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Docket No. 91564-Agenda 23-January 2002.

CARPETLAND U.S.A., INC., Appellee, v. THE ILLINOIS 

DEPARTMENT OF EMPLOYMENT SECURITY et al.,

Appellants.

Opinion filed June 20, 2002.

JUSTICE GARMAN delivered the opinion of the court:

Carpetland U.S.A., Inc. (Carpetland), sought administrativereview in the circuit court of Cook County of a decision by LynnQuigley Doherty, Director of Employment Security, whichadopted the report and proposed decision of a representative of theDepartment of Employment Security (Department) before whoma hearing had been held. The Director determined that floormeasurers and floor-covering installers whose services wereutilized by Carpetland were employees rather than independentcontractors and, therefore, were not exempt under section 212 ofthe Unemployment Insurance Act (Act) (820 ILCS 405/212 (West2000)). The Director further found that Carpetland owed$38,977.17, plus interest and penalties, in unpaid unemploymentinsurance contributions for 1991. The circuit court confirmed theDirector's decision. On appeal, a divided court reversed, findingthe Director's decision clearly erroneous. We granted theDepartment's petition for leave to appeal (see 177 Ill. 2d R. 315).We agree with the appellate court that the agency decision as tothe installers was clearly erroneous and, therefore, affirm in part.Because we do not find clear error in the agency decision as to themeasurers, we reverse in part.

Under the Act, an employer's liability for makingcontributions and an employee's eligibility for benefits aredependent, in part, on the existence of an employment relationshipbetween them. The statutory definition of employment, rather thancommon law principles of master and servant or independentcontractor, governs this determination. AFM Messenger Service,Inc. v. Department of Employment Security, 198 Ill. 2d 380, 396-97 (2001). The Act defines "employment," in relevant part, as"any service *** performed by an individual for an employingunit." 820 ILCS 405/206 (West 2000). Carpetland, a corporation"which has or *** had in its employ one or more individualsperforming services for it within this State" (820 ILCS 405/204(West 2000)), is an employing unit. At issue is whether 12measurers and 259 installers whose services were utilized byCarpetland during the relevant time period were employees, onwhose behalf Carpetland was required to make unemploymentinsurance contributions, or independent contractors, for whom theAct carves out an exemption:

"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 these conditions are stated in the conjunctive, allthree must be satisfied for the independent contractor exception toapply. Jack Bradley, Inc. v. Department of Employment Security,146 Ill. 2d 61, 75 (1991). The burden of proof is on thepresumptive employer, who is claiming the benefit of theexemption. Thus, the terminology used by the parties to describetheir relationship is not controlling. The determination must bemade, instead, based on the facts relevant to the three conditions.Jack Bradley, 146 Ill. 2d at 75-76. In addition, because the Actwas passed with the public welfare in mind, its terms should beliberally construed in favor of inclusion. Jack Bradley, 146 Ill. 2dat 75.

The Director and the circuit court concluded that none of thethree conditions of section 212 were met. The appellate courtreached the opposite conclusion. 319 Ill. App. 3d 1068.

BACKGROUND

Carpetland is a retailer of floor coverings, primarily carpeting.During 1991, Carpetland operated 17 stores in Illinois.Carpetland's retail price for its products does not includemeasuring the customer's floor to determine the dimensionsneeded or installation of the floor covering. However, the majorityof Carpetland's sales, approximately 75%, are to customers whorequest that Carpetland arrange for installation of the floorcovering by signing a sales agreement containing the followingprovision:

"INSTALLATION BY SUBCONTRACTOR

It is understood that Carpetland will not install saidmaterials but that by the acceptance of this proposal youauthorize Carpetland to contract with a subcontractor on[your] behalf to make the installation. You authorizeCarpetland to issue to said subcontractor on [your] behalfan installation work order with these specifications. Youagree to pay to Carpetland the amount specified hereinwhich shall include the price of all materials and theinstallation charges which are payable to thesubcontractor on your behalf."

