Present:  Judges Benton, Willis and Annunziata
Argued at Richmond, Virginia


        OPINION BY
v.   Record No. 0255-97-2JUDGE JAMES W. BENTON, JR.

      JANUARY 13, 1998

   Randall G. Johnson, Judge

          Daniel M. Press (Chung & Press, P.C., on
          briefs), for appellant.

          John B. Purcell, Jr., Assistant Attorney
          General (James S. Gilmore, III, Attorney
          General; Lisa J. Rowley, Assistant Attorney
          General, on brief), for appellee.

     Brothers Construction Company, Inc. contends the circuit
court judge erred in upholding the Virginia Employment
Commission's ruling that Brothers was not exempt from the payment
of unemployment insurance taxes on the remunerations paid to its
siding installers.  See Code  60.2-212(C).  We affirm the
judgment because the evidence supports the commission's findings
of facts and conclusions of law that (1) services were performed
by individuals for remuneration, (2) the installers were not free
from Brothers' direction and control, (3) the services were not
performed outside all of Brothers' places of business, and (4)
the installers were not engaged in independently established
trades, occupations, professions or businesses.

     Following a random audit for unemployment insurance tax
compliance, the commission issued to Brothers, which was then
named Brothers Siding Company, Inc., a letter containing findings
of fact and a determination that individuals who installed siding
for Brothers performed services for Brothers that constitute
employment as defined in Code  60.2-212.  Brothers requested a
hearing pursuant to Code  60.2-500.
     Testimony at the hearing proved that Brothers, which had
then changed its name from Brothers Siding Company, Inc., to
Brothers Construction Company, Inc., is in the business of
installing siding, gutters, and downspouts on residential and
other buildings.  Charlie Hwang, the president of Brothers,
testified that after Brothers obtained contracts to install
siding on buildings, Brothers hired installers to work at job
sites located throughout Virginia, Maryland, and Washington, D.C. 
The testimony established that during a five year period,
Brothers issued two hundred federal tax forms No. 1099 to
installers who performed work for Brothers.
     Hwang orally negotiated with the installers, most of whom
did not speak English very well, to pay them at a set rate per
square foot of installed siding.  Each of the installers that he
hired signed a "self-employment contract" with Brothers that
reads as follows:
          I understand that I am an independent
          contractor, and that I am responsible for all
          tax withholdings, FICA and self-employment
          taxes due.  I have specific control over the
          order and sequence of work performed, time of
          completion, and the hours worked.  I am paid
          by job production or by completed job, but
          not by my time.  Due to these factors, I
          realize that I have the opportunity for
          [entrepreneurial] Profit (and Loss).  I also
          understand that I will receive a form 1099
          from BROTHERS SIDING CO. so that I may file
          the proper Self-Employment forms due at the
          end of the year.  I understand also that I am
          responsible for filing a quarterly estimate
          of federal taxes to cover Self-Employment
          Income reported to me by BROTHERS SIDING CO. 

     Brothers required the installers to obtain all of their
materials from Brothers' warehouse and to provide their own tools
and transportation to the job sites.  Even though Brothers
supplied all the siding materials for the installers, Hwang
testified that Brothers only employed a few "service work"
employees who fixed damaged siding.  Otherwise, none of Brothers'
employees installed siding; they only installed gutters and
     Brothers set deadlines for completion of the work.  If any
of the work was defective, Brothers required the installers to
return to the site and make the requisite repairs.  The
installers were paid each week on Saturday based upon the square
feet of material installed that week.  Many of the installers
hired work crews.  Hwang testified that Brothers did not
supervise the installers or the hiring of the work crews.
     The evidence proved that Brothers reported, as employees for
unemployment tax purposes, all its corporate executives,
officers, warehouse help, and administrative staff.  However,
Brothers issued to the siding installers federal tax forms No.
1099 showing "non-employee compensation" paid.  A random audit by
the commission's tax auditor disclosed that approximately two
hundred tax forms No. 1099 were issued to these siding installers
between 1989 and 1991.  Upon investigation, the auditor found
that most of the identification numbers on those tax forms were
individual Social Security numbers.  The auditor eliminated from
his investigation any of the two hundred names of installers that
he discovered were business names.  The auditor also found that
only three of fifty installers he randomly selected to check had
business licenses in three of the counties in Northern Virginia
where Brothers performed siding installation contracts.  Based on
this information, the auditor opined that the installers were not
independent contractors and issued to Brothers a Notice of Tax
Liability Determination.
     Following the presentation of the evidence at the hearing,
the commission made extensive findings and concluded that "the
services performed by all installers and their assistants . . .
constituted services in employment so as to subject [Brothers] to
the liability for paying unemployment insurance taxes on the
remuneration paid for such services."  The commission ordered
Brothers to file amended payroll tax reports to cover the
remuneration in question.  Brothers filed for review of that
decision in the Circuit Court of the City of Richmond.  See Code
 60.2-500(B)(1).  The circuit court judge affirmed the
commission's decision.

