Stable owner liable for unemployment tax, appeals court affirms

The owner of a Zionsville horse stable lost her appeal of a determination that she owed unemployment insurance tax for employees because they performed non-agricultural work.

The Indiana Court of Appeals on Monday affirmed the judgment of liability made by Aija Funderburk, an administrative law judge for the Indiana Department of Workforce Development, who ordered the owner of Boone Ridge Stables to pay back years’ unemployment insurance taxes plus interest and penalties.

A terminated three-year stable employee filed for unemployment benefits in July 2011 and the department filed a “block claim investigation” after it found the stable reported no wages for the worker. An audit ensued, finding the stable paid more than $70,000 in wages from 2008-2011.

Stable owner C. Subah Packer argued that employees were exempt because they provided “agricultural labor,” but the department differed, and the COA agreed in C. Subah Packer v. The Indiana Department of Workforce Development, 93A02-1301-EX-83.

Packer agued the workers cared for “agricultural commodities,” and thus the stable is exempt from tax liabilities and providing unemployment insurance benefits. She argued none of the employees gave riding lessons, for instance, which would not qualify as agricultural labor.

“We have not previously construed the definition of ‘agricultural commodities’ in the unemployment compensation context,” Judge Edward Najam wrote for the court, which found guidance in Day v. Ryan, 560 N.E.2d 77, 81 (Ind. Ct. App. 1990). That decision followed the line of established caselaw recognizing a fundamental distinction between an agricultural pursuit and a separately organized, independent productive activity.

“Packer operated a stable where she raised, managed, and conducted husbandry services for horses. Her employees fed and cared for the horses, turned them out to pasture, helped maintain the farm buildings and equipment, and performed husbandry services. In general, such activity is agricultural labor,” Najam wrote. “But the employees also cared for boarded horses and horses used for riding lessons in addition to tending Packer’s horses. The boarding of horses is not agricultural but, instead, is a separately organized, independent productive activity.”

Because the stables didn’t keep adequate employment records, the department couldn’t determine how much of the work might have been agricultural and how much might not have been.

"Thus, [Funderburk] could not make an evidence-based determination of which employees and how many hours were attributable to agricultural and non-agricultural labor, and the Department could not calculate the amount of unemployment compensation taxes owed solely for non-agricultural labor,” Najam wrote for the panel that included judges Elaine Brown and Paul Mathias. The opinion affirms that Packer must pay unemployment compensation taxes on the entire amount of employee pay for the audit years.

“To conclude otherwise would have allowed Packer to escape liability for taxes owed for non-agricultural labor. We cannot say that the … factual determination is arbitrary, unreasonable, against the evidence, or contrary to law. As such, we affirm the … determination that Packer is liable for unemployment insurance taxes for the audited years.”