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Docket No. 89984-Agenda 25-March 2001.

AFM MESSENGER SERVICE, INC., Appellant, v. THE 
DEPARTMENT OF EMPLOYMENT SECURITY et al.,
Appellees.

Opinion filed September 20, 2001.

JUSTICE FITZGERALD delivered the opinion of the court:

In this appeal we consider whether delivery drivers for AFMMessenger Service, Inc. (AFM), were "independent contractors"within the meaning of section 212 of the Unemployment InsuranceAct (820 ILCS 405/212 (West 2000)). In two separateadministrative proceedings, the Department of EmploymentSecurity (Department) determined that the drivers were employeesand not independent contractors. AFM was, therefore, liable forunemployment insurance contributions. On administrative review,the circuit court confirmed. The appellate court, in a consolidatedappeal, held that the agency decisions were not clearly erroneousand affirmed. 315 Ill. App. 3d 308. We granted AFM's petition forleave to appeal (see 177 Ill. 2d R. 315) and now affirm thejudgment of the appellate court.

BACKGROUND

1993 Agency Decision

In June 1990, a former clerical worker for AFM filed a claimfor unemployment benefits, which triggered an audit of AFM bythe Department. Among the individuals included in the audit wereAFM's delivery drivers. The audit resulted in a determination andassessment against AFM for over $12,000 in unpaidunemployment insurance contributions for 1988 and 1989. AFMfiled a protest and petition for hearing. AFM contended, inrelevant part, that it was exempt from making unemploymentcontributions in connection with the drivers' services andcompensation because the drivers were independent contractorsunder section 212. On January 26, 1993, a hearing was held beforea representative of the Director of Employment Security(Director).

At the hearing, Susan Vitula, a co-owner of AFM, testifiedthat AFM is a small-package same-day delivery service, which hasbeen operating in the Chicago area since 1986. According toVitula, all drivers must sign a contract, which AFM supplies. Thebrief, 10-line contract used by AFM during 1988 and 1989provided that AFM and the named driver "agree to contract for therendition of personal services as an independent broker/operator"and that "[i]t is understood [the driver] is acting as an independentcontractor subject to all the necessary laws, procedures, etc.,related to an independent contractor, including, but not limited to,Federal and State Income taxes on his net income and any SelfEmployment, Unemployment, Minimum or any other taxesnormally paid by an independent contractor."

Vitula also testified that, in accordance with the rules andregulations of the Illinois Commerce Commission (ICC), alldrivers were required to enter into an equipment lease with AFM.The form of the equipment lease was provided by the ICC, and therequired $25 ICC filing fee was paid by AFM. Pursuant to thelease, the named driver agreed to lease his or her vehicle to AFMfor a period not to exceed three years. The lease also provided thatAFM would compensate the driver on a weekly basis. Thecompensation would be computed as a percentage of the totalrevenue derived from operation of the leased vehicle. Vitulaexplained that the drivers were paid a "commission" based on theprice of each delivery they completed. Most drivers were paid a50% commission when they started. In order to receive theircommissions, which were paid on Friday, drivers were required todrop off or mail their delivery tickets to AFM. Finally, Vitulatestified that the drivers did not wear uniforms, and that whenAFM offered the drivers a company baseball cap, many of thedrivers declined.

Two drivers also testified on behalf of AFM. According toAFM's counsel, their testimony was representative of all AFMdrivers during the years 1988 and 1989. Brian Lhotka testified thathe learned about AFM through a friend, and in 1989 began makingdeliveries for AFM's customers. Typically, Lhotka would callAFM by 8 a.m. to let the dispatcher know that he was available forwork. AFM could also reach him at home. According to Lhotka,he was not required to report to AFM every day, nor was herequired to work a specific number of days or a specific number ofhours per day. Lhotka, however, usually made himself availablefor work Monday through Friday; he also made himself availablefor night deliveries, when the rates were higher. AFM did notassign a territory to Lhotka or limit the area in which he couldwork. AFM imposed no time constraints in connection with thedeliveries, but Lhotka worked within the time constraints imposedby AFM's customers. AFM did not specify what route Lhotkashould take to make the deliveries, and he was free to decline anydelivery. Lhotka further testified that AFM issued no rules orregulations, conducted no training courses or meetings, andrequired no uniform. When AFM offered him a baseball cap withthe AFM insignia, Lhotka declined.

