IN RE: RUBY STREET QUILTWORKS
Commissioner of the Employment Security DepartmentMay 15, 2013
Empl. Sec. Comm'r Dec.2d 996 (WA), 2013 WL 12113132
Commissioner of the Employment Security Department
State of Washington
*1 IN THE MATTER OF: RUBY STREET QUILTWORKS RUBY ST HQ, PETITIONER
*1 Case No. 996
*1 Docket No: 04-2013-03959
*1 May 15, 2013
TAX CASE INITIAL ORDER (Tax)
*1 Hearing Held: This matter came before Administrative Law Judge Linda C. Petrie on May 07, 2013 at Spokane, Washington after due and proper notice to all interested parties.
*1 Persons Present: The employer was represented by Janet Gillingham, Owner, Marjorie Horton, Instructor, and David K. Palmer, Attorney, Cullen Palmer Law Office LLP, and Employment Security Department by Scott Michael, Legal Appeals Representative and Leah Snow, Tax Specialist.
STATEMENT OF THE CASE:
*1 At issue in this appeal is whether an Order of Notice of Assessment issued pursuant to RCW 50.24.070 properly holds the employer liable for contributions, penalties and interest in an amount of $37.74.
Having fully considered the entire record, the undersigned Administrative Law Judge enters the following Findings of Fact, Conclusions of Law and Initial Order:
FINDINGS OF FACT:
*1 1. Petitioner, Ruby Street Quiltworks, is a retail quilting shop which sells fabric and quilting supplies, including notions and patterns. The business located in Tumwater began in February, 2008. The retail nature of Petitioner's business requires its personnel to advise customers about quilting. Employees in the retail business are expected to be qualified to advise on fabric selection, how colors work, calculate amounts of fabric needed, and to assist customers in the construction of patterns.
*1 2. The Petitioner's business has a retail floor space for displaying fabric and a classroom facility which takes up about 17.3% of the Petitioner's 2770 square foot business. Petitioner allows groups and individuals engaged in quilt making activities to meet at the classroom. Clubs and groups of quilters get together at the classroom to work on quilts as the classroom provides large level work surfaces. Petitioner allows quilt making “guilds” to use the classroom facility. Petitioner's owner, Janet Gillingham, envisioned offering quilting classes at the business from its inception. Ms. Gillingham felt that quilting classes would support her quilting retail business and would also be a place for the quilting community members to gather.
*1 3. Petitioner offers some quilting classes which are extensions of its direct retail sales. Petitioner uses its employees to teach these classes which occur, for example, when the Petitioner has a specific retail product, such as a ruler, tool, or pattern, to sell at the shop. The content of the class is dictated by the product the Petitioner's business is trying to sell, as compared to other independently conceived and planned classes.
*1 4. Instructors who have techniques or skills they want to share with the quilting community approach Ms. Gillingham to talk about their ideas to teach a class. If Ms. Gillingham approves and if the classroom is available the Petitioner would have a verbal agreement with the instructor and the class is scheduled.
*2 5. Although the Petitioner's business does not profit per se from the fees charged for these classes, Petitioner acknowledges its hope and intention was that those persons who attend the classes would purchase supplies and fabric at the store thereby increasing its retail sales. During 2011, the Petitioner gave customers discounts on merchandise purchased if they were enrolled in a class.
*2 6. The three instructors at issue for the 2011 calendar year: Marjorie Horton, Brenda Lewis and Laura Piliaris, set their own class fees and determined the class size. Classes were open to the general public. The instructors furnished and provided handouts and other items not specifically available to students. Students would bring their own materials (possibly purchased from the Petitioner's retail store).
*2 7. The Petitioner collected fees for the classes at the time the students signed up for the classes. If a student cancels the class the student will get a store credit for use only at the Petitioner's business. The credit could be used to sign up for other classes at Petitioner's location. If the instructor cancels, then the students would be issued a refund, whether a store credit or refund of payment. The monies taken in for the classes are deposited in the Petitioner's bank account and when the class has taken place the Petitioner would pay the three instructors 80 percent of the fees. The class fee is reimbursed to the instructor less 20% to defray the Petitioner's cost of maintaining the classroom. The instructors' earnings were reported for federal income tax purposes on 1099 forms.
*2 8. The Petitioner advertises the instructors' classes in an email newsletter, in flyers available at the business location, on the Petitioner's web sit, on face book, and by word of mouth at the business location.
