                               Cite as 2015 Ark. App. 634

                ARKANSAS COURT OF APPEALS
                                      DIVISION III
                                       No. E-15-31


JORI ENTERPRISES, LLC, D/B/A                    Opinion Delivered   November 4, 2015
CLUB Z
                     APPELLANT                  APPEAL FROM THE ARKANSAS
                                                BOARD OF REVIEW
V.                                              [NO. 2014-BR-7-EC]


DIRECTOR, DEPARTMENT OF
WORKFORCE SERVICES                              AFFIRMED
                    APPELLEE



                              CLIFF HOOFMAN, Judge

       Appellant Jori Enterprises, LLC, d/b/a Club Z (“Club Z”), appeals from the Arkansas

Board of Review’s (“Board”) decision finding that it is required to pay unemployment

insurance taxes for the services performed by its tutors. On appeal, Club Z argues that the

Board’s decision is not supported by substantial evidence. We affirm.

       On February 21, 2014, the Arkansas Department of Workforce Services

(“Department”) issued an unemployment-tax determination letter of liability to Club Z,

concluding that Club Z’s tutors were its employees for purposes of unemployment-insurance

taxes. On March 11, 2014, Club Z filed a request for a redetermination of coverage by the

Department director (“Director”) pursuant to Arkansas Code Annotated section 11-10-308

(Supp. 2013), and the hearing was held on October 1, 2014.

       At the hearing, Joanne Campbell, the owner of Club Z, testified that Club Z is an in-

home tutoring company that matches tutors with clients who need tutoring. When a client
                                 Cite as 2015 Ark. App. 634

contacts Club Z, Campbell interviews the client to assess their specific needs, such as the

particular subject for which the tutoring is needed and the client’s schedule. The clients sign

a contract with Club Z indicating whether they need a certain number of hours of tutoring

or are in need of ongoing tutoring each week. She then refers to Club Z’s database of tutors

to determine which tutor is a good match for that particular client. Campbell notifies the

tutor about the potential client, and the tutor decides whether or not to accept the client as

his or her student. If the tutor agrees to accept the client, the tutor then communicates with

the client to arrange the day, time, and location of the tutoring session. Campbell indicated

that Club Z has a standard range of rates that it charges, although the tutor or the client can

sometimes negotiate a different rate with the company depending on the specifics of the

assignment. After tutoring services are rendered, the tutor prepares and submits an invoice

to Club Z, who then bills the client. Once payment is received from the client, Club Z

retains fifty-five percent of the hourly fee and remits to the tutor the remaining forty-five

percent. Campbell explained that this is not a one-time referral fee; instead, Club Z retains

its percentage fee for each hour that is billed pursuant to its client agreements.

       Campbell testified that each of Club Z’s tutors is required to sign an “Independent

Tutor Agreement.” As part of this agreement, the tutor completes and signs a tutor profile,

agrees to submit to a background investigation, and agrees to inform Club Z of any health-

status changes. The agreement also contains a non-competition clause, which prohibits tutors

from soliciting, diverting, or attempting to divert any of Club Z’s clients or business

opportunities to themselves or to a competitor.         Tutors are further prohibited from


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contracting with a Club Z client for a period of one year after the termination of the

agreement, or alternatively, they are required to pay liquidated damages in the amount of

$2,500. Club Z also reserves the right to cancel assignments and to immediately terminate

the agreement if a client is unsatisfied.

       According to Campbell, Club Z itself does not offer tutoring services but instead

operates as a referral or matching service. She indicated that Club Z’s tutors typically work

full time as licensed teachers or other professionals and that their work for Club Z provides

supplemental income. Campbell admitted that the website for her Northwest Arkansas

franchise of Club Z states that it “proudly offers one-on-one in-home tutoring for all subjects,

pre-K to adult” and that some people could believe from this advertisement that Club Z was

a tutoring service.

       Ashley Henderson testified that she is a “private contractor” or tutor for Club Z. She

indicated that she is a postgraduate student and that her tutoring jobs supplement the income

she receives as a research assistant. Henderson stated that she decides whether to accept a

particular client and that she contacts the client directly to make arrangements for the time

and location of the tutoring sessions. In order to receive payment for her tutoring services,

she prepares an invoice with the number of hours worked for each client and submits it to

Club Z, who then pays her.

       George Myers, a field-audit supervisor for the Department, testified that he had

participated in the determination that Club Z’s tutors were employees and not independent

contractors. He stated that he had concluded from Club’s Z’s tutor agreement that Club Z


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exercised control over the tutors by controlling the assignments and the payment details.

Myers further testified that he had found that Club Z was in the business of tutoring and that

its tutors performed the services at the client’s location, which was considered to be an

extension of Club Z’s place of business under these circumstances.

       After the hearing, the Director issued a decision agreeing with the Department’s

determination that Club Z’s relationship with its tutors constituted covered employment

pursuant to Arkansas Code Annotated section 11-10-308 and that Club Z was responsible for

the payment of unemployment-insurance taxes for the services performed by its tutors. Club

Z then appealed to the Board, which affirmed and adopted the Director’s decision in an

opinion filed on December 12, 2014. Club Z has now timely appealed the Board’s decision

to this court.

       On appeal, the findings of the Board are affirmed if they are supported by substantial

evidence. Barb’s 3-D Demo Serv. v. Dir., 69 Ark. App. 350, 13 S.W.3d 206 (2000).