Lhotka signed the form contract that AFM supplied, underwhich he was paid a 60% commission on deliveries. In order to getpaid, Lhotka would turn in his delivery tickets to the AFM office.He usually did this when he was in the area and it was convenientto do so. Lhotka would sometimes pick up his check from theAFM office on Friday, or from the business next door to AFMwhere the checks were left. Lhotka testified that he consideredhimself an independent contractor and could terminate his servicesfor AFM at any time without reason. He received no paid vacationtime, no paid sick days, and no pension benefits from AFM. Hewas not eligible for any compensation other than his commission,and AFM did not deduct taxes from his commissions. Each yearhe worked as a delivery driver, he received an Internal RevenueService Form 1099 (miscellaneous income) from AFM. As part ofhis 1989 federal tax return, Lhotka filed a Schedule C (profit orloss from business), showing approximately $20,000 of incomefrom his messenger service business. Lhotka testified that althoughhe had the right to work for other messenger service companies,in 1989 he performed delivery work solely for AFM. Lhotkafurther testified that his investment in his business consisted of thevehicle he owned; the upkeep and maintenance on his vehicle, nopart of which AFM paid; and the maps he purchased. AFMsupplied Lhotka with a beeper and radio, for which he paid AFMa use fee. Although he had the right to hire, at his own expense, anassistant to help with deliveries, Lhotka never hired an assistant.

Lhotka also signed the required ICC lease with AFM.Pursuant to ICC regulations, Lhotka displayed two signs in hisvehicle windows indicating that the vehicle was leased to AFM.When picking up packages and making deliveries, Lhotkaindicated to the customer that he was with AFM.

Angelo Cisneros testified that he was a driver for AFMbeginning in 1988. He learned about AFM through his brother,who also drove for AFM. Cisneros' testimony was generallyconsistent with Lhotka's testimony. Cisneros signed a contractwith AFM, under which he was paid a 60% commission, and anICC equipment lease. He considered himself an independentcontractor. Cisneros testified that he was not required to report toAFM at any particular day or time, and that he was free to makehis services available to AFM whenever he chose. Typically,services with AFM were initiated when AFM paged him, butCisneros was free to refuse the pickup or delivery. According toCisneros, AFM did not assign him a territory or limit the area inwhich he could work. AFM did not provide any rules orregulations. AFM did not require a uniform, and although AFMgave him a company baseball cap, he was not required to wear it.Cisneros displayed the required signs in his vehicle, indicating thatit was leased to AFM, and he sometimes identified himself withAFM when making a pickup. AFM did not have the right toappoint or approve a helper for Cisneros.

On his income tax return, Cisneros reported that he was self-employed. Cisneros testified that his investment in his businesswas his automobile, on which he paid the insurance, gas, repairsand maintenance, without reimbursement from AFM. Cisneroshad his own beeper, but rented a radio from AFM. During 1988and 1989, Cisneros testified that he also worked for his father,although the income was probably too small to report. In 1990,Cisneros' entire income was from AFM. Although Cisnerosworked for other messenger companies, he only worked for onecompany at a time.

Following the hearing, the Director's representativedetermined that AFM had failed to sustain its burden of proof thatthe drivers were independent contractors under section 212.According to the representative, AFM had not established that thedrivers were free from AFM's control and direction, as requiredunder section 212(A); that the drivers' services were performedoutside of the usual course or places of AFM's business, asrequired under section 212(B); and that the drivers were engagedin independently established businesses, as required under section212(C). See 820 ILCS 405/212 (West 2000). The representativeconcluded that AFM was liable for unpaid unemploymentinsurance contributions. Significantly, the representative acceptedAFM's argument that any payments to the drivers should beallocated two-thirds to rental of the drivers' vehicles, and one-thirdto wages. This allocation reduced AFM's liability fromapproximately $12,800 to approximately $6,400.

Over AFM's objection, the Director adopted the decision ofthe representative. On administrative review, the circuit court ofCook County confirmed the Director's decision as neither againstthe manifest weight of the evidence nor contrary to law.

1996 Agency Decision

In August and September 1994, Mark Przybylinski deliveredpackages for AFM's customers. In early 1996, in connection witha prior claim for unemployment benefits made by Przybylinski, aclaims adjudicator for the Department found that the wages paidto him by AFM could not be used to establish benefit credit.Przybylinski appealed this finding and a hearing before a refereewas held on February 21, 1996.