At the agency hearing, Carpetland's vice president ofoperations, three installers, one measurer, and an employmentconsultant testified before the Department's representative.

Installers

Joseph H. Smith testified that he had been in the business ofcarpet installation for 27 to 28 years. He is now self-employedwith a company known as J. Smith Floors, Inc. During 1991, hewas the self-employed president of an Indiana corporation knownas Tile Works, Inc., which sold and installed floor coverings.Smith estimated that about 75% of Tile Works' business consistedof performing installations for retail or commercial customers ofCarpetland and other companies. About 25% consisted of in-housesales and installations. Of the portion of his business that involvedinstallations for other companies, about 30% of the work was forCarpetland; the rest was for Builder's Square, Colortile, and otherretailers who were competitors of Carpetland. At the time of thehearing, Smith continued to do work for Carpetland, under thesame arrangement that existed in 1991.

When Carpetland has a job for Smith in Illinois, he iscontacted directly by the salesperson and, after accepting the job,receives a work order via fax. The work order contains the nameand contact information for the customer and a description of thework to be done, including a diagram for placement of the floorcovering. Depending on the job, he might have to visit the site toevaluate it. He occasionally declines jobs if his schedule is full, thejob is "too big or too small," or the job will not pay well.

Smith has a basic price for various types of jobs, which headjusts up or down depending on the size and complexity of thejob. He quotes a price to Carpetland and, if they reach anagreement, he takes the job. If not, the job will go to someone else.He includes in his quoted price any anticipated incidental expensessuch as parking. If his costs are less than his original estimate, heretains the extra profit. If the job costs him more than his estimate,he suffers the loss.

The actual installation work is performed by Smith'semployees. In general, he has 10 to 12 employees but increasesthat number to 25 or 30 during busy seasons. He usessubcontractors when he is short-handed. Carpetland is notinvolved in his staffing decisions, does not suggest or recommendthat he increase or decrease staff, and does not refer potentialemployees to him. Any training needed is provided by Smith.

One of his employees picks up the carpeting or other materialat Carpetland and transports it to the customer's site. Smithsupervises the actual installation. Only rarely will someone fromCarpetland be present during the installation.

Smith provides any materials or supplies needed forinstallation, such as adhesives for vinyl or tile, mortars and groutsfor ceramic and marble, and seam tape, tack strips, and othermaterials for carpeting. When purchasing these supplies, Smithdetermines which suppliers he will use and deals directly withsuppliers who sell only "to the trade." Smith also provides all ofthe necessary tools, in which he estimated he has invested $15,000to $18,000. In addition, Smith owns three delivery trucks andmaintains a 3,500 square foot warehouse and an office with a staffof four.

After completing a job for Carpetland, Smith submits aninvoice on his company stationery, accompanied by a copy of thework order. Usually, he does this by mail. Carpetland pays himtwice a month, with a check made out to his company. Heestimated that his company does about one job per month forCarpetland.

Smith guarantees his work for one year from the date ofinstallation. If the customer complains to Carpetland, the matter isreferred to him for resolution. He does not receive complaintsdirectly from Carpetland customers once his installers have left thecustomer's premises.

Smith testified that in 1991, he had an Illinois Department ofEmployment Security account number and a federal employeridentification number. Tile Works filed a corporate tax return in1991. Smith uses his own business cards, containing the name ofhis company and his own telephone number. He advertises hisbusiness in local newspapers and in the yellow pages.

James Lawson testified that he had been the sole proprietor ofLawson's Carpet Service in Decatur, Illinois, for 20 years. In 1991,approximately 75% of his business consisted of carpet installationsfor customers of the Carpetland store in Decatur and occasionallyfor the stores in Champaign and Bloomington. He continues to dobusiness with Carpetland under the same arrangement that existedin 1991. Lawson calls the store to advise the manager that he isavailable for work. Sometimes, he is given work immediately. Atother times, the store will call him back with assignments. Heoccasionally turns down work. Lawson takes vacation or holidaytime as it suits him and informs Carpetland that he will not beavailable.

