inter alia, that the pet groomers at issue
both performed their service at Concord's place of
business and performed pet grooming service that fell
squarely within Concord's course of usual business.
Evidence both substantial and material supports the
agency's determination. We affirm the judgment of the
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Affirmed; Case Remanded
C. Wimberly, Knoxville, Tennessee, for the appellant, Concord
Enterprises of Knoxville, Inc.
Herbert H. Slatery, III, Attorney General and Reporter, and,
W. Derek Green, Assistant Attorney General, for the appellee,
the Tennessee Department of Labor and Workforce Development.
Michael Swiney, C.J., delivered the opinion of the court, in
which J. Steven Stafford, P.J., W.S., and Brandon O. Gibson,
MICHAEL SWINEY, CHIEF JUDGE
2011, the Department conducted an audit of Concord. In
September of 2011, the Department determined that Concord
misclassified certain employees as independent contractors
from 2006 through 2011 and was liable for unpaid unemployment
taxes from that period for these employees. Concord requested
a redetermination. In March 2012, the Department affirmed the
earlier findings. Various appeals ensued which pertained to
whether Concord's appeal was timely.
the matter was heard on the merits by the Appeals Tribunal in
May 2013. Susan Porterfield ("Porterfield"), owner
of Concord, testified. Porterfield testified in the
affirmative that Concord was "in the business of
grooming dogs." Concord also trained students to become
pet groomers and sold certain pet products like shampoo. The
pet groomers at issue determined their prices case-by-case,
and Concord paid them 50% commission of what they brought in
once a week. Concord provided the pet groomers with necessary
supplies. The pet groomers sometimes participated in selling
Concord retail items. The pet groomers could work where they
wished, but their services provided through Concord all were
performed at Concord's place of business on Kingston Pike
in Knox County. Customers would call Concord to set up
appointments rather than call individual pet groomers,
although they could request a particular groomer. The Appeals
Tribunal concluded that the pet groomers were covered
employees rather than independent contractors, a decision
affirmed by the Commissioner's Designee.
filed a petition for judicial review, which later was decided
by the Trial Court in a December 2015 final judgment. The
Trial Court found as follows:
This case is a petition for judicial review. It was filed by
a business challenging the Respondent's administrative
decision that the Petitioner owes back unemployment insurance
premiums for the years 2006-2011. Respondent's finding
that Petitioner owes the premiums derives from the
classification of persons who provided pet grooming services
at the Petitioner's business location.
The Respondent concluded in the administrative proceeding
that the groomers who worked at the Petitioner's business
constituted covered employees pursuant to Tennessee Code
Annotated section 50-7-207. The Petitioner contends the
groomers are independent contractors for which no premiums
Judicial review was initially filed in Knox County,
Tennessee. On January 27, 2014, the case was transferred to
Davidson County Chancery Court and assigned to this Court.
the Petitioner asserts it fits the definition of independent
contractor under the seven-factor test of Tennessee common
law, the Petitioner cited in its brief and acknowledged in
oral argument that it must also satisfy a statutory test.
Known as the "ABC" test, Tennessee Code Annotated
section 50-7-207(e)(1)(A)(B)(C) requires all of the three
following factors to be present to establish that the worker
is an independent contractor. Failure to establish any one of
the three factors classifies the worker as a covered employee
for which the business must pay unemployment insurance