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									                    ALASKA DEPARTMENT OF LABOR

                  Commissioner's Dec. No. 77T-10

In the Matter of the

Employment Security Division
of the Alaska Department of Labor


Donald A. Jeffus                    Hearing Held: March 16, 1978
dba Jeffus Aircraft                 AT/RY: Fairbanks, Alaska

                                    Parties Present: Donald Jeffus,
                                    Frank Fleeks, Mr. Jeffus'
                                    attorney, and
                                    Richard Anderson representing
                                    the State of Alaska.

     Mr. Donald Jeffus doing business as Jeffus Aircraft by and
through his then attorney of record Mr. Brent M. Wood duly
petitioned the Commissioner of Labor for the State of Alaska on
March 28, 1977 to review a Notice of Assessment dated February 28,
1977 wherein the above mentioned business was assessed
unemployment contributions, penalties and interest due the Alaska
Unemployment Insurance Fund in the amount of $4,711.75 for the
four quarterly periods of the calendar year of 1976. Hearing in
the matter was scheduled and held on March 16, 1978 in Fairbanks,
Alaska. Notice of said hearing was mailed to the petitioner's last
address of record and said petitioner attended the hearing and
gave testimony on his own behalf.
                         FINDINGS OF FACT
During the calendar year of 1976 Mr. Donald Jeffus operated an
aircraft maintenance business in Fairbanks, Alaska known as Jeffus
Aircraft. An audit of Jeffus Aircraft's business was performed by
the Fairbanks Field Tax Office in the early part of 1977 after it
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was found that an account had not been set up with the Alaska
Department of Labor. Mr. Richard Anderson testified as the
auditing accountant for the State of Alaska that he prepared the
audit from an examination of the check register, work orders, and
cancelled checks given to him by Mr. Jeffus.
    Mr. Jeffus' business was and still is conducted by having
customers contact him who are in need of aircraft maintenance and
repair, and his subsequent contact of an aircraft mechanic
associated with him and who he feels from the initial description
of the job is capable of performing the work. The proposed
maintenance repair was then inspected by Mr. Jeffus and the
mechanic involved and a bid for the job made by Jeffus Aircraft.
During the summer months much of the work was performed where the
aircraft was located and during the winter months most of the work
was performed at Mr. Jeffus’ facilities located in Fairbanks.
Minor repair parts were either provided by the customer, by Mr.
Jeffus or the mechanic performing the work; larger items were
either purchased by the customer and provided the mechanic or
purchased through Jeffus Aircraft. A bid submitted to a
prospective customer was based upon the time which the proposed
work ordinarily takes, the more routine maintenance usually
charged at a flat rate and larger repairs calculated on an
estimated number of hours to do the work. A customer, after
completion of the work paid Jeffus Aircraft who then made
disbursements to the mechanic or mechanics involved withholding
such amounts as necessary to cover parts cost and other expenses.
One or several mechanics at a time would work on a particular
aircraft or maintenance job. Most of the work was performed with
small hand tools owned by the individual mechanics. However, some
specialized machinery was provided by Jeffus Aircraft to the
individual mechanics when needed. Also two mobile shops, a trailer
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and a GMC van, equipped with generators, welders etc. and owned by
Mr. Jeffus were at the disposal of the individual mechanics when
repairing Aircraft located in the bush. No regular working hours
or schedules were required of the various mechanics nor did they
have to work on a suggested job having the right to refuse the
work. All the mechanics involved possessed the requisite licenses
to work on aircraft and were also in possession of business
licenses. Jobs were generally not inspected by Jeffus Aircraft
although in major alteration and repair work where the mechanic
was not authorized to fill out an FAA form such inspection was
made by Jeffus Aircraft and appropriately logged.
    The standard agreement between Jeffus Aircraft and the
various mechanics included a requirement that equipment provided
by Jeffus Aircraft to a mechanic be kept in good and orderly state
of repair; that all licenses required of any governmental laws,
agencies and regulations be obtained and maintained further
stipulating that the individuals were considered independent
contractors by Jeffus Aircraft; and that the use of alcohol,
drugs, pilferage, unprofessional conduct, discourtesy as well as
mistreatment of an aircraft or tools is to be considered a
material breach of the contract involved and discharges Jeffus
Aircraft from any obligation thereunder. Furthermore, the contract
provides that coveralls will be provided by Jeffus Aircraft to the
mechanics for their use while performing work for that company.
Mr. Jeffus testified that he had had only one occasion to fire a
mechanic (under the terms of said contract).
    From the evidence of record I hold that the individuals in
question hired by Mr. Jeffus as aircraft mechanics performed
services for him within the meaning of AS 23.20.525(a)(10). This
conclusion stems from the fact that the work was performed at
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Jeffus Aircraft’s request and formed an integral part of that
business’ activities. It therefore becomes the affirmative duty of
the petitioner seeking to avoid the employment contribution
requirements of the Employment Security Act to show that such
services come within the specific category excepted from the
definition of employment as found in AS 23.20.525(a)(10) sub