Lawson's Carpet Service generally employs Lawson, one full-time employee, and one part-time employee. He pays hisemployees by the hour and pays withholding taxes and FICA ontheir behalf. He also makes unemployment compensationcontributions for them. He hires by word of mouth or by placingnewspaper ads and trains his own employees. Carpetland has neverreferred a potential employee to him, nor has Carpetlandrecommended that he hire or terminate any employee. Lawsonestimated that five years of training and experience are necessaryto become a fully qualified installer. The products are constantlychanging and he must keep up-to-date. He communicates directlywith carpet manufacturers regarding recommended installationprocedures, such as which type of adhesive to use with a particularproduct.

After accepting a job, Lawson calls the customer directly todiscuss details such as whether existing carpeting must beremoved. They also set up a time for the installation. He thenobtains the roll of carpeting from the store and transports it in hiscompany's van to the customer's home or business, where he cutsit to fit.

The installer must also be able to properly prepare the floor towhich the carpeting is being applied. On some jobs, he must lay anew floor or patch the existing floor before he can install the floorcovering. When he finds such a situation, he explains it to thecustomer, quotes a price, and gets the customer's permission to dothe work. Because he gives a one-year warranty, he will not do thejob if the customer declines to allow him to properly prepare thefloor. He also works with the customer to determine where seamswill be placed. Considerations include the traffic pattern in theroom and the arrangement of furniture. If the customer authorizesadditional services that were not included in the original estimate,Lawson will negotiate a price directly with the customer. Thecustomer may pay him directly, or they will agree to pass thecharge through Carpetland. This is likely to occur when acustomer is using a credit card and wants the carpet purchase andinstallation to be treated as one credit transaction.

Lawson and his employees use tools owned by Lawson CarpetService, including power tools such as stretchers, tackers, andtrimmers. He purchases tools directly from suppliers. Carpetlanddoes not lend him tools or help him acquire tools. He estimated histotal investment in tools at $5,000. All supplies used in theinstallation process are also provided by Lawson, including tape,metal trim, staples, and knife blades.

Advertising for Lawson Carpet Service includes yellow pagesads, ads in school and church bulletins, and business cards. Inaddition to using the Lawson Carpet Service name, these adsinclude his logo. These materials do not mention Carpetland.

Lawson negotiates with Carpetland and his other clients forthe cost of each job. He sets his price based on the size andcomplexity of the job. He charges more for carpeting a stairway,for example, than for a floor. He quotes his price to thesalesperson, who might make a counteroffer. Lawson also does"contract jobs" for builders or commercial customers. He bids ona job and negotiates directly with the customer, who thenpurchases floor covering from Carpetland or another supplier. Inthese cases, he bills the customer directly for his installationservices.

Only rarely does a representatives from Carpetland visit awork site. This might occur if Lawson discovered a flaw in thecarpeting and Carpetland was going to have to replace it, or if thequantity of carpeting provided by Carpetland was insufficient.

Lawson guarantees his work for one year. He provides one ofhis business cards to the customer, who may call him directly if aproblem arises with the installation. The customer might alsocontact Carpetland and the problem would be referred to him.Lawson would make the repair, incurring the cost of new carpet ifnecessary. Carpetland does not reimburse him. If he determinesthat the problem was not his responsibility, he will charge thecustomer or Carpetland for the repair, as appropriate.

Lawson submits a bill to Carpetland twice a month andreceives a check for the billed amount several days later. He doesnot participate in any employee benefit programs.

Craig Panozzo testified that he incorporated his business,Craig's Custom Tile, in 1989. In 1991, approximately 25% of thework done by his company was for the Carpetland store inMatteson, Illinois. At the time of the hearing, he continued to doceramic and marble tile installation for retailers and builders anddoes remodeling work on his own.

