Examining the PA Work Comp Criteria to Establish the Existence of an Employer - Employee Relationship

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.

 QUESTION PRESENTED:

Was the worker performing tow truck operator duties functioning as an “Employee” or as an “Independent Contractor” at the time of injury?

 BACKGROUND FACTS:

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.