paragraphs (A), (B) & (C).
    Condition (A) requires a finding of the absence of both
actual and legal control in the performance of the services. In
Commissioner's Decision No. 77T-1 it was held "the exercise of
control consists of those elements of commanding and directing
an operation which are necessary in rendering a particular
business result. When these managing elements are merged into the
employee himself because of expertise and reliability then control
on the part of the hiring unit is lacking."
    From the evidence of record it appears that the mechanics
involved in their relationship to Jeffus Aircraft present a high
degree of expertise and reliability in the performance of their
physical duties for Jeffus Aircraft. However, evidence also
indicates such measures as accounting for, collecting and
disbursing funds, providing coveralls in order to maintain
cleanliness as well as controlling the methods of the use of tools
and equipment to prevent their damage were imposed by Jeffus
Aircraft. Also necessary FAA inspections which are occasionally
required of certain work was provided by Jeffus - a considerable
controlling measure. The contract signed by the mechanics gave
Jeffus power to terminate the relation for numerous reasons beyond
the mere failure of one party to deliver the contract bargain but
rather detailed many prohibited business practices. Such
contractual impositions are not necessary where concern is limited
to a finished product. Cumulatively, the nature of the expertise
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exhibited by the mechanics as well as the contractually narrowed
scope of business reliance by Jeffus Aircraft in it's relationship
to them, indicate the factual control of the individuals by Jeffus
Aircraft and therefore I must hold condition (A) not to have been
       Condition (B) of the exception requires proof that the
performance of the service claimed to be excepted was either
outside the usual course of business for which the service is
performed or outside all of the places of business for whom the
services was performed. In the instant case Mr. Jeffus' business
is clearly the service and repair of aircraft, and since this is
the precise reason for hiring the various mechanics it must be
held the services to have been performed within the usual course
of petitioner's business.
       "All of the places of business" as described by statute
refere to all those places where an enterprise conducts any
business related activity. Jeffus Aircraft then, conducts business
at any point where a hired mechanic performs work for them and
in the usual course of business. Thus all of the places of
business extends to those various bush locations where their
business activity is found and business presence exists as the
result of mechanical repairs and service being performed. Since I
find that such business purpose exists at all the various sites
Jeffus Aircraft operates and that the services involved were
performed at such locations I hold petitioner has failed to show
services were performed outside of all the places of business as
required of the second part of (B) of the above cited statute.
       Condition (C) requires proof of the establishment of an
independently existing trade, occupation or business of the same
nature as that involved in the services performed by the various
mechanics. All of the mechanics exhibited a fair amount of
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independence in that they all worked substantially alone and
unsupervised and they all apparently possessed the requiste
business licenses necessary to work alone. The question then is
whether these examples of independence serve to detach the
various claimants sufficiently from Jeffus Aircraft's business so
as to form separate and continuously existing enterprises. The
notion of independence demands finding a quantum of business
latitude to exist at the same time and along with an attachment
to a particular contract job as well as during those spaces of
time when an individual may be looking for work. This requires
that independent operations not cease during periods of
association with another but continue in some active and viable
state predicated upon the fixed intent to maintain a separate
business identity.
       The mechanics hired by Jeffus Aircraft to perform repair and
maintenance operations showed independent tendencies only during
periods lacking in work. It is clear that their attachment to
Jeffus Aircraft resulted in an immediate abandonment of any
interum, "stop gap", business operations in favor of employment
status with Jeffus Aircraft. The "independence" of the various
mechanics therefore is more closely akin to that kind of activity
associated with unemployment than a businessman in between working
contracts and interested in separate growth and separate business
       The petitioner having thus not met parts (A), (B) or (C) of
the exceptions found in AS 23.20.525(a)(10), it is the decision of
the Commissioner that service performed by the individuals
involved constitutes "employment" within the meaning of Alaska
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IT IS HEREBY ORDERED that the determination of the representative
of the Commissioner of Labor be and hereby is SUSTAINED.
Contributions, penalties and interest in an amount mentioned above
are to be due and owing.
    FURTHER APPEAL may be had from this decision by filing a
Notice of Appeal in Superior Court for the State of Alaska within
30 days after the date of mailing of this decision as provided in
AS 23.20.445 and the Rules of Appellate Procedure of the State
of Alaska. Unless an appeal is filed within the said 30-day
period, this decision is final.
Dated and Mailed in Juneau, Alaska on April 28, 1978.

                              ALASKA DEPARTMENT OF LABOR

                              Edmund N. Orbeck

Superior Court #4FA78-1034

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