At the hearing, Przybylinski testified that he learned aboutdriving opportunities with AFM through a newspaperadvertisement in the employment section. Prior to performingdeliveries for AFM, the company asked him to spend four hourswith another driver to learn the operation. During his briefassociation with AFM, he was required to call in daily to the AFMdispatcher, even when he was sick. AFM also gave Przybylinskia pager, so that AFM could contact him with changes in deliveryinstructions or advise him of additional items for pickup.

Przybylinski admitted that he signed a contract with AFMunder which he would be considered an independent contractor.The contract that Przybylinski signed in 1994 was not the samecontract used by AFM during 1988 and 1989. The 1994 contractstated in relevant part:

"AFM *** is engaged in the general messenger servicein the City of Chicago *** and desires to contract withMark Przybylinski, hereinafter referred to as 'Contractor,'to deliver various items placed with AFM by itscustomers.

* * *

AFM agrees that it will advise Contractor of variousitems for delivery and said delivery shall be evidenced inthe form of a ticket specifying the place to which, and theperson or party to whom, such items are to be delivered.Contractor shall be free to accept or reject the item oritems. In the event contractor elects to accept for deliveryany item or items, then it is mutually agreed by andbetween the parties that the delivery of such items oritems as [sic] shall be accepted in accordance with thefollowing terms and provisions.

1. Contractor agrees to furnish a vehicle *** and *** adriver and all gasoline, oil, lubricants, tires and otheraccessories to such vehicle, and to perform all repairs andmaintenance thereto. *** AFM shall not be responsible orliable to Contractor for any of the expense or cost ofoperation, maintenance, or repairs of such vehicle.

2. AFM will furnish to its customers delivery ticketswith respect to each item to be accepted and delivered byContractor. *** Contractor will be supplied with astatement by AFM each week which will identify eachdelivery completed by the Contractor, and the commissionearned by the Contractor computed and based on theinformation contained in each delivery ticket.

3. It is hereby declared to be the express intention ofeach of the parties that the relationship created betweenthem by this contract is that of employer-independentcontractor. *** Contractor shall have the right to hire aperson to assist Contractor in the delivery of any item oritems. Contractor shall have all control, direction, andsupervision with respect to the physical details of thework to be performed and the manner in which the workis performed. AFM shall not have the right to exercise anycontrol, direction or supervision over Contractor except toprescribe the destination for the delivery of the item oritems to be transported by Contractor, and Contractorshall be bound by delivery instructions from the customer.Contractor shall receive as compensation an agreedpercentage of the fees paid by the customer to AFM.

4. *** Contractor further agrees to secure *** publicliability and property damage insurance *** and to furnishAFM a copy of the policy ***.

5. *** The acceptance by Contractor of a delivery ticketwill constitute conclusive evidence that deliveries bycontractor shall be performed *** pursuant to the terms,conditions and provisions of this agreement.

6. This agreement may be terminated at any time byAFM or Contractor. ***"

Consistent with the provisions of the contract, Przybylinskitestified that he paid his own automobile expenses and wasrequired to maintain liability and property damage insurance. Healso testified that he could choose his own route when makingdeliveries and could hire a helper at his own expense. He did notknow whether he could have rejected a delivery and did not knowwhether he could have worked for another company at the sametime. Przybylinski did not remember signing an equipment lease,but recalls placing a sign in the window of his vehicle to gainaccess to loading docks. After two months, Przybylinskivoluntarily stopped making deliveries for AFM. He gave AFM aweek's notice and turned in his pager.

Susan Vitula of AFM testified that prospective drivers wouldinitially spend time with an experienced driver to see if they reallywanted to do this type of work. Drivers were not required totelephone AFM daily. Rather, those who wished to work on agiven day would call and advise the AFM dispatcher. If there wasa pickup in the driver's area, the dispatcher would give the driverthe details. Drivers were free to refuse a delivery with no penalty,and were free to work for other companies. Drivers periodicallyturned in their delivery tickets, either in person or by mail.Payment to the drivers was based on an agreed percentage of thedelivery charges. Pursuant to ICC regulations, drivers wererequired to sign equipment leases with AFM. AFM paid the ICCfiling fee. As to Przybylinski's affiliation with AFM, Vitulatestified that he never expressed dissatisfaction with the contractor the job, and that he left without notice, advising the company bytelephone the same day that he took another job.

