Opinion
CLAIM NO. F011031
OPINION FILED DECEMBER 3, 2002
Upon review before the FULL COMMISSION in Little Rock, Pulaski County, Arkansas.
Claimant represented by HONORABLE JOE BYARS, Attorney at Law, Fort Smith, Arkansas.
Respondent No. 1 represented by HONORABLE ROBERT TEAGUE, Attorney at Law, Rogers, Arkansas.
Respondents No. 2 represented by HONORABLE BRUCE ANIBLE, Attorney at Law, Little Rock, Arkansas.
Decision of the Administrative Law Judge: Affirmed.
OPINION AND ORDER
Respondent No. 2 appeals an Administrative Law Judge's August 29, 2001 opinion finding them liable for claimant's workers' compensation benefits as a "statutory employer." Upon our de novo review of the record, the Full Commission affirms the Administrative Law Judge's opinion.
History
Respondent No. 1, an uninsured subcontractor, employed claimant as a framing carpenter/lead man to frame houses on or about June of 2000. Claimant stated that he worked as a carpenter for 10 years before being hired by Respondent No. 1. Respondent No. 1 paid claimant $15 per hour on a weekly basis and claimant was responsible for paying his own social security and other employment taxes.
Claimant's duties included putting up walls, ceilings, roofs, windows, and doors. He stated that when he began work for Respondent No. 1, he used his own tool belt, saw, levels, cords, and hoses, and that Respondent No. 1 supplied all of the other equipment. He further stated that he worked with a crew who also used tools provided by Respondent No. 1. Claimant testified that as lead man he helped instruct the crew per Respondent No. 1's orders, and that Respondent No. 1 once instructed him to terminate a worker. He stated that he understood his relationship status to be that an employee for Respondent No. 1 who was a subcontractor for Respondent No. 2, a builder. Claimant further stated that Respondent No. 1 exerted control over his work, "He was my boss. If there was something going on that he didn't like, he had the power to change it." He added, "If he seen something built that he didn't like, he would make us change it."
Claimant stated that one of the first jobs he performed for Respondent No. 1 was "popping lines," which consisted of marking the slabs where walls were to be placed. He stated that Respondent No. 1 provided him specific instructions on how to perform his work, such as how to run the beams, how to put in wire blocking, how to brace things, etc. Claimant further stated that he did not work any other jobs while employed by Respondent No. 1.
Respondent No. 1 testified that he is an independent framing contractor and worked as a subcontractor for Respondent No. 2. He stated that Respondent No. 2 paid him $3.25 per square foot to frame the house on which claimant was working when he fell, injuring his back. He stated that he hired claimant to help him complete this work and paid claimant, and the other workers, an hourly wage every week based on the time each one turned into him.
Respondent No. 1 stated that he had another crew working a job with another contractor at the time claimant was injured. He stated that claimant worked as a lead man on one of his crews, "I hired Richard and he wanted his cousin to work with him, so there was two guys and Richard, the lead man, and he needed a couple more guys and I hired two or three other guys." (Record, p. 53). Respondent No. 1 provided any special tools his workers needed, and Respondent No. 2 supplied the wood, nails, and other materials necessary to complete the jobs. Respondent No. 1 also stated that claimant once hired a worker on his behalf (Record, p. 57). Respondent No. 1 admitted that he retained the authority to hire and fire workers; that he checked on his workers at lest twice a day; that he gave his workers instructions on how work was to be completed; that he expected workers to heed his instructions; and that workers were not responsible for paying for supplies or materials used on the job. (Record, p. 58).
While Respondent No. 1 characterized claimant as an independent contractor, upon being questioned by the court, he stated that he controlled claimant's work hours and performance:
Did he have the freedom to show up and do it whenever he wanted to, to do the framing whenever he wanted?
Within reasonable (sic), you know. I mean you can't show up at noon and leave at 2:00 and expect to keep a job. (Record, p. 61).
Respondent No. 1 asked claimant to provide a certificate of noncoverage for workers' compensation when he began work. Claimant stated that he did not have one, mistakenly believing that a certificate he previously received was expired. Claimant told Respondent No. 1 that he would provide one, but failed to do so. (Record, p. 22).
Claimant testified that on September 16, 2000, he slipped and fell while working on top of a wall he was framing, stating, "My right foot slipped; my left foot got caught and it made me go head first through a window and landed on my back on the window sill." (Record, p. 18). Claimant was taken by ambulance to St. Mary's Hospital and then transferred to a Fayetteville hospital. Claimant broke his arm in two places and injured his back. Claimant received surgery the same day he was transferred to Fayetteville and has undergone extensive rehabilitation. He stated that he has problems with mobility, his bowel and urinary tracts, and his right arm. Claimant stated he had no such problems prior to his work-related injury.