Substantial evidence is such evidence as a reasonable mind might accept as adequate to support

a conclusion. Id. We review the evidence and all reasonable inferences therefrom in the light

most favorable to the Board’s findings. Id. Even where there is evidence upon which the

Board might have reached a different conclusion, appellate review is limited to a

determination of whether the Board could reasonably reach its decision upon the evidence

before it. Id. Also, the credibility of witnesses and the weight to be accorded their testimony

are matters to be resolved by the Board. Johnson v. Dir., 84 Ark. App. 349, 141 S.W.3d 1

(2004).


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       Pursuant to Arkansas Code Annotated section 11-10-210(e) (Supp. 2013),1

       (e) Service performed by an individual for wages shall be deemed to be employment
       subject to this chapter irrespective of whether the common law relationship of master
       and servant exists, unless and until it is shown to the satisfaction of the director that:
       (1) Such individual has been and will continue to be free from control and direction
       in connection with the performance of the service, both under his or her contract for
       the performance of service and in fact;
       (2) The service is performed either outside the usual course of the business for which
       the service is performed or is performed outside all the places of business of the
       enterprise for which the service is performed; and
       (3) The individual is customarily engaged in an independently established trade,
       occupation, profession, or business of the same nature as that involved in the service
       performed.

In order for an employer to establish the exemption set forth in section 11-10-210(e), it must

prove each of the three requirements in subsections (1)–(3). Barb’s 3-D Demo Serv., supra.

If there is sufficient evidence to support the finding of the Board that any one of the three

requirements for establishing the exemption is not met, the case must be affirmed. Id. In this

case, the Director found that Club Z failed to satisfy the first two prongs of the statutory test,

although it did satisfy the third prong. The Board affirmed and adopted the Director’s

decision.

       As noted above, the failure to satisfy even one subsection of the statute requires us to

affirm the Board’s decision, and because there was clearly substantial evidence to support the

Board’s finding as to subsection (e)(2), we will discuss this subsection first. Arkansas Code

Annotated section 11-10-210(e)(2) requires that the employer establish that the service is



       1
         Section 11-10-210(e) was amended in April 2015; however, this was four months
after the Board’s decision in this case, and thus, the amended version of the statute does not
apply here.

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performed either outside the usual course of the business for which the service is performed

or that it is performed outside of all the places of business of the enterprise for which the

service is performed. The Board made the following findings with regard to this subsection:

       The appellant argued that, in essence, it was merely a referral service with no
       employees whatsoever. The evidence does not support this argument. The appellant
       offers “in home” tutorial services and does not advertise itself merely as a referral
       service. It charges clients by the hour for those tutorial services. It does not simply
       collect a referral fee from the client and leave it to the tutor to charge for the tutorial
       services he or she provides. Rather, the appellant has an ongoing relationship with the
       client and is profiting from the tutoring itself. The Board finds that the employer is
       engaged in the business of providing “in home” tutorial services.

       ....

       Having concluded that the appellant is in the business of providing in home tutorial
       services rather than simply being a referral service, it is clear that the activities of the
       tutors fail prong two of the test. The services which the tutors provide are not outside
       the normal course of business for the employer. They are exactly the services which
       the appellant is paid by the client to provide. Moreover, the services are not
       performed outside of all of the places of the appellant’s enterprise as “in home”
       tutoring indicates the appellant’s services are provided “in home,” or wherever else the
       tutor and client agree to meet. Further, the employer’s own witness, Joanne
       Campbell, Owner, also testified that at times visits are made with the client at their
       home or other locations, in order to assess what type of tutoring services are needed,
       which also indicates that the services were not performed outside all of the places of
       the appellant’s enterprise.

       Club Z continues to argue on appeal that it is merely a referral service and that it is not

in the business of providing tutorial services. However, the Director and Board found from

the evidence presented that Club Z advertises itself as offering “in-home tutoring” services

and that it profits from the tutoring itself, not from a referral fee. Furthermore, Campbell

testified that she often visits with clients at their homes to assess their needs.

       In Mamo Transp., Inc. v. Williams, 375 Ark. 97, 103, 289 S.W.3d 79, 85 (2008), our


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supreme court interpreted the phrase “place of business” in section 11-10-210(e)(2) as “the

place where the enterprise is performed.” Thus, in Mamo, the court found that the

employer’s place of business was inside the vehicles that the employer had contracted to

transport and that it had therefore failed to satisfy subsection (e)(2) of the statute. Also, in

Home Care Professionals of Arkansas, Inc. v. Williams, 95 Ark. App. 194, 235 S.W.3d 536

(2006), this court found that the employer, HCP, who was a home care referral service, was

in the business of providing in-home services for the elderly through its caretakers. Thus, the

places of business of the enterprise included the clients’ premises, where the caregivers

performed the very services by which HCP profited. See also TNT Cable Contractors, Inc. v.

Director, 2015 Ark. App. 79 (affirming the Board’s finding that cable installers were an integral

part of TNT’s business and that the places of business of the enterprise included the locations

of the installation and the roadways between them).

       Similarly, in this case, there was sufficient evidence to show that Club Z is engaged in

the business of providing tutorial services and that the services that the tutors provide are not

outside the normal course of Club Z’s business. Further, the services performed are not

outside of all of the places of Club Z’s enterprise, as its places of business include the homes

of its clients or wherever the clients and tutors agree to meet. Thus, there was substantial

evidence to support the Board’s finding that Club Z failed to satisfy the requirement in

Arkansas Code Annotated section 11-10-210(e)(2). It is therefore unnecessary to address the

remaining statutory requirements, as Club Z failed to meet its burden to show that it is

exempt from paying unemployment insurance taxes on its tutors. Accordingly, we affirm the


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Board’s decision.

       Affirmed.

       VIRDEN and KINARD, JJ., agree.

       Richard S. Hardwicke, for appellant.

       Phyllis Edwards, for appellee.




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