Update: On May 2, 2013, the Supreme Court handed down a merit decision in this case. Read the analysis here.
On January 9, 2013, the Supreme Court heard oral argument in State of Ohio ex rel. John Nese, Donald Williams, and Catherine Miles v. State Teachers Retirement System Board of Ohio and Jefferson County Educational Service Center Governing Board, 2012-0251. Justice French wrote the Court of Appeals decision in this case, so she recused herself, and Judge Robert Ringland of the Twelfth District Court of Appeals sat for her. The issue in the case is whether instructors of an online educational system are entitled to participate in the State Teachers Retirement System.
In 2001, the Jefferson County Educational Service Center Governing Board (ESC) (which used to be the county school district) approved the development of a Virtual Learning Academy (VLA) as an internet-based educational delivery system designed to provide alternative educational options for students. The VLA is not a school, but a curriculum option that school districts might utilize to help their own students. Participating districts may either use their own teachers or can elect to utilize individuals hired directly by the ESC to serve as instructors for the enrolled students. The State Teachers Retirement Board (STRB) concluded that VLA instructors were not “teachers,” as defined in R.C. 3307.01(B), and therefore were not eligible to participate in the Retirement System.
Nese, Williams, and Miles, three VLA instructors, filed an original action in the Court of Appeals for Franklin County seeking a writ of mandamus to compel STRB to accept their contributions to the Retirement System, and to compel ESC to make employer contributions to the system. ESC was joined as a party defendant in an amended complaint, but ESC is aligned with the instructors in this appeal.
The case was assigned to a magistrate, who determined that STRB had abused its discretion in finding that the instructors were independent contractors, and recommended that a writ of mandamus be issued. STRB filed objections to the Magistrate’s conclusions of law.
The Tenth District Court of Appeals, by a split decision, denied the writ. The majority held that STRB did not abuse its discretion by determining that the relators were independent contractors because there was some evidence to support the Board’s decision. The appeals court noted that there was also evidence to support a contrary conclusion, but the court was not to substitute its judgment for that of STRB.
Read the oral argument preview of this case here.
At Oral Argument
Arguments of the Instructors
One lawyer argued for the instructors, taking most of the time, and the rebuttal. I’ll refer to him as relators’ counsel. A different lawyer argued for ESC.
Relators’ counsel argued that this case turns on the definition of “teacher,” and not whether the relators were employees or independent contractors, because unlike OPERS and SERS, which statutorily do make membership dependent on employment status, and specifically prohibit independent contractors from participating, independent contractors who are teachers can participate in STRS. No one has ever answered the question of whether the realtors are teachers, because all the decisions focus on the status of the employment relationship, on the employee/independent contractor distinction. The relators are definitionally teachers, under R.C. 3307.01(B)(4), which defines a teacher as “any other teacher or faculty member employed in any school… controlled and managed, and supported in whole or in part, by the state or any political subdivision.” Membership in STRS depends on one’s status as a teacher, not as an employee. The key word in this subsection is “employed in.” The statute does not say “employed by” or “teacher who is an employee of.” STRB abused its discretion in excluding the relators because they were independent contractors. STRB never determined that the relators were not teachers; only that they were not employees.
Counsel for ESC made a simpler argument—which was that the relators were its employees, and not independent contractors because of ESC’s control over the mode and manner of their work, citing a number of examples.
The ultimate question here is whether the underlying relationship is that of employer and employee, regardless of what it is called. STRS participation is not limited to traditional teachers. It accepts membership from community schools, for example. All the definitions in the statute require that persons seeking participation in STRS be employed as teachers, and relators were not. They were engaged as independent contractors; they were not employed as teachers—a distinction crucial in this case, and fatal to the relators. Counsel did not deny that the relators were teachers, in the sense of pedagogy they offered students. But he argued the case turns on whether relators were “employed as teachers.” He emphatically denied that they were “employed as teachers” by ESC, necessary to meet the threshold requirement for participation in STRS. An employment relationship is necessary to participate in STRS, and relators did not have it. He disagreed strongly that independent contractors can participate in STRS, and argued that STRB was correct in concluding relators were independent contractors. He described them as doing piecemeal work, getting paid per course, per student, without limited or continuing contracts, receiving no fringe benefits, and dictating their own hours of work. More than sufficient evidence exists to show relators were engaged as independent contractors by the ESC and are not employed as teachers as required by 3307.01(B).
What Was on Their Minds
Tinker, Teacher, Soldier, Spy? Good grief, What Are These People?
Doesn’t their employment status matter? asked Chief Justice O’Connor. Unless they are employed, does it matter if they are teachers? Were they always teachers and employees? Even though they were once paid with 1099’s? Do these individuals not comport with the duties and the relationships that regular public school teachers have with their school districts?