A Carpetland employee calls Panozzo when a job comes up,usually giving him 10 to 14 days' notice. He will turn the jobdown if he does not have the time to do it or if the job is too bigfor him to do alone. If he accepts the job, he picks up a work sheetfrom Carpetland and the tile from the distributor in Crestwood,Illinois. All of the work he does for Carpetland is on newconstruction, so he does not have to visit the site before agreeingto a price per square foot, as he would have to do for a remodelingjob. Panozzo provides the necessary supplies such as pads,adhesives, cement, grout, and caulk. The cost of supplies is builtinto his price. He also provides his own tools, such as saws, inwhich he has invested approximately $5,000.

Periodically, Panozzo turns in a "recap sheet" to Carpetland,along with the worksheet for each job. He stops by Carpetlandseveral days later to pick up a check made out to Craig's CustomTile. When he takes a vacation, he notifies Carpetland that he willbe gone. Panozzo also acknowledged that he did not have anaccount with the Department or a federal employer identificationnumber.

Measurers

Kenneth W. Weiss testified that from January to June 1991,he worked as a measurer, doing jobs subcontracted to him by GWCarpet Service (GW), a sole proprietorship of his father, GaryWeiss. The business was operated out of the elder Weiss' home.Several secretaries were employed by GW, but the measurers were"subcontractors."

Weiss estimated that 10% of the jobs he did for GW were forCarpetland and the remainder were for other floor-coveringbusinesses. Each morning, he would call GW to pick up jobassignments for that day. He was given the customers' names,addresses, and telephone numbers, the account or store that hadrequested each measuring job, and perhaps the name of thesalesperson. Weiss would contact the customers to arrange a timeto make the measurements.

After making the measurements, Weiss returned to his"personal office" in his home to make a diagram of each job.Some accounts supplied their own forms; Carpetland did not. Inaddition to showing the measured area to scale, the diagram notedany additional information that might be needed to calculate thecost of the floor covering or installation, such as heavy furniturethat would have to be moved, or old carpeting to be taken up.Weiss placed the forms in his mailbox, where they were picked upby a messenger service for GW. GW then had the reports deliveredto the stores that had ordered the work. Weiss rarely went into aCarpetland store. Occasionally, he would do so if a customer hada special need such as a rush order that he might decide to hand-deliver as a service to the customer.

No one from Carpetland checked his work. If a mistakeoccurred, he remeasured. He would be paid for the additional workif the mistake turned out not to be his responsibility. If he hadmade the mistake, he would not be paid for the second trip.

Weiss and other measurers charged GW on a per-job basis,with additional charges for distance and particularly large jobs. Hewould submit daily and weekly tallies of jobs done. His checkfrom GW was delivered each week by the same messenger whopicked up his measurements. GW, in turn, billed Carpetland andthe other stores. GW negotiated its fees with each of the stores andthe rates were slightly different as a result.

Weiss was trained on the job by his father. Later, Weisstrained other measurers. Carpetland was not involved in any of thistraining. Weiss testified that he considered himself to be self-employed and that he filed a Schedule C federal tax return in 1991.GW was his only customer and he earned $7.50 per job, unlessthere was some adjustment for distance or size of the job. Onaverage, Weiss would do 17 jobs per day, six days per week. Hedid not have his own business cards and did not do anyadvertising. GW had business cards and called on stores to solicitbusiness.

When GW went out of business in June 1991, the youngerWeiss and two other measurers each took over a portion of thebusiness. Each of them paid Gary Weiss "a commission" on theaccounts that they took over from GW. Several of the Carpetlandstores became Weiss' accounts under this arrangement.

Carpetland

John L. Booth, Carpetland's vice president of operations,explained that a Carpetland salesperson calculates the cost of afloor covering based on dimensions provided by the customer.However, if the customer does not know the dimensions or wantsto arrange for installation, an actual measurement is required. Thesalesperson has the option of doing the measuring himself orreferring the job to a measuring service. If a measuring service isused, half the cost is deducted from the salesperson's commission.The salesperson explains to the customer that the measuringservice is an independent business, over which Carpetland has nocontrol, but that the salesperson will relay the customer's requestas to a convenient time for the measuring to occur. After theresults of the measuring are communicated to the salesperson, herecalculates the price and informs the customer of any adjustment.