Respondent No. 2 appeals the decision that claimant was an "employee" and argues that they are not responsible for claimant's workers' compensation benefits as his "statutory" employer.
Adjudication
The court used 10 factors to determine whether a worker is an employee or an independent contractor as cited in Dickens v. Farm Bureau Mut. Ins. Col, 315 Ark. 514, 868 S.W.2d 476 (1994):
the extent of control which, by agreement, the master may exercise over the details of the work;
whether or not the one employed is engaged in a distinct occupation or business;
the kind of occupation, with reference to whether in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
the skill required in the particular occupation;
whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
the length of time for which the person is employed;
the method of payment, whether by the time or by the job;
whether or not the work is a part of the regular business of the employer;
whether or not the parties believe they are creating the relationship of master servant; and whether the principal is or is not in business.
See also D.B. Griffen Warehouse, Inc. v. Sanders, 336 Ark. 456, 986 S.W.2d 836 (1999). It is the right to control, not the actual control, that determines the relationship. Taylor v. Gill, 326 Ark. 1040, 934 S.W.2d 919 (1996).
In Arkansas Transit Homes v. Aetna Life Cas., 341 Ark. 317, 16 S.W.3d 545 (2000), the court stated:
Factors pertaining to the nature of the worker's occupation and whether it is part of the regular business of the employer comprise the "relative nature of the work" test recognized in Sandy v. Salter, 260 Ark. 486, 541 S.W.2d 929 (1976). There, this court adopted Professor Larson's test for examining the relationship between the worker's occupation and the regular business of the employer. The more the worker's occupation resembles the business of the employer, the more likely the worker is an employee.
See Madden v. Aldrich, 343 Ark. ___, ___ S.W.3d ___ (November 1, 2001). The Arkansas Supreme Court further stated:
An independent contractor is one who contracts to do a job according to his own method and without being subject to the control of the other party, except as to the result of the work; the governing distinction is that if control of the work reserved by the employer is control not only of the result, but also of the means and manner of performance, then the relationship of master and servant necessarily follows; but if the control of the means be lacking, and the employer does not undertake to direct the manner in which the employee shall work in the discharge of his duties, then the relation of independent contractor exists; there is no fixed formula for determining whether a person is an employee or an independent contractor; thus, the determination must be made based on the particular facts of each case.
Arkansas Transit Homes v. Aetna Life Cas., 341 Ark. at 321,quoting Massey v. Poteau Trucking Co., 221 Ark. 589, 254 S.W.2d 959 (1953). See also, Johnson Timber Corp. v. Sturdivant, 295 Ark. 622, 752 S.W.2d 241 (1998).
In applying these standards to the present case, it is clear that claimant was an employee of Respondent No. 1. Both claimant and Respondent No. 1 testified that Respondent No. 1 maintained control over claimant's work. Respondent No. 1 specifically stated that he required his workers to adhere to his instructions regarding their work and that he supervised their work via daily inspections. Respondent No. 1 also admitted that he hired claimant in a supervisory capacity to exercise leadership over his other workers.
Respondent No. 1 also testified that he paid claimant an hourly wage (denoting an employee relationship) and that he dictated the place of work and provided the supplies to perform the tasks required of his workers. Additionally, an application of the "relative nature of the work" test leads to the conclusion that claimant was an employee because he performed work that was of the same nature of Respondent No. 1's business.
In Kevin O. Moore v. MDH Builders, Inc., Full Commission Opinion, filed August 3, 2000 ( E901863), this Commission found a worker to be an "employee" of an uninsured subcontractor where the worker was paid an hourly rate of compensation; the worker supplied his own pouch, skill saw and nail gun; the subcontractor maintained the right to control the means by which the worker performed his duties; and where the subcontractor could terminate the worker without any liability. Furthermore, the worker's occupation appeared to be of the same type as the subcontractor. Id.
Because the present circumstances appear to indicate an employer/employee relationship between claimant and Respondent No. 1, we find claimant to be an employee of Respondent No. 1. Since Respondent No. 1 is uninsured, we find that Respondent No. 2's insurance carrier is responsible for payment of claimant's workers' compensation benefits.
Ark. Code Ann. § 11-9-402 provides:
(a) Where a subcontractor fails to secure compensation required by this chapter, the prime contractor shall be liable for compensation to the employees of the subcontractor.
(b)(1) Any contractor of the contractor's insurance carrier who shall become liable for the payment of compensation on account of injury to or death of an employee of his or her subcontractor may recover from the subcontractor the amount of the compensation paid or for which liability is incurred.