*2 9. Ms. Horton earned $2360 in 2011 teaching quilting classes at the Petitioner's business. Ms. Horton does not otherwise work as an employee for the Petitioner and her earnings were based only on the classes she coordinated with Ms. Gillingham. Ms. Horton began quilting in 1976. She has a large bedroom in her home for her work area and her husband built her an outbuilding for her quilting design work. Ms. Horton is well recognized for her quilting accomplishments. She has published her own quilting manual which is a resource book for quilters, has appeared on television about quilting and has lectured on quilting. In addition, she has taught quilting workshops in Western Washington and Oregon. For the 2011 calendar year Ms. Horton only taught at the Petitioner's business. Ms. Horton taught 16 classes at the Petitioner's location in 2011.
*2 10. Ms. Lewis earned $1880 for classes taught in 2011. Ms. Piliaris earned $696 for classes taught in 2011. No testimony was presented as to how many classes each taught for the Petitioner or for other quilting businesses/groups. Both Ms. Lewis and Ms. Piliaris worked for Petitioner in 2011 as employees in the retail section. In addition to bringing their own class ideas to Ms. Gillingham they taught classes specifically directed by the Petitioner
*3 11. When Ms. Horton had an idea for a class she wanted to teach she would speak to Ms. Gillingham and they would go through the calendar. She would walk away with a verbal agreement for a scheduled class. Ms. Horton would determine the class size and the topic as well as the cost each student would pay for the class. She determined the class fee depending upon what she wanted to earn each hour. Petitioner's business did not give her any directive as to how to specifically teach the class.
*3 12. Ms. Horton planned her classes from home in 2011. If Petitioner told her what class topic it wanted her to teach, Ms. Horton would tell the Petitioner whether she would do so or not. Ms. Horton would generally advise the Petitioner what class she wanted to teach as she believed she had a good pulse on the quilting community. Ms. Horton is more interested in the continuing nature of classes, not just a one time how to use a pattern class.
*3 13. Ms. Horton had an account with the Department of Revenue about ten years prior when her quilting manual was selling and she was collecting sales tax. However, as the amount of her earnings decreased she did not maintain the account. In 2011, Ms. Horton did not have a Department of Revenue account. All of her quilting income was from teaching classes at Petitioner's business. She does not sell her quilts. Ms. Horton restricted her teaching locations due to the price of fuel in 2011. Petitioner's business presents an easy location for her to reach.
*3 14. Ms. Gillingham thinks the process of selecting a class is something regulated by the quilting community. Although an instructor would supply his or her credentials, Ms. Gillingham does not check references submitted by the instructor. If she did not believe that an instructor had the necessary quilting qualifications she would try to dissuade the individual from teaching. If a class had not been well received she would not necessarily disallow the instructor from teaching again. In an extreme case she would tell the instructor that no time was available on the schedule for the class. Ms. Gillingham “rarely” goes into an instructor's class to observe or give any advice.
*3 15. On September 7, 2012 the Department audited the Petitioner's business. Tax specialist, Leah Snow, reviewed the records of the business (1099s, W-2, W-3, 940, 941, payroll summary and check register) and spoke to the owners of the business. Based upon her evaluation of the employer's records Ms. Snow determined that Ms. Horton, Ms. Lewis, and Ms. Piliaris should be treated as employees for the tax year 2011.
*3 16. On January 3, 2013 the Department issued an Order and Notice of Assessment indicating that Marjorie Horton, Brenda Lewis, and Laura Piliaris were properly classified as employees for the tax year 2011 and therefore Petitioner owed $37.74.
CONCLUSIONS OF LAW:
*3 1. Pursuant to RCW 50.24.070 if an employer is late in paying any taxes, interest or penalties, the department will issue an Order and Notice of Assessment. The Order and Notice of Assessment will specify the amount due.
*4 2. The first question to be addressed is whether the instructors performed personal services, of whatever nature, for wages or under a contract calling for performance of such services. RCW 50.40.100. An individual is not in employment if the answer is answered in the negative. If the question is answered in the affirmative, the individual is in employment unless the services are excluded from coverage by another section of Title 50 RCW.
