CLAIM NO. E901863
Before the Arkansas Workers’ Compensation Commission
ORDER FILED AUGUST 3, 2000.
Upon review before the FULL COMMISSION in Little Rock, Pulaski County, Arkansas.
Claimant represented by the HONORABLE CHARLES R. PADGHAM, Attorney at Law, Hot Springs, Arkansas.
Respondent represented by the HONORABLE FRANK B. NEWELL, Attorney at Law, Little Rock, Arkansas.
Decision of the Administrative Law Judge: Affirmed.
OPINION AND ORDER
The respondents appeal an opinion and order filed by the administrative law judge on August 27, 1999. In that opinion and order, the administrative law judge found that the claimant was an employee of the uninsured contractors, Leonard Tubbs and Ken Buck when the claimant was injured on a job site on February 9, 1999. In addition, the administrative law judge found that the claimant was the statutory employee of MDH Builders, Inc. on February 9, 1999. After conducting a de novo review of the entire record, and for the reasons discussed herein, we find that MDH Builders is liable for compensation for the claimant’s injury sustained on February 9, 1999, under the provisions of Ark. Code Ann. §11-9-402 (Repl. 1996). Therefore, we find that the decision of the administrative law judge must be affirmed.
The facts in this case are not in dispute. MDH Builders was a prime contractor at a Fazoli Restaurant project. MDH Builders engaged Mr. Ken Buck on the project. Mr. Buck then engaged Mr. Leonard Tubbs. Buck had no tools for the project. Tubbs supplied the tools. Buck agreed to pay half of Tubbs’ overhead, and Tubbs agreed to pay half of Bucks’ overheard. The two also agreed to split the profit. Tubbs engaged his nephew, the claimant, to also work on the project. The claimant did not share the profit. The claimant was paid at an hourly equivalent of $10.00 per hour, to be paid equally between Buck and Tubbs for accounting purposes. However, the claimant was apparently not paid actual wages, but was earning credit against a prior debt the claimant owed Tubbs.
The respondents contend that the claimant’s contractual relationship was solely with Tubbs, and that the claimant’s relationship with Tubbs was in the nature of a contractor or partner, and not an employee. In the alternative, the respondents argue that, even if the claimant was an employee of Tubbs, or an employee of a partnership between Tubbs and Buck, MDH Builders cannot be liable as a prime contractor for the claimant’s injury because MDH Builders contracted solely with Buck, and not with Tubbs or with a Buck/Tubbs partnership.
1. Independent Contractor vs. Partner vs. Employee
The issue of whether one is an employee or an independent contractor is analyzed under two separate tests: (1) the control test and (2) the relative nature of the work test.
The control test was set out in Silvicraft, Inc. v. Lambert, 10 Ark. App. 28, 661 S.W.2d 403 (1983), and Franklin v. ArkansasKraft, Inc., 5 Ark. App. 264, 635 S.W.2d 286 (1982). In theFranklin case, the Court stated:
The issue of whether an individual was functioning, at the time of an injury, as an employee or an independent contractor must depend on the particular facts of each case. Moore v. Long Bell Lumber Co., 228 Ark. 345, 307 S.W.2d 533 (1957); Hollingsworth Frazier v. Barnett, 226 Ark. 54, 287 S.W.2d 888 (1956); Farrell- Cooper Lumber Co. v. Mason, 216 Ark. 797, 227 S.W.2d 444
(1950); Parker Stave Co. v. Hines 209 Ark. 438, 190 S.W.2d 620 (1945); Irvan v. Bounds, 205 Ark. 752, 170 S.W.2d 674 (1943).
The question of an injured person’s status has been the subject of much litigation. There are numerous cases involving the timber industry alone, and the cases are not consistent. Compare, Dallas County Pulpwood Company v. Strange, 257 Ark. 799, 520 S.W.2d 247 (1975), with West v. Lake Lawrence Pulpwood Co., 233 Ark. 629, 346 S.W.2d 460 (1961).
