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• Employee or Independent Contractor

Employee or Independent Contractor?

written on February 22, 2011 by Ross Brittain and Schonberg

 

Consider this scenario:  Acme Builders is constructing a beautiful home for new Browns quarterback Brady Quinn.  Acme contracts with former Browns quarterback (and first round draft pick) Tim Couch, out of work and quite bored, to hang drywall at the worksite.  Tim verbally agrees with Acme that he is an independent contractor and therefore acknowledges that Acme will not provide him with workers’ compensation coverage.  A few days into the job, Tim sustains a serious workplace injury.  Although Tim’s injury itself is not surprising, Tim’s actions post-injury are surprising.  Despite his verbal agreement with Acme, Tim decides to file a workers’ compensation claim.  Acme contests the same under the assumption that Tim (as an independent contractor and not an employee of Acme) is simply not entitled to workers’ compensation benefits through Acme. 

Whether or not Tim will receive workers’ compensation benefits for his injury will initially turn on his classification as an employee of Acme or an independent contractor.  As a general rule, independent contractors are not considered employees for workers’ compensation purposes.  If Tim is considered an independent contractor (and therefore not an employee of Acme), he will be unable to receive workers’ compensation benefits through Acme.  However, if Tim is considered an employee of Acme, the question will then proceed to whether or not there is a compensable claim.  If it is a compensable claim, Acme would be personally responsible for all claim costs.  Acme might also have to prepare for an audit by the Ohio Bureau of Worker’s Compensation to address other similarly situated individuals who have contracted with Acme.  As a result of the audit, Acme may be found to owe unpaid premiums to the Bureau.  So clearly, Tim’s claim could have a significant impact on Acme!      

So, how will the Industrial Commission determine if Tim is an employee of Acme or an independent contractor?  Although it seems fairly straightforward, it unfortunately is not.

The Ohio Workers’ Compensation Act sets forth a very detailed definition as to who specifically constitutes an “employee” for workers’ compensation purposes.  Moreover, the Act provides that persons who perform labor or provide services pursuant to a construction contract will be considered an employee if specific criteria apply.  Twenty specific criteria are listed and ten must apply for an individual to be considered an employee.

Additionally, Ohio courts have consistently stated that when determining whether an individual is an employee or an independent contractor, the key factual determination is “who had the right to control the manner or means of the individual’s work.”  This is commonly called the “right to control” test and it basically states that an employer-employee relationship exists when an employer reserves the right to control the manner and means of doing the work.  Conversely, if the manner and means of doing the work is left to one who is responsible to the employer only for the result, an independent contractor relationship is created.  The Supreme Court of Ohio has held that when determining “who has control,” the factors to be considered include (but are not limited to), who controls the details and quality of the work, who controls the hours and days worked, who selects the materials, tools and personnel used, who selects the routes traveled, the length of employment, the type of business, the method of payment and any pertinent written or oral agreements. 

As you can see, determining whether or not Tim is an employee of Acme or an independent contractor requires a fairly detailed analysis.  With more facts, it would be possible for us to analyze this situation with the numerous criteria outlined above and in the Ohio Revised Code.  This would give us a good idea as to how the Industrial Commission of Ohio would rule in this matter. 

Luckily, Acme’s predicament is a purely fictional one.  However, many Ohio employers are going to have a similar situation arise at one point or another.  From a practical standpoint, remember that oral or written agreements between parties will not be the ultimate authority in a determination concerning whether or not an individual is an employee, but only one factor reviewed in light of many others.  As such, it is always wise to procure an agreement, but do not hope to rely solely on the same.  Creating a working relationship with a focus upon the criteria set forth above will ensure that an independent contractor relationship exists.  

By Anthony A. Baucco