*4 3. Employment means personal service. In ordinary usage, the term “services” has a general, broad meaning. It includes any act performed for the benefit of another under some arrangement or agreement whereby such act was to have been performed. Daily Herald Co. v. Employment Security Dep't, 91 Wn.2d 559, 563, 588 P.2d 1157 (1979). The test for personal service is whether the services at issue were performed for the entity sought to be assessed or for its benefit. The inquiry is whether there is a direct and clear connection between the personal services provided and the benefit received by the other party. Cascade Nursing Svcs., Ltd. v. Employment Security Dep't, 71 Wn. App. 23, 30-31, 856 P.2d 421 (1993).
*4 4. The evidence here shows that the instructors' services were performed in accordance with an agreement between the instructor and Ms. Gillingham and that the Petitioner directly benefitted. Not only did the Petitioner retain 20% of the class fees, but more than likely the giving of the class at its business location resulted in increased sales of fabric and other supplies the students needed for the class. Furthermore, the class would create a connection. between the students and the Petitioner's business. If the student cancelled the class the Petitioner in essence retained the money as the student would only be entitled to a credit to use only at the store. Finally, the offering of the classes made Petitioner's business active in the quilting community which would, again, more than likely spur on business. Accordingly, the undersigned concludes that the services of the three instructors were personal services performed for wages.
*4 5. Because the “personal service” and “for wages” requirement of RCW 50.04.100 are met, the instructors' services constitute employment unless they are excepted from the definition of employment pursuant to Title 50 RCW. The tests for exception from employment are found at RCW 50.04.140 through 50.04.270. These statutes are strictly construed in favor of coverage. In re All State Construction Co., 70 Wn.2d 657, 665, 425 P.2d 16 (1967).
*4 6. RCW 50.04.140 provides:
*4 Services performed by an individual for remuneration shall be deemed to be employment subject to this title unless and until it is shown to the satisfaction of the commissioner that:
*4 (1)(a) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his or her contract of service and in fact; and
*5 (b) Such service is either outside the usual course of business for which such service is performed, or that such service is performed outside of all the places of business of the enterprises for which such service is performed; and(c) Such individual is customarily engaged in an independently established trade, occupation, profession, or business, of the same nature as that involved in the contract of service.
*5 (2) Or as a separate alternative, it shall not constitute employment subject to this title if it is shown that:
*5 (a) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his or her contract of service and in fact; and
*5 (b) Such service is either outside the usual course of business for which such service is performed, or that such service is performed outside of all the places of business of the enterprises for which such service is performed, or the individual is responsible, both under the contract and in fact, for the costs of the principal place of business from which the service is performed; and
*5 (c) Such individual is customarily engaged in an independently established trade, occupation, profession, or business, of the same nature as that involved in the contract of service, or such individual has a principal place of business for the work the individual is conducting that is eligible for a business deduction for federal income tax purposes; and
*5 (d) On the effective date of the contract of service, such individual is responsible for filing at the next applicable filing period, both under the contract of service and in fact, a schedule of expenses with the internal revenue service for the type of business the individual is conducting; and
*5 (e) On the effective date of the contract of service, or within a reasonable period after the effective date of the contract, such individual has established an account with the department of revenue, and other state agencies as required by the particular case, for the business the individual is conducting for the payment of aII state taxes normally paid by employers and businesses and has registered for and received a unified business identifier number from the state of Washington; and
*5 (f) On the effective date of the contract of service, such individual is maintaining a separate set of books or records that reflect all items of income and expenses of the business which the individual is conducting.
*5 Accordingly, individuals who perform services and receive remuneration may be excepted from the definition of being “in employment” only if they meet the requirements set forth under either subsection (1) of this statute, or of subsection (2) of this statute.
*5 7. The issue to address then is whether the three instructors are under the direction and control of the Petitioner. The first requirement of the exception tests are the same and require the Petitioner to prove that the instructors during the time period at issue “has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact.” It has long been held that direct supervision is not necessary to establish direction and control within the purview of RCW 50.04.140. The focus is on whether the employer wielded general control over the work rather than on details. Sound Cities Gas & Oil Co. V. Ryan, 1 Wn.2d 457,125 P.2d 246 (1942); In re Pioneer Food Sales, Comm'r Dec.2d 782 (1986). Further, the right to control the performance of the work is sufficient to defeat independent contractor status. See, Western Ports Transportation v. Employment Security Department, 110 Wn. App. 440, 41 P.3d 510 (2002). Any measure of direction or control defeats contractor status, as independent business persons are not controlled or directed in their work by anyone else.
