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By: Janice D. Lai
On August 16, 2022, the Connecticut Supreme Court addressed what may constitute an enterprise’s “usual course of business” under Part B of the three-part statutory ABC Test, Conn. Gen. Stat. §31-222, for whether an individual is an employee or an independent contractor for purposes of the Unemployment Compensation Act.
In Vogue v. Administrator, Unemployment Compensation Act, 344 Conn. 321 (2022), the plaintiff, a body art and piercing business, appealed from the Board of Review of the Employment Security Appeals Division’s decision that a tattoo artist was an employee for which unemployment contribution was owed under the Unemployment Compensation Act. The body art and piercing business argued that the tattoo artist was an independent contractor.
The body art and piercing business had a retail store where it provided piercings and sold jewelry as well as offered tattoo services which the tattoo artist provided. The tattoo artist had a written agreement with the company which stated that he was an independent contractor and required him to carry separate business liability insurance. The tattoo artist performed the tattoo services himself, provided his own supplies and determined the price for such services. He would keep 50% of the customer’s sale and give the other 50% to the company. The company did not pay any other money to the tattoo artist. The body art and piercing business emphasized that the tattoo artist did not perform his tattoo services on a regular or continuous basis at its store and that he was the only tattoo artist there.
The Connecticut Supreme Court held that the body art and piercing business was liable for the tattoo artist’s unpaid unemployment contributions because the company failed to satisfy all three parts of the statutory ABC Test. Specifically, the company failed to satisfy Part B because it could not demonstrate that the tattoo artist’s services were outside of its “usual course of business.” The body art and piercing business was found to have regularly and continuously provided tattoo services.
The Connecticut Supreme Court also held that how an enterprise holds itself out to the public may be used as substantial evidence of whether an activity is performed in its usual course of business under Part B of the ABC Test. Further, although advertising may not be dispositive by itself, it may be evidence of whether an activity is within an enterprise’s usual course of business.
The Connecticut Supreme Court pointed to fact that the body art and piercing business’ website advertised, “Tattoo and Piercings” and stated, “Welcome to Vogue, your one-stop destination for body jewelry, as well as piercings and tattoo services.” Beyond advertising, the phone number listed for tattoo services was the company’s store number and tattoo services were only offered during store hours. Customers received a receipt with the company’s name and contact information rather than the tattoo artist’s name. The required waiver was between the company and the tattoo customer.
The Vogue decision is a cautionary tale for businesses to be cognizant of how they hold themselves out to the public with respect to services provided by independent contractors. Companies that fail to do so may find themselves responsible for unemployment compensation contributions should such services be determined to be within their usual course of business under Part B of the ABC Test.