     The taxation provision of the Act provides that "[i]n any
judicial proceedings . . . , the Commission's findings of facts,
if supported by the evidence and in the absence of fraud, shall
be conclusive, and the jurisdiction of the court shall be
confined to questions of law."  Code  60.2-500(B)(1).  For
unemployment compensation purposes, "[s]ervices performed by an
individual for remuneration shall be deemed to be employment." 
Code  60.2-212(C).  The parties agree that the commission has
the initial burden of proving that services were performed by
individuals for remuneration.  See Virginia Employment Comm'n v.
Thomas Regional Directory, Inc., 13 Va. App. 610, 612, 414 S.E.2d
412, 414 (1992).
     In our review of the law, we are guided by the following
          The meaning of "employment" in the
          unemployment compensation context is
          controlled by statute. . . .  The Act is to
          be liberally construed to effect its
          beneficent purpose and in borderline cases
          "employment" should be found to exist. 
          Exemptions in the Act should be strictly
          construed against the alleged employer, the
          rule requiring liberal construction in favor
          of the taxpayer not being applicable.  As
          defined in the Act, the term "employment"
          should be accorded a broader and more
          inclusive meaning than in the common-law
          context of master and servant.

Virginia Employment Commission v. A.I.M. Corp., 225 Va. 338,
345-46, 302 S.E.2d 534, 539 (1983) (citations omitted).  In
addition, we must consider the evidence in the light most
favorable to the findings of the commission, and we will not
disturb the commission's findings unless the evidence, as a
matter of law, is insufficient to support those findings. 
Virginia Employment Comm'n v. Peninsula Emergency Physicians,
Inc., 4 Va. App. 621, 626, 359 S.E.2d 552, 554 (1987).
                Services Performed by Individuals
     Brothers contends the commission failed to meet its burden
of proof because the evidence did not establish that services
were performed by individuals.  Brothers argues that even if the
installers were sole proprietorships, they did not fit within the
definition of "individual" contained in Code  60.2-212(C)
because most of the installers hired assistants.  The commission
found that Brothers was liable for unemployment taxes for the
installers and the "individuals assisting the installers."  The
record supports this finding of fact.
     The evidence proved that all but three of the two hundred
installers used Social Security numbers that were issued to
individuals.  The auditor eliminated any installers from the list
that were business entities or that had business licenses.  The
evidence provides no rational basis to support a finding that the
remaining names on the list were anything other than individuals
as that term is commonly used.  Therefore, the commission met its
burden of proving that services were performed by individuals for
remuneration.  The evidence proved that individual installers and
their assistants performed work for Brothers and that Brothers
paid them for these services.  

     After the commission met its burden of proof, the burden
then shifted to Brothers to prove by a preponderance of the
evidence that it qualified for an exemption under Code
 60.2-212(C).  See Thomas Regional Directory, 13 Va. App. at
612, 414 S.E.2d at 414.  Code  60.2-212(C) provides as follows:
          Services performed by an individual for
          remuneration shall be deemed to be employment
          subject to this title unless:

          1.  Such individual has been and will
          continue to be free from control or direction
          over the performance of such services, both
          under his contract of service and in fact;

          2.  Such service is either outside the usual
          course of the business for which such service
          is performed, or such service is performed
          outside of all the places of business of the
          enterprise for which such service is
          performed; or such individual, in the
          performance of such service, is engaged in an
          independently established trade, occupation,
          profession or business.

     "[I]f the putative employer fails to demonstrate that it is
within the terms of both subsection (C)(1) and one of the three
exceptions under subsection (C)(2), it fails to meet its burden
of proof and an 'employment' relationship exists."  Thomas
Regional Directory, 13 Va. App. at 612, 414 S.E.2d at 414. 
Furthermore, the Supreme Court has ruled that these exemptions
"should be strictly construed against the alleged employer." 
A.I.M. Corp., 225 Va. at 346, 302 S.E.2d at 539.

