Thanks for visiting! Welcome to a new way to research case law. You are viewing a free summary from Descrybe.ai. For citation and good law / bad law checking, legal issue analysis, and other advanced tools, explore our Legal Research Toolkit — not free, but close.
Software Associates v. Dept. of Employment
Citations: 715 P.2d 985; 110 Idaho 315; 1986 Ida. LEXIS 429Docket: 15676
Court: Idaho Supreme Court; February 28, 1986; Idaho; State Supreme Court
Software Associates, Inc. appeals a ruling from the Industrial Commission that classified the computer programming services performed by its corporate officers, Michal and Marla Marchant, as "covered employment" under the Idaho Employment Security Act. Since its incorporation in 1980, Software, owned and operated solely by the Marchants, has provided programming services. While they serve as corporate officers and manage contracts, the Marchants also perform the majority of the programming work themselves, dedicating only 1% to 7% of their time to their officer duties. They receive compensation as both programmers and shareholders in a lump sum, making it challenging to distinguish their earnings from programming versus profit distributions. The Idaho Department of Employment reviewed Software's records and determined that the payments to the Marchants during 1981 and 1982 were for services under "covered employment," leading to an assessment of employment security taxes. Software appealed this deficiency, but an appeals examiner upheld the Department's decision. The Industrial Commission affirmed this ruling without additional evidence. The court noted that "covered employment" under the Employment Security Act is broadly defined to include all services rendered, regardless of the nature of the contract. It encompasses both employees and independent contractors, with specific exemptions for independent contractors who meet criteria related to control over their work and engagement in an established trade. The exemption discussed is to be narrowly construed, as established in King. The Industrial Commission found that sole owners, officers, and directors of a corporation cannot create an independent contractor status when their services are closely tied to the corporation’s business. This aligns with the principle that if a work relationship is classified as employer-employee, the independent contractor status is not applicable. However, incorporation alone does not preclude sole shareholder-officers from engaging in independent occupations. The decision of the Industrial Commission is reversed and remanded for further findings, considering the Employment Security Act's intent to protect workers from involuntary unemployment. The case history notes that the Marchants previously bought out another shareholder, Ralph Harding. Additionally, the legislature intended for the definition of covered employment to be broader than the common law definitions, with exemptions traditionally interpreted narrowly. Factors to determine employer-employee relationships include the corporation's prior representations, statements made to the Department of Employment, methods of payment and tax withholding, and benefits provided by the corporation. Costs are awarded to the appellant.