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. Believing the home workers are independent contractors, FOE has not paid unemployment contributions, which would only be required for employees. After a review triggered when one of the home knitters sought unemployment benefits after losing her full-time job as a respite care provider, 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 sewer are independent contractors under the three-part “ABC” test set forth in the Vermont statute. Unemployment contributions do not have to be paid for independent contractors. Part A of the 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 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 has appealed to the Vermont Supreme Court, where NELF has filed an amicus brief supporting FOE’s position. NELF argues, on behalf of itself and co-amicus National Federal of Independent Business Legal Foundation, that the ESB fatally confused control of results with control over performance. Freedom from the latter is the proper test under the law and, based on the factual record, FOE clearly meets its burden. 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 points out in its brief that if, as the ESB has ruled, control over the results of the work performed were the test, there could be no independent contractor status in Vermont. Businesses will always specify the results of the work for which they have hired an independent contractor. When it enacted the ABC test, the Vermont Legislature defined independent contractor status and did not abolish it altogether. Thus, the ESB’s interpretation should also be reversed on the ground that it is contrary to the Legislature’s intent and would have the effect of depriving Vermont of the important services provided by independent contractors in all sectors of Vermont’s economy. This case is currently scheduled for argument in the fall of 2006.