Booth further testified that measurers are not Carpetlandemployees. They do not participate in any Carpetland employeebenefit program such as insurance or paid vacation. Measurersmay take vacation time or other time off without clearing it withCarpetland. Carpetland does not provide them with vehicles orreimburse them for mileage. Carpetland does not require that themeasurers work only for Carpetland. Carpetland neither trains theemployees of the measuring services nor instructs the measurerson the performance of their work. Measurers are not required tocome to a Carpetland store for any purpose and representatives ofCarpetland do not go to customer's locations to review orsupervise the work of measurers. If a measuring service makes anerror that results in extra cost, such as a need for additionalcarpeting, Carpetland holds the measurer responsible for theexpense. Carpetland pays the measuring services on a per-measure basis at a rate that is negotiated individually. Differentstores have different arrangements with the measuring services asto how often they are paid, usually weekly or biweekly. Themeasuring service submits invoices to Carpetland, on the service'sown bill or letterhead. Carpetland pays the amount of the invoice,without deductions for payroll taxes.

Carpetland does not enter into written contracts with thevarious measuring services, but does require that each serviceprovide certificates of automobile and liability insurance as acondition of doing business.

Carpetland specifically informs its customers that it does notprovide installation services. If the customer wants to have thefloor covering installed, Carpetland will subcontract the work toan installer. Booth identified a form that was used in allCarpetland stores as an "installation subcontract." The formcontains the customer's name and address, the material to beinstalled, the areas to be covered, and the installation price. Theprice of installation is negotiated between the store and theinstaller and is based on a base price per square yard, plus any"add-ons" such as preparation of the floor. The base price variesfrom store to store and, within a single store, from installer toinstaller. Installers are free to decline jobs and do so on occasion.Once the installer accepts the job, this document is signed by thestore manager and the installation subcontractor. The installer thencontacts the customer to arrange a time for installation, picks upthe materials from Carpetland, and completes the installation.

If the installer encounters unanticipated problems, such as theneed to move heavy furniture or remove old flooring, he attemptsto negotiate payment with the customer. The installer is free to dosuch additional work without charging the customer, but mayinsist on additional payment. If the installer and the customer donot reach an agreement, Carpetland might elect to absorb the cost.It is possible that the job would not go forward at all. Carpetlandcould not compel the installer to do the additional work withoutadditional payment.

Carpetland does not provide any on-site supervision to theinstallers. When using a new installation service, a Carpetlandrepresentative may visit the work site to observe the quality of thework, until the company is satisfied that the installer's work is upto its standards.

Carpetland does not limit the installers' other employment.They are free to accept contracts from others, includingCarpetland's competitors. Carpetland provides no training and isnot involved in the hiring, firing, or disciplining of the installers'employees. Carpetland does not control their days or hours ofwork or their vacation schedules. The installers provide their owntools and supplies; Carpetland provides only the carpeting andpadding or other floor covering it has sold to the customer.

Checks are issued on a biweekly basis after the installersubmits an invoice showing that the work was done. The amountis calculated on the fee per square yard that was negotiatedbetween Carpetland and the individual installer. In 1991, the rangewas from $2.20 to $2.75 per square yard, with the average around$2.50. Carpetland charges the customers $3.00 per square yard forinstallation and makes a profit on each installation contract. Notaxes are withheld. The installers are required to carry liabilityinsurance and Carpetland demands documentation of coverage.

If a customer calls the Carpetland store with a complaint, theperson who takes the call fills out a complaint form. The store firstdetermines whether the complaint is related to the product it soldor to the installation. Installation problems might include a seamthat is coming apart or a ripple in the carpeting. Carpetlanddetermines which installer did the work and contacts him to makethe necessary repair. A copy of the complaint form is provided tothe installer, who sends it back to Carpetland with the customer'ssignature to document that the problem has been resolved to thecustomer's satisfaction.

Carpetland requires its installers to guarantee their work forone year, so if such a problem occurs within one year of theoriginal installation, the installer bears the expense of the repair.In the unusual circumstance that an installation problem appearslater, Carpetland would pay an installer to make the repair.

