Fleece on Earth v. Vermont Department of Labor

(Vermont Supreme Court)

•  Defending Independent Contractors in Vermont

The issue in this case is whether knitters and sewers who make children’s clothing in their homes for sale by Fleece on Earth (“FOE”) in Chittenden, Vermont, are independent contractors or FOE’s employees under Vermont’s unemployment compensation statute. The Vermont Department of Labor (“DOL”) assessed FOE for unemployment contributions for all of the home workers on the basis that they are FOE’s employees.

FOE appealed the assessment, arguing that the knitters and sewers are independent contractors under the three-part “ABC” test set forth in the Vermont statute. Part A of that test requires a showing by the employer that the service provider “has been and will continue to be free from control or direction over the performance of such services.”  The DOL’s Employment Security Board (“ESB”) ruled that FOE failed Part A of the test because it supplies the home workers with designs and yarn and pays for products that substantially meet its requirements, thereby controlling what the workers make. FOE  appealed to the Vermont Supreme Court, where NELF filed an amicus brief supporting FOE’s position. NELF argued, on behalf of itself and co-amicus National Federation of Independent Business Legal Foundation, that the ESB fatally confused control of results with control over performance.  While FOE tells the home workers what to make, they do the work on their own schedules, with their own tools, and in their own way. NELF also observed that if control over results were the test, there could be no independent contractor status in Vermont because businesses will always specify the results of the work to be performed for them by independent contractors. When it enacted the ABC test, the state legislature defined independent contractor status; it did not abolish it altogether. Thus, NELF argued, the ESB’s interpretation is contrary to the legislature’s intent and would deprive Vermont of the important services provided by independent contractors in all sectors of Vermont’s economy.