On March 15, 1996, the referee issued his decision. Thereferee concluded that AFM had failed to establish thatPrzybylinski was an independent contractor under the three criteriaset forth in section 212. Accordingly, the wages paid toPrzybylinski by AFM could be used to establish benefit credit.AFM appealed the referee's decision to the Board of Review(Board). The Board affirmed the referee's decision. Onadministrative review, the circuit court of Cook County confirmedthe Board's decision as neither against the manifest weight of theevidence nor contrary to law.

Appellate Review

The two cases were consolidated for appellate review. Withone justice dissenting, the appellate court affirmed the judgmentof the circuit court, which had confirmed the decisions of theDirector and Board, agreeing that AFM had failed to establish thatits drivers were independent contractors under section 212. 315 Ill.App. 3d 308.⁽¹⁾ We granted AFM's petition for leave to appeal. See177 Ill. 2d R. 315.

ANALYSIS

Standard of Review

Before reaching the merits of this appeal, we must firstdetermine the applicable standard of review. Judicial review of adecision of the Department is governed by the AdministrativeReview Law (735 ILCS 5/3-101 et seq. (West 2000)). 820 ILCS405/1100, 2205 (West 2000). Under the Administrative ReviewLaw, the scope of judicial review extends to all questions of lawand fact presented by the record before the court. 735 ILCS5/3-110 (West 2000). The applicable standard of review, whichdetermines the degree of deference given to the agency's decision,depends upon whether the question presented is one of fact, one oflaw, or a mixed question of law and fact. City of Belvidere v.Illinois State Labor Relations Board, 181 Ill. 2d 191, 204-05(1998); Branson v. Department of Revenue, 168 Ill. 2d 247, 265(1995).

AFM maintains that the Department's decision presents aquestion of law and is subject to de novo review. See Richard'sTire Co. v. Zehnder, 295 Ill. App. 3d 48, 56-57 (1998). TheDepartment maintains, however, that this case presents a mixedquestion of law and fact and that, pursuant to this court's decisionin City of Belvidere, the more deferential "clearly erroneous"standard of review applies. We agree with the Department.

A mixed question of law and fact is one "involv[ing] anexamination of the legal effect of a given set of facts." City ofBelvidere, 181 Ill. 2d at 205. Stated another way, a mixed questionis one "in which the historical facts are admitted or established, therule of law is undisputed, and the issue is whether the facts satisfythe statutory standard, or *** whether the rule of law as applied tothe established facts is or is not violated." Pullman-Standard v.Swint, 456 U.S. 273, 289 n.19, 72 L. Ed. 2d 66, 80 n.19, 102 S. Ct.1781, 1790 n.19 (1982); see also Lutheran Church of the GoodShepherd v. Department of Revenue, 316 Ill. App. 3d 828, 831-32(2000); Joel R. v. Board of Education of Mannheim SchoolDistrict 83, 292 Ill. App. 3d 607, 612 (1997) (citing with approvalthe Pullman-Standard definition of mixed questions).

In City of Belvidere, this court reviewed an agency decisionwhich presented a mixed question of law and fact. There, the laborrelations board determined that the city had committed an unfairlabor practice when it refused to bargain with the firefightersunion over the city's decision to contract out paramedic servicesto a private company. Under the Illinois Public Labor RelationsAct, to bargain collectively meant "to negotiate in good faith withrespect to wages, hours, and other conditions of employment." 5ILCS 315/7 (West 1994). Thus, whether the city was obligated tobargain over this matter turned on whether the city's decision tocontract out for paramedic services affected the "wages, hours andother conditions" of the firefighters' employment. We determinedthat the decision of the labor relations board was best considereda mixed question of law and fact. We explained:

"The Board's finding is, in part, factual because itinvolves considering whether the facts in this casesupport a finding that the City's decision affectedwages, hours and other conditions of employment.Nevertheless, the Board's finding also concerns aquestion of law because the phrase 'wages, hours andother conditions of employment' is a legal term thatrequires interpretation." City of Belvidere, 181 Ill. 2d at205.

In the present case, the Department's decision also presents amixed question of law and fact. Its decision is, in part, factualbecause it involves considering whether the facts support theagency's finding that the AFM drivers are employees and notindependent contractors under section 212. Nevertheless, theDepartment's decision also concerns a question of law because thethree statutory requirements for independent contractor status setforth in section 212 (freedom from control and direction,performance of services outside the usual course or places ofbusiness, and establishment of an independent business) arecomprised of legal terms and concepts requiring interpretation.