Booth testified regarding written "retainage agreements"under which Carpetland retains a portion of the fees due to theinstaller until a fund of $1,000 is created. This money is used todefray the costs of repairs necessitated by improper installation. Ifan installer ceases doing business with Carpetland, the fund,including interest, is paid out in thirds, in 30-day increments, toallow for the possibility that a complaint may arise regarding oneof the installer's last jobs. Not all installers agree, but Carpetlanddoes prefer to have such an arrangement.

Booth explained that Carpetland also solicits work on acontract basis, in addition to its retail sales. Such a contract mightinvolve floor coverings for a commercial building or new housingconstruction. When the bids on such a project include bothmaterials and labor, the Carpetland salesperson solicits bids fromseveral installers so that he may make his bid as low as possible.Thus, installers who regularly do work for Carpetland may bidagainst each other for these jobs.

According to Booth, neither measurers nor installers areidentified in any way as Carpetland employees. They do not wearuniforms or other apparel with a Carpetland name or logo. Theyare not given Carpetland business cards to use. They use their ownvehicles, which do not carry the Carpetland name.

Contract for Installation Services

Carpetland uses two forms of standard contract. The first is a"Customer Sales Contract," which contains the "Installation bySubcontractor" provision quoted above. The second is an"Installation Subcontract," by which the customer authorizesCarpetland to arrange for installation of the floor covering. Thisdocument also contains a "Contract for Installation Services" thatis signed by the installer and an authorized representative ofCarpetland. The Contract for Installation Services identifiesCarpetland as contractor and the installer as subcontractor. Theinstaller agrees to perform the services called for by the contractat the time and place designated, in a "neat, workmanlike mannerin accordance with the job specifications applicable to thisContract and established trade practices." Carpetland agrees tofurnish the carpeting or floor covering; the installer agrees toprovide all other necessary tools and supplies. The installerguarantees his work for one year and agrees to remedy any defectin installation. Further, the contract states that Carpetland will notpay for any additional services requested by the customer unlessCarpetland agrees in advance to do so. The installer also agrees toobtain and maintain liability insurance and to furnish certificatesof insurance to Carpetland. In addition to paying his own state,federal, and local taxes, the "Subcontractor" also agrees to "electcoverage under any applicable workmen's compensation lawswhich provide for coverage pursuant to election" and to "elect tooperate or become subject to any applicable unemploymentcompensation act which permits such election." Finally, thecontract is "personal" to Carpetland and the installer, "and may notbe assigned or transferred by either party."

The parties agree that the appropriate standard of review inthis case is the "clearly erroneous" standard. Nevertheless, thequestion arose at oral argument whether, because the facts in thiscase are essentially undisputed, the de novo standard should apply.

The Department states that in City of Belvidere v. IllinoisState Labor Relations Board, 181 Ill. 2d 191, 205 (1998), thiscourt departed from its prior holdings that administrative rulingsbased on the application of law to undisputed facts would bereviewed de novo. See, e.g., Chicago Patrolmen's Ass'n v.Department of Revenue, 171 Ill. 2d 263, 271 (1996) (where factsare undisputed, an administrative determination of whether certainproperty is tax exempt answers a question of law, subject to denovo review). However, in City of Belvidere, we did not entirelyabandon the de novo standard in administrative review cases.

"The standard of review applicable to an agency's decisiondepends upon whether the question presented is one of fact orlaw." City of Belvidere, 181 Ill. 2d at 204. When the decisioninvolves a pure question of law, we will review it de novo. City ofBelvidere, 181 Ill. 2d at 205. When reviewing purely factualfindings, the agency's findings and conclusions are deemed to beprima facie true and correct and, thus, are reviewed under amanifest weight of the evidence standard. 735 ILCS 5/3-110(West 2000); City of Belvidere, 181 Ill. 2d at 204.