Were they offered employment contracts? asked Judge Ringland. Were they employed by ESC? Does ESC qualify as a public school?
Are they independent contractors? asked Justice O’Neill. But don’t we have an employer telling them how, when and where to do their work? Couldn’t an argument be made that if you tell me what to do, and I do it and you send me a check, I am your employee? Don’t these folks have to report in every day?
What is the sum evidence that relators are not teachers? Asked Justice Pfeifer. When the Board’s lawyer gave a lengthy answer suggesting why they were independent contractors, Pfeifer commented that that sounded like why they weren’t employees, not why they weren’t teachers. Should it matter that ESC thought they were employees? And couldn’t the statutory language “employed as teachers” just be to differentiate them from cooks, or janitors, or bus drivers?
Can we have teachers who are not employees? asked Justice O’Donnell. Then came this key exchange of the day, after what felt like a very long time;
Justice O’Donnell: “if they are not employed as teachers, what are they employed as?”
Board’s lawyer: they are engaged as independent contractors here-they are not employed.
Justice O’Donnell: So they are engaged as teachers, but not employed as teachers? That distinction keeps them from participating in STRS in your view?
Board’s lawyer: Yes.
To which the Chief followed up to the Board’s lawyer, the crux of your argument is that an independent contractor is not “employed” [ as a teacher]?
So, “person employed” is part of the definition of “teacher” under the statute? Asked Justice Lanzinger (answer:yes)
And then later, in a final key exchange of the day, Justice O’Donnell had this exchange with relator’s counsel, who insisted that the question that has never been answered is whether the relators were teachers.
That seems to be the crux of the difference between yourself and your opponent—his argument is that these individuals are not employed—they are independently contracted teachers, and you are arguing they are employed as teachers. I’m going to have to look to determine the status of their engagement I don’t know the difference between engaged as teachers and employed as teacher, as the General Assembly intended in the statute.
For whatever reason (in contrast to SERS and OPERS which condition membership based on status as an employee) membership in STRS is defined by being a “teacher employed in,” not “teacher who is an employee of ” or “teacher employed by”
Readers—are you getting the flavor of all this?
Who Can Participate in STRS?
Can independent contractors, asked Justice O’Neill and Chief Justice O’Connor. (Yes, said relators’ counsel; No said STRB’s counsel) Didn’t the Board exclude them for this reason? asked Justice O’Neill.
Does the statute require the Board to interpret the statute in the manner that it did, asked Justice Lanzinger. We’ve got three terms here—teacher, employee, independent contractor—which was the Board determining?
If the Board determination is supported by some evidence, what are we left with, asked Chief Justice O’Connor.
That Ever Nasty Standard of Review
What is it in this case, asked Justice O’Neill. (answer: abuse of discretion) In order to find in your favor, he asked relator’s counsel, must we not find there is no evidence they are not independent contractors? If there is some evidence they are independent contractors, aren’t you dead in the water? (answer—no, you must find there is no evidence they are not teachers, and independent contractors are entitled to membership in STRS under the statutory definition of teacher.)
How it Looks From the Bleachers
To Professor Bettman
Like an Excedrin headache, to be honest. Round and round and round we go. Teacher? Employee? Independent Contractor? Despite the finesse in each side’s issue framing, the case is still likely to turn on the precedent on employees versus independent contractors. The path of least resistance, given the narrowness of the review here, would be to agree with the Tenth District that STRB did not abuse its discretion by determining that the relators were independent contractors because there was some evidence to support the Board’s decision. But the dissent in the appellate decision is very persuasive. Here’s a bit of its flavor:
“Part of my difficulty with STRB’s arguments lies in its imposing the traditional attributes of a teacher on the less than traditional and, in light of technological advances, a likely increasingly common approach to teaching. What constitutes control will vary with the circumstances, and the circumstances here are considerably different than those of the more traditional classroom and make the factors STRB cites not pertinent to determining whether relators are employees… The factors STRB cites to demonstrate a lack of the requisite control do not address the relevant factors in determining whether relators are employees in the setting in which they render teaching services, because the factors the majority relies on, by the very nature of JCESC, VLA, and other educational providers like them, are not likely to exist as part of the control the employer exerts over teachers.”
I can see Justice Pfeifer, and maybe Justices O’Neill and O’Donnell agreeing with this. I sense a split decision. And personally, my sympathies are with the relators.
To Student Contributor Elizabeth Chesnut
With each side arguing a different point and missing the other in the middle, I predict that the Justices will be left to find that the decision on appeal was not the result of an abuse of discretion. The opinion may not come down to the metaphysical debate in which counsel for both sides indulged during oral argument; whether these teachers were, in fact, teachers (or even state employees) will be less important than whether there was enough evidence to support the finding that they were not.