In City of Belvidere, we held that the standard of reviewapplicable to agency decisions that present a mixed question oflaw and fact is the "clearly erroneous" standard. City of Belvidere,181 Ill. 2d at 205. We described this standard of review as lyingbetween the manifest weight of the evidence standard and a denovo standard, so as to provide "some deference" to the agency'sdecision. City of Belvidere, 181 Ill. 2d at 205. We did not,however, otherwise define this standard and did not explain whereon the continuum between the manifest weight standard and denovo review the clearly erroneous standard lies. In applying thisstandard, our appellate court, including the appellate court panelin this case, has utilized the definition of "clearly erroneous"adopted by the United States Supreme Court in the context ofFederal Rule of Civil Procedure 52(a) (Fed. R. Civ. P. 52(a)). SeeCarpetland U.S.A., Inc. v. Department of Employment Security,319 Ill. App. 3d 1068, 1073 (2000), appeal allowed, 195 Ill. 2d576 (2001); Rogy's New Generation, Inc. v. Department ofRevenue, 318 Ill. App. 3d 765, 770 (2000); Board of Education ofCommunity Consolidated School District No. 59 v. State Board ofEducation, 317 Ill. App. 3d 790, 796 (2000); Hormel Foods Corp.v. Zehnder, 316 Ill. App. 3d 1200, 1205 (2000); Randolph StreetGallery v. Zehnder, 315 Ill. App. 3d 1060, 1064 (2000); 315 Ill.App. 3d at 312-13; Friends of Israel Defense Forces v.Department of Revenue, 315 Ill. App. 3d 298, 303 (2000).

Rule 52(a) provides in relevant part: "Findings of fact,whether based on oral or documentary evidence, shall not be setaside unless clearly erroneous, and due regard shall be given to theopportunity of the trial court to judge of the credibility of thewitnesses." Fed. R. Civ. P. 52(a). In construing this rule, theSupreme Court has held that "[a] finding is 'clearly erroneous'when although there is evidence to support it, the reviewing courton the entire evidence is left with the definite and firm convictionthat a mistake has been committed." United States v. United StatesGypsum Co., 333 U.S. 364, 395, 92 L. Ed. 746, 766, 68 S. Ct. 525,542 (1948). See also Concrete Pipe & Products of California, Inc.v. Construction Laborers Pension Trust, 508 U.S. 602, 622, 124L. Ed. 2d 539, 563-64, 113 S. Ct. 2264, 2279 (1993) (quoting withapproval the United States Gypsum Co. definition of "clearlyerroneous").

Review under the clearly erroneous standard of Rule 52(a) is"significantly deferential." Concrete Pipe, 508 U.S. at 623, 124 L.Ed. 2d at 564, 113 S. Ct. at 2280. The rationale for this deference"is not limited to the superiority of the trial judge's position tomake determinations of credibility." Anderson v. City of BessemerCity, 470 U.S. 564, 574, 84 L. Ed. 2d 518, 529, 105 S. Ct. 1504,1512 (1985). Rather, deference is accorded based on the"expertise" that comes with "experience" as the trial judge fulfillshis or her major role as fact finder. Anderson, 470 U.S. at 574, 83L. Ed. 2d at 529, 105 S. Ct. at 1512.

We note that the deference accorded a trial judge's experienceand expertise under the federal rule is not unlike the deferenceaccorded decisions of our administrative agencies. Indeed, thiscourt has frequently acknowledged the wisdom of judicialdeference to an agency's experience and expertise. SeeAbrahamson v. Illinois Department of Professional Regulation,153 Ill. 2d 76, 97-98 (1992) (explaining that a significant reasonfor giving substantial weight and deference to an agency'sinterpretation of an ambiguous statute is that "agencies can makeinformed judgments upon the issues, based on their experience andexpertise"); Greer v. Illinois Housing Development Authority, 122Ill. 2d 462, 495-96 (1988) (noting that too much judicialintervention in an administrative action may interfere with theexercise of agency discretion and expertise); Massa v. Departmentof Registration & Education, 116 Ill. 2d 376, 388 (1987)(deferring to agency's expertise and experience and expressing areluctance to tamper with an agency decision revoking aprofessional license); see also Office of the Cook County State'sAttorney v. Illinois Local Labor Relations Board, 166 Ill. 2d 296,306 (1995) (requirement that a litigant exhaust administrativeremedies before seeking judicial review permits the agency to useits special expertise in resolving the matter); Employers MutualCos. v. Skilling, 163 Ill. 2d 284, 288 (1994) (under the doctrine ofprimary jurisdiction, a matter should be referred to anadministrative agency when it has a specialized or technicalexpertise that would help resolve the controversy); Central CityEducation Ass'n v. Illinois Educational Labor Relations Board,149 Ill. 2d 496, 523 (1992) (labor relations board is "uniquelyqualified" to answer certain questions involving collectivebargaining given its experience and understanding of the issues).Even when we have reviewed an agency's interpretation of astatute de novo, we have acknowledged that the agency'sinterpretation was "relevant." Branson, 168 Ill. 2d at 254. Further,when we adopted the clearly erroneous standard of review formixed questions of law and fact, we again recognized theexperience and expertise of the agency and indicated that thestandard would be deferential to some degree. City of Belvidere,181 Ill. 2d at 205.