Under some circumstances, however, the issue presentedcannot be accurately characterized as either a pure question of factor a pure question of law and, therefore, will be treated as a mixedquestion, subject to an intermediate standard of review. City ofBelvidere, 181 Ill. 2d at 205. In AFM, we determined that whethercertain workers are independent contractors under section 212 ofthe Act is such a mixed question of law and fact, subject to reviewfor clear error. AFM, 198 Ill. 2d at 396. Under the clearlyerroneous standard, we give somewhat less deference to theagency than we would if the decision related solely to a questionof fact, because the decision is based on fact-finding that isinseparable from the application of law to fact. We will reverseonly if, after review of the entire record, we are " 'left with thedefinite and firm conviction that a mistake has been committed.' "AFM, 198 Ill. 2d at 395, quoting United States v. United StatesGypsum Co., 333 U.S. 364, 395, 92 L. Ed. 746, 766, 68 S. Ct. 525,542 (1948).

We note at the outset Carpetland's suggestion that theDepartment's summary of facts is "incomplete" and "misleading."

The Director's representative had at her disposal Carpetland'sanswers to Department questionnaires, the results of a Departmentaudit of Carpetland, numerous documents, and the testimonysummarized above. She prepared a detailed report, whichcontained findings of fact, analysis, and conclusions. She did notsuggest that any of the witnesses were less than entirely credible.Carpetland filed objections to the report. Finding the objectionsuntimely, the Director adopted the report as her decision. Uponremand from the circuit court, the Director responded to theobjections and again affirmed the report and recommendeddecision of the representative.

A thorough review of the record reveals several misstatementsof fact in the report. For example, the representative found thatwhen Carpetland bid on commercial contracts, "installation wasincluded." The record, however, shows that if a commercial jobwas to include installation, the Carpetland salesperson solicitedbids from installers so that he could submit a bid covering bothmaterials and labor.

The report also makes several references to individualmailboxes assigned to the installers and to the fact that installerswould visit the Carpetland store to retrieve job assignments fromthe mailboxes. The testimony was clear, however, that only theMunster, Indiana, store utilized the mailbox system tocommunicate with installers. Thus, this practice is irrelevant to thepresent case.

The report also found that when a Carpetland store began toutilize the services of a new installer, the "work was checkedclosely" for the first several installations. In the testimony,however, the word "closely" was never used. The witnessesindicated that it was rare for someone from Carpetland to visit aninstallation site. They might do so in the beginning of a workingrelationship with an installer, to observe the finished installationto see that it was up to standard.

The report states that "[w]hen work was unavailable fromCarpetland[,] the installers worked for other carpet sales stores,"creating the impression that their first duty was to Carpetland andthat their willingness or ability to work for other stores wascontingent on Carpetland's not having any work for them. Therecord discloses, however, that at least for some installers,Carpetland represented a small portion of their workload and thatthey had several clients who, in effect, competed for their time.

Similarly, the report states that all complaints aboutinstallation "flow through" Carpetland. Lawson, however, testifiedthat he would leave one of his business cards with the customer,so that he could be contacted directly about any problems with theinstallation. Thus, communication through Carpetland was onlyone means by which a customer could make a complaint regardinginstallation.

The report also states that each installer was "required" to signa written retainage agreement. However, the Carpetland executivewho testified regarding these agreements said that Carpetlandpreferred to have this sort of arrangement with an installer, but didnot necessarily refuse to do business with an installer whodeclined to participate in the retainage arrangement.

Finally, this section of the report contains legal conclusions,without reference to any supporting authority, in addition tofindings of fact. For example, the report lists as a finding of factthe legal conclusion there was no privity of contract between thecustomer and the installer.

Because the report does not contain a complete and reliablesummary of the facts adduced at the hearing, we shall look to therecord, as well as to the report, for the relevant underlying facts.

APPLICATION OF SECTION 212

Carpetland clearly intended to deal with measurers andinstallers as independent contractors rather than employees, andorganized its working relationships accordingly. However, ourinquiry is not controlled by the designations or description used bythe parties. 56 Ill. Adm. Code