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There are numerous factors which may be considered in determining whether an injured person is an employee or an independent contractor for purposes of workers’ compensation coverage. Obviously, the relative weight to be given the various factors must be determined by the Commission. Some of the factors which might be considered, depending on the facts of a given case, are:
(1) the right to control the means and the method by which the work is done;
(2) the right to terminate the employment without liability;
(3) the method of payment, whether by time, job, piece or other unit of measurement;
(4) the furnishing, or the obligation to furnish, the necessary tools, equipment and materials;
(5) whether the person employed is engaged in a distinct occupation or business;
(6) the skill required in a particular occupation;
(7) whether the employer is in business;
(8) whether the work is an integral part of the regular business of the employer; and
(9) the length of time for which the person is employed.
These are not all the factors which may conceivably be considered in a given case, and it may not be necessary in some cases for the Commission to consider all of these factors. Traditionally, the “right to control” test has been sufficient to decide most of the cases, although many variations of “control” have probably been squeezed into that test.
5 Ark. App. At 267, 269-70, 635 S.W.2d at 288, 289.
The relative nature of the work test was set out inSandy v. Salter, 260 Ark. 486, 541 S.W.2d 929 (1976), as follows:
Larson makes the point that the recognition of control as the governing test of the employment relationship arose in common-law tort cases, where the question was whether the master was vicariously liable for his servant’s negligence. In that setting the master’s right to control his servant’s detailed activities was highly relevant to the question whether the master ought to be liable. The issue, however, was the master’s liability for injuries inflicted by the servant upon third persons. By contrast, the issue in compensation cases is the master’s liability for injuries sustained by the employee. Larson, Workmen’s Compensation Law, § 43.42 (1973).
Larson reasons that in a case such as the one at bar, the law should consider, in determining whether an employer-employee status exists, not only the matter of control but also the relationship between the claimant’s own occupation and the regular business of the asserted employer. Larson, §§ 43.50 and 43.51. With regard to the latter aspect of the problem, two considerations have weight: First, how much of a separate calling or profession is the claimant’s occupation? How skilled is it? To what extent may it be expected to carry its own share of the workmen’s compensation responsibility? Second, what relationship does the claimant’s work bear to the regular business of the asserted employer? Is there a continuous connection or only an intermittent one, or is there no connection at all? See, Larson, § 43.52.
260 Ark. at 489-90, 541 S.W.2d at 931.
In the present case, we find that a preponderance of the evidence establishes that the claimant was engaged as an employee and not as an independent contractor. While the claimant appears to have bid his own jobs and contracted for work at some other sites, at the Fozoli site he was engaged to work for an hourly rate of compensation. Moreover, the record indicates that at least Tubbs had the right to control the means by which the claimant performed his work, although the record does not indicate that Tubbs exercised his right to control the claimant’s work to any significant degree. The record likewise indicates that Tubbs could terminate the claimant without any liability, if Tubbs were to choose to do so. The claimant supplied his own pouch, skill saw, and one nail gun because there was not enough of these tools. According to Tubbs, Buck did not supply any tools because Tubbs supplied all the tools (apparently with the exception of the claimant’s pouch, saw and nail gun.) Finally, on this record, it appears that the claimant’s occupation in construction appears to be the same type of work, and not a distinct occupation, for which MDH Builders initially engaged Buck, and for which Buck brought in Tubbs. Therefore, a preponderance of the evidence establishes that the claimant was an employee under both the control test and the relative nature of the work test.
We also find the record fails to support the respondents’ alternative assertion that the claimant was brought in as a partner to Tubbs. To the contrary, the only profit sharing involved in this case appears to have been between Tubbs and Buck, and the claimant was employed at an hourly wage, with his wages accounted as overhead equally between Buck and Tubbs.
2. MDH Builders’ Liability Under Ark. Code
Ann. § 11-9-402 (Repl. 1996)
MDH Builders argues on appeal that, even if the claimant was an employee, MDH Builders cannot be liable under Section 402 because MDH Builders subcontracted to Buck only, and therefore MDH Builders cannot be a prime contractor to either a partnership of Buck and Tubbs, or a prime contractor to Tubbs.
Ark. Code Ann. § 11-9-402(a) (Repl. 1996) 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.
