A Missouri court has considered whether an individual who worked for a company which listed time-share interests for sale was an independent contractor or an employee of the company.

Christina Hitchcock ("Hitchcock") was hired as an agent/telemarketer by National Resort Mart, Inc.'s Kimberling City, Missouri office ("Company"), a company which lists time-share interests for sale. Hitchcock's job was to convince individuals who were seeking to sell time-share interests to list with the company. Hitchcock did not possess a real estate license, since Missouri does not require a license to sell time-share interests. The Company hired Hitchcock as an independent contractor, and she received a commission for each listing that she obtained. After nearly a year, the Company terminated its relationship with Hitchcock. Hitchcock filed a claim for unemployment benefits with the state's unemployment compensation division ("Division"), and the Division sent the Company notice that Hitchcock was entitled to receive unemployment compensation because she had been an employee of the Company. The Company appealed this determination.

The Missouri Court of Appeals affirmed the Division's determination. First, the court considered the Company's argument that Hitchcock was excluded from the Division's definition of employment by statute. Missouri has a statute which excludes real estate salespeople from the definition of employment when at least eighty percent of the salesperson's compensation is derived from commissions received from real estate sales transactions. The Company argued that this exception should apply to Hitchcock, since she was compensated like a real estate salesperson and performed work that was similar to a real estate salesperson. The court ruled that this exception only applies to licensed real estate salespeople, and Hitchcock did not fit into this category because she did not have a real estate license. Thus, the court rejected the Company's argument that it was statutorily exempt from paying unemployment compensation to Hitchcock.

Next, the court considered whether Hitchcock qualified as an independent contractor under Missouri law. Missouri courts use the I.R.S.'s twenty-factor test to determine whether an individual is an employee or independent contractor. To read more about this test, click here. Under this test, the right to control the individual's behavior is the central question in determining whether an individual qualifies as an independent contractor or employee.

Looking at Hitchcock's working arrangements with the Company, the court found that the nature of this relationship pointed to a finding of an employer/employee relationship because the Company exercised a great deal of control over Hitchcock's actions. First, Hitchcock was required to be available between the hours of 9AM- 5PM, and she had to notify the Company's regional headquarters when she was not available during those hours so that they would not forward any calls to her. Second, if Hitchcock wanted to work from home, she was required to have a fax machine at her house. Third, she received all of her leads for time-share listing directly from the Company. Finally, Hitchcock normally worked forty hours a week, worked out of the Company's offices, and obtained payment information for the Company from clients. All of this supported the Division's determination that Hitchcock was an employee of the Company, as the Company exercised a great deal of control over the Hitchcock's actions. The court also found that nearly all of the 20-factors identified by the IRS supported the Division's conclusion that Hitchcock was an employee. Thus, the court affirmed that Division's determination that Hitchcock was an employee of the Company.

Nat'l Resort Mart, Inc. v. Hitchcock, 88 S.W.3d 459 (Mo. Ct. App. 2002).