Examining the Pennsylvania Workers Compensation Criteria to Establish the Existence of an Employer - Employee Relationship
One of the early published decisions of the newly constituted Commonwealth Court was the J. Miller Co. v. Mixter decision in 1971. That decision determined the existence of an employer-employee relationship via application of the "control test". This analysis remains the standard, to this day.
The existence of an Employer-Employee relationship is an essential element of a compensable workers compensation disability claim. New positions in developing service industry areas (rideshare drivers) give rise to new questions of the existence of an employment relationship.
We will assess the existence of an employment relationship in these new economy endeavors ... by application of existing caselaw and past precedents. . Past caselaw decisions have reviewed many relationships in the trucking industry. A recent case examines the employment relationship.
Berkebile Towing & Recovery v. WCAB (Harr, SWIF & UEGF) No. 220 C.D. 2020 Memorandum Opinion by Judge Fizzano Cannon filed May 10, 2021.
Was the worker performing tow truck operator duties functioning as an “Employee”
or as an “Independent Contractor” at the time of injury?
The Commonwealth Court provided
a rather detailed analysis of the evidence presented to determine if an
individual functioned as an “Employee” within the intent and meaning of section
104 of the Pennsylvania Workers
Compensation Act. Worker’s when he sustained a fatal injury in the performance of
his duties as a tow truck operator
As Appellate decisions
assessing the existence of an employment relationship delve into the details of
the relationship of the parties, to determine the degree of “control” maintained
and exercised by the purported Employer, we recite the detailed facts found in
the WCJ decision to award fatal claim benefits.
The WCJ reviewed the
facts presented in the context of the Universal Am-Can case and expressly
considered the extent of Berkebile’s right
of control over the work to be completed by Decedent Harr and other drivers. The WCJ reviewed
the factors concerning: the nature of work; the skills required to do the work;
the centrality of the work to Berkebile’s business; Berkebile’s supply of the tools
and equipment; their right to terminate the relationship.
Berkebile
owned the tow trucks, set the rates, and collected payment for
the jobs. Berkebile prohibited drivers from using Berkebile trucks to take tow
calls from other companies. The WCJ found
these facts were analogous to those that established an employment relationship
in Sarver Towing v. WCAB (Bowser), 736 A.2d 61 (Pa. Cmwlth. 1999)
The WCJ concluded that although Berkebile did not “micromanage” any individual tow job, Berkebile did maintain extensive domain over Harr’s work day. Trucks had very large placards with the Berkebile name and very small signage that the trucks were driver leased. Berkebile maintained a significant degree of control over how the drivers could and could not use the trucks – they could take them home but they could not use them to perform jobs for other towing companies. Drivers did not set the prices. If customers paid directly, the payment was turned over to Berkebile. If a driver declined too many calls, then Berkebile could stop assigning calls and reclaim its truck. The WCJ found these facts overrode the existence of other facts in favor of contractorship - such as the IC Agreement, the driver ability to decline jobs, payment by the job rather than time, and the driver’s responsibility for taxes.
Appellate Court HOLDING
The Commonwealth Court
denied the Employer appeal from the award of fatal claim benefits and challenge
to the conclusion that Decedent Harr was an employee of Berkebile Towing rather than an independent contractor. The Commonwealth Court performed a detailed
analysis of the factual evidence presented, in accord with the “control”
standard.
“While no hard and fast rule
exists to determine whether a particular relationship is that of employer-employee
or owner-independent contractor, certain guidelines have been established and
certain factors are required to be taken into consideration.” Universal Am-Can Ltd. WCAB (Minteer),
762 A.2d 328 (Pa. 2000).
“The following indicia and
principles are part of the inquiry: control of manner (in which) work is to be
done; responsibility for result only; terms of agreement between the
parties; the nature of the work or occupation; skill required for performance; whether
once is engaged in a distinct occupation or business; which party supplied the
tools; whether payment is by the time or by the job; whether work is part of the
regular business of the employer and also the right to terminate the employment
at any time.”
“Whether some or all of
these factors exist in any given situation is not controlling. Further, while each factor is relevant, there
are certain guidelines that have been elevated to be dominant considerations … [C]ontrol
over the work to be completed and the manner in which it is to be performed are
the primary factors in determining employee status. Moreover, it is the existence of the right
to control that is significant irrespective of whether the control is actually exercised.”
The Commonwealth Court reviewed
the instant case in the context of prior similar decisions regarding the
employment status of the tow truck drivers such as Sarver Towing v. WCAB (Bowser),
736 A.2d 61 (Pa. Cmwlth. 1999) (where the right to control the manner of
the claimant’s work was critical even if that right is not exercised) and Baykhanov
v. WCAB (Onixe Express), (Pa. Cmwlth. 245 C.D. 2018 filed October 12, 2018)
(where a car carrier driver was found to not be an employee).
In the Baum case,
a truck driver was found to be an employee even though he had some degree of
ability to decline work which was found to be evidence of flexibility in work
scheduling rather than a negation of an employment relationship. The instant Court noted the facts found by the WCJ in the Berkebile case - Berkebile ownership control over the availability
and use of trucks - favored a finding an employer-employee relationship, but
contrasted the Baykhanov case, where similar facts led to a
finding of an independent contractor relationship.
This Court assessed these
two case law precedents and distinguished weight afforded a published decision
in Sarver from the unreported divided opinion in Baykhanov. Additionally, in the instant case, the WCJ found
Harr’s witnesses to be credible regarding the employment relationship, which
was not true in Baykhanov.
In support of its
conclusion that an Employee-Employer relationship existed, the Court reviewed
the detailed evidence and testimony that was available to the WCJ –
Harr drove a tow truck with
a permanent Berkebile placard. Harr did not own the truck. He did not pay any formal lease or rental
payments. Harr did not pay for the truck’s
registration, inspections, or insurance. Berkebile provided
a fuel card. Berkebile testified he had verbal agreements with the drivers to lease
the truck for a 10% fee. Berkebile did not maintain workers’
compensation insurance.
Berkebile’s
tow trucks were fully equipped so drivers did not bring their own tools or equipment. Harr wore clothing with Berkebile’s name. Harr had no employers and did not do any (similar)
side work. Harr did not have a set schedule,
he received calls from Berkebile’s dispatcher on a 24/7 basis. He did not get paid if he did not go out on
calls. Berkebile had drivers perform odd jobs at the shop when they were not
dispatched. Berkebile provided little training
and did not supervise Harr when he performed tow jobs or service calls. Berkebile
negotiated mandatory corporate clients rates.
If customers paid Harr, he would turn over the payment to Berkebile.
RECOMMENDATIONS:
This appellate
case law review provides a lengthier and more detailed factual review, when
compared to the typical workers’ comp case review.
This
is intentional – as a means to demonstrate the amount of detail the WCJ, WCAB
and Commonwealth Court will analyze in the weighing of evidence of the presence
or absence of an Employee – Employer relationship.
Consequently
– this level of detail in the evidence presented - reflects the detail the workers’
comp defense attorney must strive to present – to allow a full assessment of
the evidence and testimony in support of the existence of an employment or independent
contractor relationship.
Discovery
of Employer documents and witness interviews are essential components of the initial
case review and litigation preparation process. One must emphasize to the Employer/Insurer
client that our early involvement and client cooperation with evidence
production are essential to an attempt to achieve a successful litigation
result or a favorable negotiated resolution.