*6 8. The facts here show that the instructors performed classes specific to their talents and abilities with the Petitioner's approval. The instructors approached Ms. Gillingham with ideas for classes and if Ms. Gillingham agreed to it and the classroom was available she would agree with the instructor that the classes could be taught on the Petitioner's premises. The undersigned does not discount that Petitioner does not control how the specifics of how the classes are taught and would “rarely” attend or offer any guidance during classes. As Ms. Horton's credible testimony establishes she herself would decide on a topic to teach as she had a better understanding of the quilting community needs. Had Ms. Gillingham suggested atopic to her that she did not feel was relevant or that she did not want to teach, she would not have followed the directive. That being said, the above referenced authority establishes that the instructors were under the Petitioner's direction and control because the Petitioner wielded general control over the work rather than on details. Petitioner had the right to control the performance of the work: As noted above, the fact that she did not directly supervise is not necessary to establish direction and control within the purview of RCW 50.04.140. Ms. Gillingham had to approve the class and likewise had the authority to tell an instructor that there was no availability of the classroom if she did not want the class to be taught. Accordingly, based upon the evidence presented the instructors were subject to the Petitioner's direction and control.
*6 9. Furthermore, Petitioner is engaged in the business of selling fabric and notions for quilting. Quilting classes, while not a required part of the business, provide a source of revenue and customer affiliation. Petitioner is engaged in quilting services to its customers. As Ms. Gillingham indicated in her testimony, part of her business is to assist and teach the customers. As such, the undersigned concludes that the Petitioner has not satisfied the provisions of RCW 50.04.140(b) in that the services performed by the instructors are not outside the usual course of business for which such services are performed.
*6 10. Additionally, the facts in this case further establish that although Ms. Horton has written a how to quilting manual and lectured at various locations and appeared on television, in 2011 the only business she offered classes through was the Petitioner's business. The undersigned observes that Petitioner has not established that any of the three instructors had UBI numbers which would establish them as independent contractors during the 2011 time period. There is no direct testimony to establish that the instructors customarily engaged in an independently established trade, occupation, profession, or business. In fact, both Ms. Lewis and Ms. Piliaris worked as employees for the Petitioner in the retail section of the business during 2011. All things considered, the undersigned concludes that Petitioner has not satisfied the provisions of RCW 50.04.140(c).
*7 11. Based upon the conclusions set forth above, the undersigned concludes that the three instructors under the facts presented are engaged in “““employment” subject to Title 50 RCW and therefore the remuneration paid to them for the 2011 time period should be considered wages for determining Petitioner's unemployment insurance tax liability.
Now therefore it is ORDERED:
*7 The Order & Notice of Assessment issued pursuant to RCW 50.24.070 is AFFIRMED. The Notice properly holds the Petitioner liable for unemployment tax contributions, interest and penalties in the amount of $37.74.
*7 Dated and Mailed on May 15, 2013 at Spokane. Washington.
NOTICE OF FURTHER APPEAL RIGHTS
*7 This Tax Initial Order is final unless a Petition for Review is filed, in writing, with the Commissioner's Review Office of the Employment Security Department at PO Box 9555, Olympia, Washington 98507-9555, and postmarked on or before June 14, 2013. All argument in support of the Petition for Review must be attached to and submitted with the Petition for Review. The Petition for Review, including attachments, may not exceed five (5) pages. Any pages in excess of five (5) pages will not be considered and will be returned to the petitioner. The docket number from the Initial Order of the Office of Administrative Hearings must be included on the Petition for Review. Do not file your Petition for Review by Facsimile (FAX). Do not mail your Petition to any location other than the Commissioner's Review Office.
Commissioner of the Employment Security Department
State of Washington
*1 IN RE: RUBY STREET QUILTWORKS
*1 Case No. 996
*1 Review No. 2013-2270
*1 Docket No. 04-2013-03959
*1 August 9, 2013
DECISION OF COMMISSIONER
*1 On June 14, 2013, RUBY STREET QUILTWORKS, by and through Jan and David Gillingham, Owners, petitioned the Commissioner for review of a Tax Case Initial Order issued by the Office of Administrative Hearings on May 15, 2013. Pursuant to chapter 192-04 WAC this matter has been delegated by the Commissioner to the Commissioner's Review Office. Having reviewed the entire record and having given due regard to the findings of the administrative law judge pursuant to RCW 34.05.464(4), we adopt the Office of Administrative Hearings' findings of fact; however, we do not adopt the Office of Administrative Hearings' conclusions of law. We instead enter the following.