         Control and Direction 
     Brothers points to the "self-employment contract" signed by
all of its installers as evidence of Brothers' lack of control
and direction over the installers.  However, "the existence of
the master-servant relationship under the Unemployment Act 'does
not depend upon how the parties designate each other in their
contract.'  Rather, the individual's status in relation to the
alleged employer is to be determined from all the facts and
circumstances adduced by the evidence, including the provisions
of any written agreement."  A.I.M. Corp., 225 Va. at 347, 302
S.E.2d at 539 (citations omitted).  See Thomas Regional
Directory, 13 Va. App. at 614-15, 414 S.E.2d at 415-16.
     "The power of control is the most significant indicium of
the employment relationship."  Richmond Newspapers, Inc. v. Gill,
224 Va. 92, 98, 294 S.E.2d 840, 843 (1982).  "The potential power
of control, not the actual exercise of control, is the important
element."  A.I.M. Corp., 225 Va. at 347, 302 S.E.2d at 539-40. 
See Hann v. Times-Dispatch Publ'g Co., 166 Va. 102, 106, 184 S.E.
183, 184-85 (1936).  This right of control includes not only the
power to specify the result to be accomplished but also includes
the power over the "performance of such services, both under his
contract of services and in fact."  Code  60.2-203(C)(1).  "If
the party for whom the work is to be done has the power to direct
the means and methods by which the other does the work, an
employer-employee relationship exists."  A.I.M. Corp., 225 Va. at
347, 302 S.E.2d at 540.  "Among the tests used to determine if
the right to control exists are:  whether instructions have to be
obeyed, and whether either of the parties possesses the right to
terminate services at will without incurring liability to the
other."  Id.  Another "'means of ascertaining whether or not this
right to control exists is the determination of whether or not,
if instructions were given, they would have to be obeyed.'" 
Hann, 166 Va. at 107, 184 S.E. at 185 (citation omitted).
     The evidence and the reasonable inferences to be drawn from
the evidence proved that Brothers had the right to instruct the
installers as to the work that was to be done and the manner in
which that work would be performed.  While the installers
provided their own tools and transportation, Brothers provided
all of the materials for completion of the job.  The installers
were not free to choose their own materials or purchase materials
from other sources.  Furthermore, the work had to be performed to
Brothers' standards, specifications, and satisfaction.  Although
the installers were not under constant supervision, Brothers
conducted periodic inspections.  If, upon inspection, Brothers
discovered that the work was defective, Brothers required the
installers to return to the job site to correct the mistakes
according to Brothers' specifications.  If the installers' work
was particularly unsatisfactory, the installers would not be
hired for another job.  Brothers also retained the right to
terminate the installers from a project at will.  Thus, we cannot
say the commission erred as a matter of law in finding that
Brothers exercised control over the installers.
               Although the commission's finding that Brothers exercised
control over the installers is dispositive of the case, see Code
 60.2-212(C), we briefly discuss the additional requirements
needed to prove an exemption under Code  60.2-212(C)(2) because
the commission addressed them.  The exemptions of Code
 60.2-212(C)(2) require proof that service performed by an
individual for remuneration "is either outside the usual course
of the business for which such service is performed, or such
service is performed outside of all the places of business of the
enterprise for which such service is performed; or such
individual, in the performance of such service, is engaged in an
independently established trade, occupation, profession or
business."  The commission found that Brothers failed to prove
those exemptions.
   Outside Place of Business
     Brothers concedes that it does not meet the first exception
contained in subsection (C)(2):  "[s]uch service is . . . outside
the usual course of the business for which such service is
performed."  However, Brothers argues that it operates only from
its headquarters in Lorton, Virginia, and that the installers'
services were performed throughout Maryland, Virginia, and
Washington, D.C. on sites that were not its places of business. 
However, "places of business" are not confined to the
headquarters or office premises of the employer but embrace all
of the sites in the territory in which the alleged employees
worked.  See Life & Casualty Ins. Co. v. Unemployment
Compensation Comm'n, 178 Va. 46, 56, 16 S.E.2d 357, 361 (1941). 
The installers "operated in precisely the same place or places
where [Brothers] would have operated if [it] had undertaken the
work [it]self."  Unemployment Compensation Comm'n v. Collins, 182
Va. 426, 436-37, 29 S.E.2d 388, 393 (1944).  In each instance,
the installers worked to install siding on buildings that
Brothers had agreed by contract to service.  Thus, Brothers did
not meet its burden of proving that the services provided by the
installers were performed outside of all Brothers' places of
              Independently Established Businesses
     "[I]t is elemental that one engaged in an independent
enterprise, business or profession has a proprietary interest
therein to the extent that he can operate it without hindrance
from any individual or force whatsoever."  Life and Casualty, 178
Va. at 55-56, 16 S.E.2d at 361.
          "It will be observed that in order to escape
          the provisions of the statute the requirement
          is not that the alleged employee be engaged
          in an 'independent business.'  He must be
          engaged in one that is 'independently
          established.'  An 'established' business is
          one that is permanent, fixed, stable, or

Peninsula Emergency Physicians, 4 Va. App. at 630, 359 S.E.2d at
557 (quoting Collins, 182 Va. at 437, 29 S.E.2d at 393).
     The evidence failed to prove that the installers either had
a proprietary interest or were engaged in independently
established businesses that were permanent, stable and lasting. 
Although the installers had their own tools, the evidence proved
that Brothers supplied all the materials to perform the work. 
Brothers presented no evidence that the installers had business
cards, business licenses, business phones, or business locations
to support a claim of a lasting, independently established
business.  See Thomas Regional Directory, 13 Va. App. at 616, 414
S.E.2d at 416.  No evidence proved that the installers received
income from any party other than Brothers.  See id. at 615, 414
S.E.2d at 416.  "[T]he failure to produce evidence on a factor is
held against the party having the burden of proof, not against
the party that does not have the burden of proof."  Id. at 616,
414 S.E.2d at 416.
     For these reasons, we hold that the evidence was sufficient
to support the commission's finding that the services performed
by the installers and their crews constituted employment so as to
subject Brothers to unemployment insurance tax liability.  For
these reasons, we affirm the judgment upholding the commission's