Based on the foregoing, we conclude that the clearlyerroneous standard of review, adopted in City of Belvidere,parallels in significant respects the clearly erroneous standardunder the federal rules, and that the Supreme Court's definition of"clearly erroneous" provides a practical guide for the applicationof this standard. Accordingly, we hold that when the decision ofan administrative agency presents a mixed question of law andfact, the agency decision will be deemed "clearly erroneous" onlywhere the reviewing court, on the entire record, is "left with thedefinite and firm conviction that a mistake has been committed."United States Gypsum Co., 333 U.S. at 395, 92 L. Ed. at 766, 68S. Ct. at 542. That the clearly erroneous standard is largelydeferential does not mean, however, that a reviewing court mustblindly defer to the agency's decision. Indeed, in City of Belvidere,we reversed the decision of the administrative agency.

As a final matter, we note that this court has reviewed otherdecisions of the Department which raised issues similar to thosepresent here under a manifest weight of the evidence standard. SeeJack Bradley, Inc. v. Department of Employment Security, 146 Ill.2d 61, 73 (1991); Griffitts Construction Co. v. Department ofLabor, 76 Ill. 2d 99, 104 (1979); Gladstone Cab Co. v. Donnelly,30 Ill. 2d 465, 474 (1964); Spahn v. Department of Labor, 25 Ill.2d 482, 490 (1962); Beth Weber, Inc. v. Murphy, 389 Ill. 60, 67(1945); Murphy v. Daumit, 387 Ill. 406, 412 (1944). These cases,however, predate City of Belvidere. Further, there is no indicationin these cases that a party raised the possibility that theadministrative decision under review may have presented a mixedquestion of law and fact. Here, the Department addressed thatpossibility. Cf. Branson, 168 Ill. 2d at 266 (where the parties to anadministrative appeal did not address the possibility that theagency's determination may be a mixed issue of law and fact, andthe parties assumed that a manifest weight of the evidencestandard applied, the parties' contentions would be reviewedaccordingly). We now consider the merits of this appeal.

Unemployment Insurance Act

The Unemployment Insurance Act (Act) (820 ILCS 405/100et seq. (West 2000)), adopted in 1937, provides economic relief tothose who are involuntarily unemployed, through the collection ofcompulsory contributions from employers and the payment ofbenefits to eligible unemployed persons. 820 ILCS 405/100 (West2000); Carson Pirie Scott & Co. v. State of Illinois Department ofEmployment Security, 131 Ill. 2d 23, 28 (1989); S. Bernstein, TheIllinois Unemployment Insurance Act, Ill. Ann. Stat., ch. 48, atXIX-XXI (Smith-Hurd 1986). Liability for contributions andeligibility for benefits is dependent, in part, on the existence of an"employment" relationship. The determination of whether such arelationship exists is not controlled by common law principles ofmaster and servant and independent contractor. Rather, we mustlook to the statutory definitions, which are more inclusive than thecommon law. Jack Bradley, 146 Ill. 2d at 74; GriffittsConstruction, 76 Ill. 2d at 103-04; Spahn, 25 Ill. 2d at 486;Eutectic Welding Alloys Corp. v. Rauch, 1 Ill. 2d 328, 332 (1953).Thus, a person who is regarded at common law as an independentcontractor may nonetheless be considered an employee under theAct. See Jack Bradley, 146 Ill. 2d at 74; Rozran v. Durkin, 381 Ill.97, 101-04 (1942).