*1 Ruby Street Quiltworks (“Ruby Street” hereafter), the alleged employer in this case, is a retail business that sells fabric and quilting supplies including notions and patterns. Employees working in the retail store are expected to provide on-the-spot advice or instruction on fabric selection, how colors work, construction of patterns, and amount of fabric needed. See adopted Finding of Fact No. 1. Additionally, Ruby Street offers some quilting classes that are extensions of its direct retail business. Ruby Street uses its employees to teach these classes, which occur when it has a specific retail product, such as a ruler, tool, or pattern, to sell at the store. See adopted Finding of Fact No. 3. Finally, Ruby Street's employees occasionally serve as hostesses or instructors for a couple of quilting clubs that are run at the store. These three categories of employee-taught classes and on-the-spot instruction are not the subject of the assessment in this case; and, as a matter of fact, the employee-taught classes did not begin until mid-2012, which was after the assessed period of 2011.
*1 Instead, at the center of the Department's assessment are certain teaching services provided by three individual instructors during the calendar year of 2011: Marjorie Horton, Brenda Lewis, and Laura Piliaris.1 Besides a retail floor space for displaying fabric and quilting supplies, Ruby Street has a classroom facility that takes up about 17 percent of its 2,770 square foot business. See adopted Finding of Fact No. 2. When these instructors have techniques or skills they want to share with the quilting community, they would approach the owner of Ruby Street, Janet Gillingham. If Ms. Gillingham approves and the classroom is available, she would have a verbal agreement with the instructors and the class is scheduled. See adopted Finding of Fact No. 4.
*1 Classes are open to the general public. Ruby Street advertises the classes via email newsletters, by flyers available at the store, on its website and Facebook page, and by word of mouth among the quilting community. See adopted Findings of Fact Nos. 6, 8.
*1 Ruby Street does not exercise general power to supervise, direct, or influence the quality of the classes taught by the instructors. Instead, the instructors would determine the class size, the topic, as well as the cost each student would pay for the class. See adopted Finding of Fact No. 11. Ms. Gillingham believes the process of selecting a class is something regulated by the quilting community. Although the instructors would supply their credentials, Ms. Gillingham does not generally check references submitted by the instructors. As a matter of fact, Ms. Gillingham rarely goes into an instructor's class to observe or give advice. See adopted Finding of Fact No. 14. Furthermore, the instructors would provide handouts and other items not specifically available to their students; and the students would bring their own supplies, materials, and equipment to the class. See adopted Finding of Fact No. 6.
*2 Ruby Street collects fees for the classes at the time the students sign up for the classes. If a student cancels the class, he or she would receive a store credit for use at the business. The credit could be used to sign up for other classes or to purchase supplies at the store. If the instructor cancels the class, the students would be issued a refund in whatever form they prefer, whether a store credit or refund of credit card payment. The fees collected for the classes are deposited in Ruby Street's bank account. After the class has taken place, Ruby Street would pay the instructor 80 percent of the fees, and retain the remaining 20 percent to defray its costs of maintaining the classroom. See adopted Finding of Fact No. 7. Although Ruby Street does not make a profit from the 20 percent fees charged for the classes, it hopes that the students attending the classes would purchase supplies and fabric at the store thereby increasing its retail sales. See adopted Finding of Fact No. 5.
*2 Ms. Horton, Ms. Lewis, and Ms. Piliaris earned $2,360, $1,880, and $696 respectively in 2011 teaching quilting classes at Ruby Street. Their earnings were reported on Form 1099 for federal income tax purposes. See adopted Findings of Fact Nos. 7, 9, 10. The Department conducted an audit of Ruby Street on September 7, 2012, and determined that these three individuals should be reclassified as employees of Ruby Street for the tax year of 2011. See adopted Finding of Fact No. 15. On January 3, 2013, the Department issued an Order and Notice of Assessment, assessing Ruby Street a tax liability of $37.74 on remuneration paid to the three individuals. See adopted Finding of Fact No. 16. Ruby Street filed a timely appeal of the Order and Notice of Assessment. See Exhibit No. 3.
