James A. BEAMAN, Aubrey B. Barker and Harold Warnock, as members of and constituting the Employment Security Commission of Arizona, Appellants,
SUPERIOR PRODUCTS, INC., an Arizona corporation, and John L. Zeigler, dba Zeigler's Appliances of Tucson, Arizona, Appellees.
[89 Ariz. 120] Wade Church, Atty. Gen., and Richard J. Daniels, Asst. Atty. Gen., for appellants.
Richard J. Dowdall, Tucson, for appellees.
This is an appeal from a judgment of the superior court reversing an order of appellant employment security commission requiring the appellees to pay unemployment contributions on amounts earned as commissions by salesmen selling vacuum cleaners for said appellees. The major issue disputed before the Employment Security Commission was whether the appellees' salesmen were 'employees' within the meaning of the term as used in A.R.S. § 23-615. After full hearing the Commission so found. On appeal the superior court concluded there was no competent, material or substantial evidence produced at the hearing which would justify a finding that these salesmen were employees within the meaning of the statute as understood by the superior court.
We think the superior court took too narrow a view of the term 'employee' and [89 Ariz. 121] was overly impressed with the form rather than the substance of the relationship between appellees and their salesmen.
This court long since has adopted a liberal interpretation of this act. In Southwest Lumber Mills v. Employment Security Commission, 66 Ariz. 1, 5, 182 P.2d 83, 85, we said:
'* * * it has been [sic] remembered that the statute is remedial; that it enunciates and is addressed to a public policy; that it is ameliatory of the evils resulting from lack of employment;
that it is to be liberally construed to effectuate its purpose; that devices of every kind to defeat it are to be frowned upon and stricken down; and that by the several Arizona cases construing and giving it effect this court has adopted an interpretation of it strictly in accord with its intent and objects as announced by the legislature in the preamble to the Act.'
See also, e. g., Sisk v. Arizona Ice & Cold Storage Co., 60 Ariz. 496, 141 P.2d 395; Gaskin v. Wayland, 61 Ariz. 291, 148 P.2d 590.
In relation to the particular point here in issue (who is covered by the act?) we have made it clear that the common law definition of the terms 'employer', 'employee', and 'independent contractor' has been abrogated for the purposes of the act in favor of a more liberal interpretation consistent with the purpose of the act. We went to great pains to make this clear in McClain v. Church, 72 Ariz. 354, 357-358, 236 P.2d 44, 46-47, 29 A.L.R.2d 746:
'The courts have divided upon the question as to those who were covered by similarly worded unemployment compensation acts. One school of judicial thought adopted the view that the Act applied only to those who sustained toward each other the common law relationship of either master and servant or principal and agent, while the other adopted the view that it was intended by the lawmakers to, and the statutes defining 'employment' did, enlarge the scope of that term and that it included many individuals who have otherwise been excluded from the benefits of the acts by the former concepts of master and servant and principal and agent as recognized by the common law. This court in the case of Sisk v. Arizona Ice & Cold Storage Co., 60 Ariz. 496, 141 P.2d 395, definitely rejected the common law concept of 'employment' and aligned Arizona with the jurisdictions enlarging the scope of the term.'
The act in its present posture is even broader than it was when the McClain case arose. The fact that the so-called 'A, B, C' test has been eliminated from the statute (formerly § 56-1002(i)(5)(A)(B)(C), A.C.A.1939 as amended) does [89 Ariz. 122] not make the coverage of the law less liberal. On the contrary, the test was in the act originally for the purpose of restricting coverage, not broadening it. When it was found that the relationship was within the scope of the 'A, B, C' test, it was determined that the relationship was not that of employer-employee. See McClain v. Church, supra. The removal of this restriction broadened the coverage of the act. What was said of 'wages' in Beaman v. Westward Ho Hotel Co., 89 Ariz. 1, 357 P.2d 327, 331, applies equally to 'employment':
'We have repeatedly held however, that in the absence of constitutional limitations, the power of the Legislature in its field is plenary. Therefore, when it declares that 'wages means all remuneration for services from whatever source' the courts are without authority to hold otherwise. The above term is all inclusive. It is broader than the language deleted from the act existing prior to the 1947 amendment. Any relief for appellee rests exclusively with the Legislature.' (Justice Phelps concurring specially.) (Emphasis in original.)
Although each case must necessarily depend on its peculiar facts we think the following excerpt is correct and should serve as a useful guide in cases involving salesmen.
'Salesmen are generally employees, even though paid on a commission basis and comparatively free from control. In most cases the services are performed in the course of the employer's business and not in the furtherance of an independently established business of the salesman. Although actual ...