Under the Act, "employment" is defined in relevant part as"any service *** performed by an individual for an employingunit." 820 ILCS 405/206 (West 2000). "Employing unit" includesa "corporation," such as AFM, "which has or *** had in itsemploy one or more individuals performing services for it withinthis State." 820 ILCS 405/204 (West 2000). The expansivedefinition of "employment" is circumscribed by section 212 of theAct, which carves out an exemption for services performed by"independent contractors." Section 212 provides:

"Service performed by an individual for an employingunit, whether or not such individual employs others inconnection with the performance of such services, shall bedeemed to be employment unless and until it is proven inany proceeding where such issue is involved that-

A. Such individual has been and will continue to be freefrom control or direction over the performance of suchservices, both under his contract of service and in fact;and

B. Such service is either outside the usual course of thebusiness for which such service is performed or that suchservice is performed outside of all the places of businessof the enterprise for which such service is performed; and

C. Such individual is engaged in an independentlyestablished trade, occupation, profession, or business."820 ILCS 405/212 (West 2000).

Because the three conditions of section 212 are phrased in theconjunctive, all three conditions must be satisfied for theindependent-contractor exemption to apply. Jack Bradley, 146 Ill.2d at 75; Griffitts Construction, 76 Ill. 2d at 104; Eutectic WeldingAlloys, 1 Ill. 2d at 332. In determining the existence of such anexemption, the terminology used by the parties in describing theirrelationship is not controlling, and there is a strict burden of proofplaced upon the party claiming the exemption. Jack Bradley, 146Ill. 2d at 75-76; Griffitts Construction, 76 Ill. 2d at 104; see also820 ILCS 405/2200 (West 2000) (burden is on the party contestingthe determination and assessment of contributions by the Directorto prove that it is incorrect); 820 ILCS 405/2303 (West 2000) (onjudicial review of any decision of the Board or of any decision,order, ruling, determination and assessment, statement of benefitwages, statement of benefit charges, or rate determination made bythe Director, the burden is on the person seeking such review). Inaddition, because the Act was passed with the public welfare inmind, its provisions should be liberally construed in favor ofinclusion. Jack Bradley, 146 Ill. 2d at 75; Griffitts Construction,76 Ill. 2d at 104; see also Ross v. Cummins, 7 Ill. 2d 595, 597(1956) (exemption provisions of the Act are strictly construedagainst the party claiming the exemption).

The Department determined that AFM had failed to meet itsburden as to all three conditions of section 212. Because theinability to satisfy any one condition will defeat an employer'sclaim for an independent-contractor exemption, we find itunnecessary to consider whether AFM satisfied all threeconditions. Instead, we focus on the third condition, whichrequires that the drivers for AFM be "engaged in an independentlyestablished trade, occupation, profession, or business." 820 ILCS405/212(C) (West 2000). As discussed below, we conclude thatthe Department's determination that AFM failed to satisfy thiscondition is not clearly erroneous.

In Murphy v. Daumit, 387 Ill. 406 (1944), we held that the Actcontemplated that an individual engaged in an independententerprise, under section 212(C), is one who "has a proprietaryinterest in such business to the extent that he can operate samewithout hindrance from any individual whatsoever and whosebusiness also is free from control." Daumit, 387 Ill. at 417. Daumitinvolved the status of salesmen who sold vacuum cleaners door-to-door for the Chicago distributor of a vacuum cleanermanufacturer. The manufacturer set the price of the cleaners, andthe distributor set the credit terms. The time-payment contracts,under which the cleaners were bought, were subject to theapproval of the distributor and were the distributor's property. Thesalesmen received $25 on each sale, less any trade-in allowance.The distributor did not set the salesmen's hours or territory andpaid no expenses. The distributor provided the salesmen severaldays of personal training in how to handle sales, creditarrangements and authorized statements, and conducted salesmeetings at his office once or twice a week. Salesmen reported onthe number of demonstrations they conducted. They were alsorequired to follow up on customer complaints and to report to thedistributor on how the matter was handled. If a salesman did notshow up for an unusual length of time, he was requested to turn inhis machine and terminate his relationship. Although the salesmencould carry other lines of cleaners, there was no evidence that anyof them did so.

On this record we concluded that the salesmen acted only asthe representative of the distributor, taking orders in thedistributor's name, subject to the distributor's approval and not forthemselves as independent contractors. Daumit, 387 Ill. at 416.The salesmen, in effect, "had no business to sell or give away."Daumit, 387 Ill. at 417. Their endeavor existed only by reason oftheir employment by the distributor, which was subject totermination, at which time the salesmen were unemployed.Daumit, 387 Ill. at 417.