*2 Ruby Street is liable for contributions, penalties, and interest as set forth in the Order and Notice of Assessment if, during the period at issue, the three individuals were in “employment” of Ruby Street as defined in RCW 50.04.100. See RCW 50.04.080; RCW 50.24.010. If the three individuals' employment is not established, Ruby Street is not liable for the assessed items. If the individuals' employment is established, Ruby Street is liable unless the services in question are exempted from coverage.
*2 We consider the issue of whether the three individuals were in employment of Ruby Street subject to this overarching principle: The purpose of the Employment Security Act, Title 50 RCW (“Act” hereafter), is to mitigate the negative effects of involuntary unemployment. This goal can be achieved only by application of the insurance principle of sharing the risks, and by the systematic accumulation of funds during periods of employment. To accomplish this goal, the Act is to be liberally construed to the end that unemployment benefits are paid to those who are entitled to them. See RCW 50.01.010; Warmington v. Emp't Sec. Dep't, 12 Wn. App. 364, 368, 529 P.2d 1142 (1974). This principle has been applied so as to generally find the existence of an employment relationship. See, e.g., In re All-State Constr. Co., 70 Wn.2d 657, 665, 425 P.2d 16 (1967); Penick v. Emp't Sec. Dep't, 82 Wn. App. 30, 36, 917 P.2d 136 (1996).
*3 RCW 50.04.080 defines “employer” as any individual or type of organization having any person in employment. Under RCW 50.04.100, “““employment” is defined as follows:
*3 “Employment”, subject only to the other provisions of this title, means personal service, of whatever nature, unlimited by the relationship of master and servant as known to the common law or any other legal relationship, including service in interstate commerce, performed for wages or under any contract calling for the performance of personal services, written or oral, express or implied. (Emphasis added.)
*3 Accordingly, unless an exemption applies, “employment” exists if (1) an individual performs personal services for an alleged employer; and (2) if the employer pays wages for those services. See Skrivanich v. Davis, 29 Wn.2d 150, 157, 186 P.2d 364 (1947). The test for personal service is whether the services in question are clearly for the entity sought to be taxed or for its benefit. See Daily Herald Co. v. Emp't Sec. Dep't, 91 Wn.2d 559, 564, 588 P.2d 1157 (1979). In applying this test, we look for a clear and direct connection between the personal services provided and the benefit received by the entity sought to be taxed. See Cascade Nursing Serv., Ltd. v. Emp't Sec. Dep't, 71 Wn. App. 23, 31, 856 P.2d 421 (1993).
*3 While the definition of “employment” in RCW 50.04.100 is broad, it is not all encompassing. See Language Connection, LLC v. Emp't Sec. Dep't, 149 Wn. App. 575, 581, 205 P.3d 924 (2009). For example, in Cascade, the court addressed the issue of whether nurses were engaged in employment of a nursing referral agency under RCW 50.04.100. Cascade operated a business referring qualified registered nurses to medical facilities and institutions. Cascade negotiated a nurse's fee with each medical facility; and it also negotiated a fee with the medical facility for its referral services. The court held that Cascade did not “employ” the nurses within the meaning of RCW 50.04.100 because the personal services provided by the nurses were not “clearly for Cascade or its benefit,” see Cascade, 71 Wn. App. at 33; instead, the nursing services were for the benefit of the medical facilities, and Cascade received only incidental benefits:
*3 [T]he act or acts constituting personal services are the nursing services provided by the nurses to the hospitals. Cascade does not benefit from these services, but only receives a fee for referring qualified nurses to particular facilities. In other words, Cascade is simply a scheduling and billing agent for the nurses.
*3 Cascade, 71 Wn. App. at 34 (emphasis in original).
*3 In this case, Ruby Street is a retail business that sells fabric and quilting supplies; and it is not a school that teaches quilting techniques or skills. As such, the teaching services rendered by the three individuals are not clearly for Ruby Street or otherwise for its benefits. Consequently, we must conclude that the three individuals are not in employment of Ruby Street pursuant to RCW 50.04.100.
*4 In its Initial Order, the Office of Administrative Hearings reached the opposite conclusion because it found that Ruby Street benefited from the teaching services provided by the three individuals. In so concluding, the Office of Administrative Hearings relied on the facts that (1) Ruby Street retained 20% of the class fees; (2) the classes could result in increased sales of fabric and other supplies at Ruby Street's retail business; and (3) the classes created a connection between the students and Ruby Street's business, and further made Ruby Street more involved in the quilting community. See unadopted Conclusion of Law No. 4.