Thus, we find that Respondent No. 2 is responsible for payment of workers' compensation benefits as claimant's "statutory employer." We further find that Respondent No. 2 is entitled to file a lien against Respondent No. 1 for recovery of these expenditures pursuant to Ark. Code Ann. § 11-9-402. Accordingly, we affirm the Administrative Law Judge's decision.
In reaching our decision, we note that Respondent No. 2's brief on appeal seems to assert in part that the Commission's issuance of a certification of noncoverage on March 26, 1997 to Richard Wessons Carpentry, as a matter of law, conclusively presumed from that point forward that the claimant was a sole proprietor, and not an employee, with regard to any third party for whom he might perform work.
As Respondent No. 2 notes, Ark. Code Ann. § 11-9-102(10)(D) (Repl. 1996) states:
Act 1757 of 2001 phased out open-ended certifications of noncoverage. A certification of noncoverage issued after July 1, 2001 is valid for two years after the effective date. Pursuant to Act 1757, any certification of noncoverage issued in 1997 expired on March 31, 2002.See Ark. Code Ann. § 11-9-402(Repl. 2002). Because the claimant's injury occurred before March 31, 2002, the amendments of Act 1757 appear to have no bearing on Respondent No. 2's argument regarding the 1997 certification of noncoverage at issue.
(D) Any individual receiving a certification of noncoverage under this chapter from the commission shall thereafter, or until he elects otherwise, be conclusively presumed not to be an employee for purposes of this chapter or otherwise.
We see at least three problems with Respondent No. 2's theory that the claimant's 1997 certification of noncoverage bars the claimant's claim against Respondent No. 2. First, we note the Arkansas Courts have not yet interpreted the terms and legislative intent of Ark. Code Ann. § 11-9-102(10)(D) (Repl. 1996). However, construing the various provisions of the Arkansas Workers' Compensation Law together, the Commission has previously interpreted that a certification of noncoverage applies only to sole proprietors or partners of a partnership, but not to employees, who lack the legal capacity to waive their right to compensation by agreement. See Ark. Code Ann. § 11-9-108(Repl. 2002); Ark. Code Ann. § 11-9-402(Repl. 2002); Patrick Golden v. Randy Wiggins Logging, Full Workers' Compensation Commission, Opinion filed July 13, 1998 (W.C.C. No. E602244).
Second, even if the Arkansas Courts reach a different statutory interpretation than that reached by the Commission in Patrick Golden,supra, we note that Ark. Code Ann. § 11-9-102(10)(D) (Repl. 1996) indicates that an individual receiving a certification of noncoverage will be conclusively presumed to be an employee until he elects otherwise. As discussed above, in the present case, at the time that claimant went to work for Respondent No. 1, he was under the impression that his 1997 certification of noncoverage had expired, and advised Respondent No. 1 likewise. Under these circumstances, the preponderance of the evidence indicates that the claimant elected not to be covered by his 1997 certification of noncoverage, in light of his mis-information to Respondent No. 1 that the certification had expired.
Third, we note that Ark. Code Ann. § 11-9-402(c)(1)(B)(i) (Repl. 1996) provides:
(B)(i) A sole proprietor or the partners of a partnership who do not elect to be covered by this chapter and be deemed employees thereunder and who deliver to the prime contractor a certification of noncoverage issued by the Workers' Compensation Commission shall be conclusively presumed not to be covered by the law or to be employees of the prime contractor. [Emphasis ours.]
In the present case, there is no dispute that the claimant did not deliver a certification of noncoverage to Respondent No. 2, the prime contractor. As we understand the highlighted portion of the statute, the presumption that the prime contractor seeks in this case cannot possibly have arisen in light of the fact that the claimant did not deliver the 1997 certification at issue to the prime contractor.
As we understand Respondent No. 2's interpretation of Ark. Code Ann. § 11-9-102(10)(D) (Repl. 1996), Respondent No. 2 seems to argue that an individual's receipt of a certification of noncoverage applies to any employment relationship an individual might engage in from that date forward, regardless of whether or not the other party in an employment relationship is even aware of the existence of any certification of noncoverage. In addition to the reasons discussed above as to why we disagree with Respondent No. 2's statutory interpretation, we point out that this interpretation would appear to lead to absurd results. For example, if a city fireman chose to obtain a certification of noncoverage for a second part-time plumbing business, under Respondent No. 2's interpretation, a certification of noncoverage obtained for the plumbing business would also seem to govern the individual's status as a city fireman (i.e., conclusively presuming the individual not to be an employee of the city if hurt fighting a fire). Likewise, under Respondent No. 2's interpretation and application of the law, if a plumber later closed the business after having previously obtained a certification of noncoverage, and went to work in a factory, his certification of noncoverage obtained for a now defunct plumbing business would affect his later employment status in his factory job (conclusively presuming him not to be an employee if hurt in the factory).