We applied our holding in Daumit most recently in JackBradley, Inc. v. Department of Employment Security, 146 Ill. 2d 61(1991). As part of its advertising and public relations business,Jack Bradley provided food demonstrators for food vendors orretailers. Through advertising and referrals, the companymaintained a list of over 200 food demonstrators. Approximately20% of Jack Bradley's business was derived from the provision ofsuch demonstrators. Before being placed on the company's list ofavailable demonstrators, the individual signed a written contractprovided by the company which stated the hourly rate of pay, thatthe individual was an independent contractor, and that theindividual had sole control over the manner and means ofperforming the service.

Typically, a food vendor or retailer would contact JackBradley regarding a food demonstration that the vendor or retailerwished to schedule. Jack Bradley took the details and contacteddemonstrators on its list to try to fill the job. A demonstrator couldrefuse the job for whatever reason, without penalty. If ademonstrator accepted the job, Jack Bradley forwarded aconfirmation slip and time sheet to the demonstrator. On thescheduled date, the demonstrator would report to the designatedlocation, usually a supermarket. Supplies were provided by thefood vendor, the retailer, or the demonstrator. Jack Bradleyprovided no training, but provided the demonstrators with anyfood preparation and demonstration guides received from thevendors. If the demonstrator's job was unsatisfactory, JackBradley simply ceased calling that demonstrator. The storemanager signed the demonstrator's time sheet, which thedemonstrator submitted to Jack Bradley for payment.Demonstrators were paid twice per month. Jack Bradley did notdeduct payroll taxes.

We acknowledged our long-held view that the test for anindependently established business under section 212(C) is that theemployee's "business" be capable of operation without hindrancefrom any other individual. Jack Bradley, 146 Ill. 2d at 78, citingDaumit, 387 Ill. at 417. That is, the employee's entrepreneurialenterprise must enjoy a "degree of economic independence suchthat the enterprise could survive any relationship with theparticular person contracting for services." Jack Bradley, 146 Ill.2d at 78, quoting with approval Sample & Sell, Inc. v. Labor &Industrial Relations Comm'n, 764 S.W.2d 109, 112 (Mo. App.1988). We concluded that the evidence revealed no proprietaryinterest of the food demonstrators in any food or productdemonstration business, and that the evidence did not show thatthe demonstrators were able to operate largely without the benefitof a relationship with Jack Bradley or another "demo" company.Jack Bradley, 146 Ill. 2d at 80-81. The fact that the demonstratorscould work for other "demo" companies was not dispositive. Suchother relationships may simply have been like the demonstrators'relationship with Jack Bradley-part-time employment. JackBradley, 146 Ill. 2d at 80. We noted, too, that Jack Bradley, ratherthan each demonstrator, provided the written contract which theparties signed, and that Jack Bradley, rather than eachdemonstrator, determined the rate of payment. Jack Bradley, 146Ill. 2d at 80.

Similarly, in the present case, the evidence did notdemonstrate that the drivers were able to operate their "deliverybusinesses" without the benefit of a relationship with AFM, oranother messenger service company like AFM. AFM procured thecustomers; AFM set the delivery prices; AFM provided thedelivery tickets to the customers; AFM made the deliveryassignments; AFM billed the customers; AFM set the commissionrate; AFM paid the drivers. AFM also retained the right, under theparties' written agreement which AFM supplied, to terminate theirrelationship at any time. Thus, a driver's "business" was notestablished "independently" of AFM. Rather, a driver's businessexisted only by reason of the driver's employment with AFM,which was subject to termination, at which time the driver wouldbe unemployed.

The Missouri court of appeals applied essentially the sameanalysis when it determined that certain baggage delivery driverswere not independent contractors for purposes of the MissouriEmployment Security Act. See Koontz Aviation, Inc. v. Labor &Industrial Relations Comm'n, 650 S.W.2d 331 (Mo. App. 1983).In that case, Koontz Aviation entered into a contract with certainairlines to deliver baggage to passengers when the baggage had notbeen available for the passengers to pick up at the airport. To makethese deliveries, Koontz engaged a number of drivers who drovetheir own vehicles and paid their own expenses. Koontz paid thedrivers 35% of the delivery charges, which were fixed by theairline.

The Missouri unemployment statute, like ours, provided athree-part test for the independent-contractor exemption. The thirdpart of the test required that the individual be " 'customarilyengaged in an independently established trade, occupation,profession or business.' " Koontz Aviation, 650 S.W.2d at 332,quoting Mo. Rev. Stat.