*4 The court in Cascade, however, rejected a similar argument advanced by the Department that Cascade received benefits from the nurses' services in the form of: (1) revenue from each hour of service provided a hospital by a nurse; (2) the promotion of Cascade's business by the nurses; and (3) the goodwill generated by the nurses' services. The Cascade court specifically concluded this was not the type of “personal service” contemplated by RCW 50.04.100. Cascade, 71 Wn. App. at 33; see also Language Connection, 149 Wn. App. 575 (no employment relationship was found when the alleged employer charged a 30 percent commission for referring interpreting services).
*4 In light of the foregoing, we are satisfied that Ruby Street does not directly benefit from the teaching services rendered by the three individuals; instead, it only receives incidental benefits. Id. at 582. In addition to receiving no direct benefit from the teaching services, Ruby Street has no general power to supervise, direct, or influence the quality of the classes taught by the individuals. For these reasons, we conclude that the three individuals are not in employment of Ruby Street pursuant to RCW 50.04.100. We therefore do not need to reach the issue of whether the individuals are independent contractors pursuant to RCW 50.04.140.
*4 Now, therefore,
*4 IT IS HEREBY ORDERED that the Tax Case Initial Order issued by the Office of Administrative Hearings on May 15, 2013, is SET ASIDE. Ruby Street Quiltworks is not liable for the contributions, penalties, and interest assessed pursuant to RCW 50.24.010 in the amount of $37.74 regarding the three individuals (i.e., Marjorie Horton, Brenda Lewis, and Laura Piliaris) for the fourth calendar quarter of 2011.
*4 Dated at Olympia, Washington, August 09, 2013.
*4 Pursuant to RCW 34.05.470 and WAC 192-04-190 you have ten (10) days from the mailing and/or delivery date of this decision/order, whichever is earlier, to file a Petition for Reconsideration. No matter will be reconsidered unless it clearly appears from the face of the Petition for Reconsideration and the arguments in support thereof that (a) there is obvious material, clerical error in the decision/order or (b) the petitioner, through no fault of his or her own, has been denied a reasonable opportunity to present argument or respond to argument pursuant to WAC 192-04-170. Any request for reconsideration shall be deemed to be denied if the Commissioner's Review Office takes no action within twenty (20) days from the date the Petition for Reconsideration is filed. A Petition for Reconsideration together with any argument in support thereof should be filed by mailing or delivering it directly to the Commissioner's Review Office, Employment Security Department, 212 Maple Park Drive, Post Office Box 9555, Olympia, WA 98507-9555, and to all other parties of record and their representatives. The filing of a Petition for Reconsideration is not a prerequisite for filing a judicial appeal.
*5 If you are a party aggrieved by the attached Commissioner's decision/order, your attention is directed to RCW 34.05.510 through RCW 34.05.598, which provide that further appeal may be taken to the Superior Court within thirty (30) days from the date of mailing as shown on the attached decision/order. If no such appeal is filed, the attached decision/order will become final.
*5 If you choose to file a judicial appeal, you must both:
*5 Timely file your judicial appeal directly with the Superior Court of the county of your residence or Thurston County. If you are not a Washington state resident, you must file your judicial appeal with the Superior Court of Thurston County. See RCW 34.05.514. (The Department does not furnish judicial appeal forms.) AND
*5 Serve a copy of your judicial appeal by mail or personal service within the thirty (30) day judicial appeal period on the Commissioner of the Employment Security Department, the Office of the Attorney General, and all parties of record.
*5 The copy of your judicial appeal you serve on the Commissioner of the Employment Security Department should be served on or mailed to: Commissioner, Employment Security Department, Attention: Agency Records Center Manager, 212 Maple Park Drive, Post Office Box 9046, Olympia, WA 98507-9046. To properly serve by mail, the copy of your judicial appeal must be received by the Employment Security Department on or before the thirtieth (30th) day of the appeal period. See RCW 34.05.542(4) and WAC 192-04-210. The copy of your judicial appeal your serve on the Office of the Attorney General should be served on or mailed to the Office of the Attorney General, Licensing and Administrative Law Division, 1125 Washington Street SE, Post Office Box 40110, Olympia, WA 98504-0110.
Ms. Lewis and Ms. Piliaris were also employees of Ruby Street in 2011.
Empl. Sec. Comm'r Dec.2d 996 (WA), 2013 WL 12113132
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