As we understand MDH Builders’ argument on appeal, MDH Builders assets that MDH Builders can be liable for compensation to the employees on only a single subcontractor, Buck, with whom MDH Builders had a contract. MDH Builders appear to argue that, if Buck subcontracted some or all of his contract to either Tubbs, or to a partnership between Buck and Tubbs, then MDH Builders would have no liability because neither Tubbs or a partnership between Buck and Tubbs was a subcontractor in relation to MDH Builders within the meaning of Ark. Code Ann. § 11-9- 402(a). We disagree.
The Arkansas Workers’ Compensation Law does not define the term “subcontractor”. However, the ordinary meaning of the term “subcontractor” includes “one who takes portion of a contract from principal contractor or another subcontractor”. See, Black’s Law Dictionary, 5th Ed.; Accord Barley v. Simmons, 6 Ark. App. 193, 639 S.W.2d 526 (1982); Hollingsworth Rockwood Ins. V. Evans, 255 Ark. 387, 500 S.W.2d 387 (1973). Therefore, the ordinary definition of “subcontractor” would indicate that the term would include not only a party who takes a portion of the contract from the principal contractor, but also one who takes a portion of the contract from another subcontractor.
Notably, this statutory interpretation would also appear to be consistent with the purpose of the provision at issue, which “is to protect the employees of subcontractors who are not financially responsible, and to prevent employers from relieving themselves from liability by doing through independent contractors what they would otherwise do through direct employees.See, Liggett Const. Co. v. Griffin, 4 Ark. App. 247, 629 S.W.2d 316 (1982). Professor Larson similarly explains:
The purpose of this legislation was to protect employees of irresponsible and uninsured subcontractors by imposing ultimate liability on the presumably responsible principal contractor, who has within his power, in choosing subcontractors, to pass upon their responsibility and insist upon appropriate compensation protection for their workers. This being the rationale of the rule, in the increasingly common situation displaying a hierarchy of principal contractors upon subcontractors upon sub-subcontractors, if an employee of the lowest subcontractor on the totem pole is injured, there is no practical reason for reaching up the hierarchy any further than the first insured contractor.
Larson, Workmen’s Compensation Law § 49-14 (1996).
In short, as we interpret the plain language of Ark. Code Ann. § 11-9-402, MDH Builders has liability as prime contractor for the claimant’s injuries regardless of whether MDH Builders subcontracted directly with the claimant’s employer, as the administrative law judge concluded, or whether instead MDH Builders subcontracted directly with Buck and then Buck subcontracted to the claimant’s employer (either Tubbs or a Tubbs/Buck partnership). As we interpret Ark. Code Ann. §11-9-402(a), MDH Builders’ liability does not hinge on whether there is only a single uninsured subcontractor or a hierarchy of uninsured subcontractors between MDH Builders and the claimant.
In reaching that conclusion, we also note that MDH Builders also cites the Arkansas Supreme Court decision in Hobbs WesternCo. v. Craig, 209 Ark. 630, 192 S.W.2d 116 (1946) for the proposition that: “To constitute a principal contractor the statutory employee of the employees of the sub-contractor, there must be some contractual relationship between the two.” The Craig
decision, and the respondents’ quote therefrom, did not involve the issue as to whether a prime contractor is liable only for injuries to the employees of its uninsured direct subcontractors, or whether a prime contractor is also liable for the injuries to the employees of uninsured subcontractors who take a portion of the contract from another uninsured subcontractor. Therefore, we do not find the respondents’ quote from Craig persuasive with regard to the statutory interpretation issue presented in this case.
Because we interpret Ark. Code Ann. § 11-9-402(a) as making MDH Builders liable for not only the injuries to employees of MDH Builders’ uninsured direct subcontractors, but also for the injuries of employees of uninsured contractors who take a portion of MDH Builders’ contract from another uninsured subcontractor, we find that MDH Builders would be liable for the claimant’s injuries regardless of whether (1) MDH Builders subcontracted directly with Buck, and Buck subcontracted with the claimant’s employer, as the respondents argue or whether (2) MDH Builders ultimately subcontracted directly with the claimant’s employer, as the administrative law judge found.
Therefore, after conducting a de novo review of the entire record, and for the reasons discussed herein, we find that the decision of the administrative law judge must be, and hereby is, affirmed.
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.
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ELDON F. COFFMAN, Chairman
_______________________________ PAT WEST HUMPHREY, Commissioner
Commissioner Wilson dissents.