For the foregoing reasons, we are not persuaded that Ark. Code Ann. § 11-9-102(10)(D) compels a finding that the claimant was preclusively presumed not to be an employee under the circumstances of this case, Respondent No. 2's legal arguments to the contrary notwithstanding. Further, for reasons also discussed herein, we find that a preponderance of the credible evidence establishes that the claimant was an employee, and not an independent contractor, on the job at issue.
All accrued benefits shall be paid in a lump sum without discount and with interest thereon at the lawful rate from the date of the Administrative Law Judge's decision in accordance with Ark. Code Ann. § 11-9-809 (Repl. 1996). For prevailing on this appeal before the Full Commission, claimant's attorney is hereby awarded an additional attorney's fee in the amount of $250.00 in accordance with Ark. Code Ann. § 11-9-715 (Repl. 1996).
IT IS SO ORDERED.
______________________________ ELDON F. COFFMAN, Chairman
______________________________ SHELBY W. TURNER, Commissioner
Commissioner Yates dissents.
DISSENTING OPINION
I respectfully dissent from the majority opinion finding that the claimant proved by a preponderance of the evidence that the claimant was an employee of Shawn Gaddy d/b/a Rat A Tat Tat Construction Company. The majority has found that Shawn Gaddy d/b/a Rat A Tat Tat Construction was a subcontractor of the prime contractor Kurt Puttkamer Homes. Therefore, Kurt Puttkamer Homes was liable for all workers' compensation benefits as required by Ark. Code Ann. § 11-9-402(A). Based upon my de novo review of the record, I find that the claimant was an independent contractor and not entitled to receive workers' compensation benefits from Kurt Puttkamer Homes. Applying the 10 factors to determine whether a worker is an employee or an independent contractor set forth in the majority opinion to the present claim, I find the preponderance of the evidence establishes that the claimant was an independent contractor and not an employee.
My review of the evidence in the record demonstrates that Mr. Gaddy considered the claimant to be an independent contractor. The claimant was paid by the hour and Mr. Gaddy did not withhold any payroll taxes or provide any benefits. The claimant provided his own tools as well. Further, Mr. Gaddy did not procure workers' compensation insurance for the coverage of the claimant. Mr. Gaddy testified that he advised the claimant during their initial conversation that he did not have and would not procure workers' compensation insurance. He also inquired whether the claimant had a certificate of non-coverage. The claimant indicated that he did not have a certificate, but he would provide one. The claimant had a certificate of non-coverage that had been issued in 1997 and the claimant was under the mistaken impression that this certificate had expired. However, the claimant indicated to Mr. Gaddy that he would procure one. These facts, when taken together, support a finding that the claimant was not an employee.
The majority opinion cites the case of Patrick Golden v. Randy Wiggins Logging, wherein the Commission found that certificates of non-coverage are only applicable to sole proprietors or partners who are conducting independent businesses and that a certificate of non-coverage cannot act as a waiver for individuals who are in fact employees.
The majority discusses three potential "problems" with the respondent's interpretation of Ark. Code Ann. § 11-9-102(10)(D) (Repl. 1996). With respect to the majority's first point, it is correct that the Courts have not yet interpreted the provisions of this statute. I can also agree in principle to the Commission's previous interpretation in Golden that under the strict construction requirements of our Workers' Compensation laws, persons who lack the requisite legal capacity cannot waive their right to compensation by agreement. However, I would note that this case is distinguishable from Golden. In Golden, the claimant was taken to an insurance agent to sign documents that were purported to provide him with insurance coverage. Instead, the claimant signed papers applying for a certificate of non-coverage. The certificate in Golden was obtained by perpetuating a fraud on the claimant. The claimant in this case was fully aware that he previously had a certificate of non-coverage, knew what the certificate meant, was aware that Mr. Gaddy did not have workers' compensation insurance coverage, and agreed to provide a certificate to Mr. Gaddy.
As to the majority's second point, the majority has concluded that the claimant proved by a preponderance of the evidence that he elected not to be covered by his 1997 certificate of non-coverage because he was under the mistaken impression that it had expired. The majority has simply ignored the fact that the even though the claimant thought his certificate had expired, he agreed to provide the respondent with a certificate when he contracted to do the work.
With respect to the majority's third and final "problem", I respectfully point out once again that the claimant agreed to deliver a certification to Mr. Gaddy, but the claimant failed to deliver a certification.
Therefore, after I consider all the evidence, I find that the claimant was not an employee of Shawn Gaddy d/b/a Rat A Tat Tat Construction. The claimant was an independent contractor and Kurt Puttkamer Homes should not be considered to be the claimant's statutory employer. Accordingly, I must respectfully dissent from the majority opinion.
_______________________________ JOE E. YATES, Commissioner