Wash. Court of Appeals published opinion — 323820.opn.pdf

Citation: Wash. Court of Appeals published opinion — 323820.opn.pdf
Jurisdiction: Washington (state)
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Original Source: https://www.courts.wa.gov/opinions/pdf/323820.opn.pdf ↗

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made to Drs. Loretta and Louise were reported as miscellaneous income on Internal

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Revenue Service (IRS) Form 1099s. 2 She concluded Drs. Loretta and Louise were

employees of the dental practice and unemployment insurance taxes should have been

paid. The Department issued Dr. Armand an order and notice of assessment requiring
.~

him to pay $1,896.37 in back taxes, penalties, and interest. Dr. Armand first

administratively appealed.

At the administrative hearing, Dr. Armand testified the association agreements

were no longer valid as the three dentists had orally entered into a partnership. He

stated Drs. Loretta and Louise receive 40 percent of their production, their share of the

dental practice's profits. The remaining 60 percent of production is applied to overhead.

Dr. Armand then took home what was left after overhead was paid, which he claimed

was about 40 percent of his production.

2 In 2013, the dental practice formed and registered a professional limited
liability company (PLLC).

3
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No. 32382-0-111
DeFelice v. Emp't Sec. Dep't

The administrative law judge (ALJ) concluded Drs. Loretta and Louise were

employees of the dental practice and affirmed. Dr. Armand petitioned the Department's

commissioner for review of the ALJ's decision; the commissioner adopted the ALJ's

findings of fact and conclusions of law and affirmed the ALJ. Dr. Armand sought

superior court review. The superior court affirmed, finding substantial evidence

supported the commissioner's decision. Dr. Armand appealed.

ANALYSIS

The issue is whether the Department's commissioner erred in deciding Dr.

Loretta and Dr. Louise were "in employment" under Washington's Employment Security