STOKES v. ETA TRANSPORTATION, INC., 1999 AWCC 185

CLAIM NO. E715213

JAMES A. STOKES, EMPLOYEE, CLAIMANT v. ETA TRANSPORTATION, INC., EMPLOYER, RESPONDENT and AMERICAN STATES INSURANCE COMPANY, INSURANCE CARRIER, RESPONDENT

Before the Arkansas Workers’ Compensation Commission
ORDER FILED JUNE 23, 1999

Upon review before the FULL COMMISSION in Little Rock, Pulaski County, Arkansas.

Claimant represented by the HONORABLE JOHN VERKAMP, Attorney at Law, Greenwood, Arkansas.

Respondent represented by the HONORABLE TOM C. MORRIS, III, Attorney at Law, Bentonville, Arkansas.

Decision of the administrative law judge: Affirmed.

[1] OPINION AND ORDER
[2] The respondents appeal an opinion and order filed by the administrative law judge on August 7, 1998. In that opinion and order, the administrative law judge found that the claimant was an employee of the respondent, and not an independent contractor as the respondents assert. After conducting a de novo review of the entire record, we find that the decision of the administrative law judge must be affirmed. [3] The respondent, ETA Transportation, Inc., is engaged in business as a truckload transportation broker, consolidation freight forwarder and product process operation. As part of its business, the respondent owns a warehouse facility in Bentonville, Arkansas. In the summer of 1997, the respondent expanded its warehouse facility, and the claimant fell on August 23, 1997, while performing iron work on that warehouse expansion. [4] The determination of whether, at the time of an injury, an individual was an independent contractor or an employee depends on the facts of the case. Franklin v. Arkansas Kraft, Inc., 5 Ark. App. 264, 635 S.W.2d 286 (1982). Ordinarily, no one feature of the relationship is determinative. Carter v. Ward Body Works, Inc., 245 Ark. 515, 439 S.W.2d 286 (1969). The right to control the method and manner of the work is the traditional test applied in Arkansas when considering whether an individual was an employee or an independent contractor. The ultimate question with the right to control test is whether the employer has the right to control, not whether the employer actually exercises control. Wright v.Tyson Foods, Inc., 28 Ark. App. 261, 773 S.W.2d 110 (1989). However, the courts have also considered the “relative nature of the work” test in addition to the right to control test. Sandy v.Salter, 260 Ark. 486, 541 S.W.2d 929 (1976); Sands v. Stombaugh, 11 Ark. App. 38, 665 S.W.2d 902 (1984); Franklin, supra;Silvicraft, Inc. v. Lambert, 10 Ark. App. 28, 661 S.W.2d 403
(1983). The main consideration of the relative nature of the work test is “the relationship between the claimant’s own occupation and the regular business of the asserted employer.” Salter,supra; Lambert, supra. [5] Consequently, the resolution of whether an individual is an independent contractor or an employee requires an analysis of the factors related to the employer’s right to control and of factors related to the relationship of the work to the asserted employer’s business. In Franklin, Supra, the Court listed the following factors, which may be relevant to both of these considerations, depending on the facts of the particular claim:

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 as an integral part of the regular business of the employer;

9. The length of time for which the person is employed;

[6] These are not all of the factors which may conceivably be relevant in a given case, and it may not be necessary for the Commission to consider all of these factors in some cases. The relative weight to be given to the various factors must be determined by the Commission. Franklin, supra. [7] In the present case, we find that the greater weight of the evidence establishes that the claimant was an employee of ETA, and not an independent contractor. Initially, we note that the method of payment in this case was an hourly wage, rather than any method of payment per piece or per unit or as part of a separate bid on ironwork. The circumstances which led to this form of payment for ironworkers were as follows. [8] When ETA determined to expand its warehouse, ETA did not take bids on the entire project. Instead, ETA purchased a pre-engineered building and paid Mr. John English on a fee basis as a project manager, not a general contractor, to oversee the project. [9] The project required various types of labor including, for example, plumbers, electricians, concrete work, dirt work and iron work. Some types of work were performed on a bid basis for a pre-determined sum. However, for the iron work, Mr. English contacted Paul Upchurch, an iron worker, and the two arrived at a wage of $15.00 per hour for Mr. Upchurch and approximately four subordinate iron workers to work on the project. [10] As regards the method of payment, an “Independent Contractor Agreement”, which the claimant signed after he started work, indicates that the claimant was to invoice for his services each week. Mr. English acknowledged that most of the time in construction a subcontractor has their own invoicing system. However, Mr. English acknowledged that in this instance he (Mr. English) recorded the hours worked each week the iron workers and that he (Mr. English) prepared the labor invoices to ETA for payment. Mr. English also acknowledged that the time invoiced for payment included any breaks the workers took during the day, except for lunch breaks. Mr. English also acknowledged that, if the iron work had required more hours than budgeted for, he would have advised the iron workers that they were approaching their “budget cap” and needed to try to “work a little smarter or work faster”. [11] As regards ETA’s right to control the claimant’s work and the right to terminate without liability, the claimant testified that he and the other ironworkers worked under a 50-hour per week maximum restriction. The claimant testified that he recalled learning of the 50-hour cap as follows:

Q. Now, you say you had — there was an agreement or that you were to work up to 50 hours a week and no more. Is that right?

A. Yeah.

Q. And who did you work that arrangement out with?

A. John come and told Paul Upchurch that we wasn’t allowed to work more than 50 hours a week.
Q. So were you present when this communication took place? Did John English ever come to you and say, “You can’t work more than 50 hours a week”?

A. Uh-huh.

[12] For his part, Mr. English did not deny the existence of the 50-hour cap. However, Mr. English gave equivocal testimony as to the source of the cap:

Q. Okay. Now, there’s been some testimony here today which you’ve heard that these people were limited to 50 hours per week. What do you have to say about that?
A. I — ETA never told me that — to limit their time. I never limited their time. They were on their own schedule, and we had — I had set a preliminary as a guideline just a date of completion for the project, and it was up to them for how many hours they wanted to work, when they wanted to start, when they wanted to stop, how many hours during the day they worked, or how many hours during the week they worked. I — at no time did I limit or was there any control set upon me or them from ETA to limit the quantity of time, whether it be small time or large time.

* * *

Q. Okay. Now, these men such as Mr. Stokes who were doing that work on the building, I want to know from you to what extent you controlled their work on a day-to-day basis that they were doing.
A. Let me go back and add one thing about the amount of time spent on a job, 50 hours. You know everybody was told, you know, everybody heard 50 hours is the maximum time during the week. That may have been — may have come from Paul Upchurch. He was — he was set up as the leader of the crew because he had the most experience as a crew leader. And he may have just decided arbitrarily, you guys — and put it out to them as a directive from higher up, whether it came from higher up or not, —

* * *

Q. I wasn’t clear on your direct, but was it your testimony that a 50-hour cap was not put on there or you just don’t know about it?
A. That was not — no time or hour time for a week was — or a day was ever put on the crew by myself or ETA.

Q. Okay.

A. It was — it would have been a self-imposed time.

Q. All right. I think —

A. So if —

Q. — now that you’ve testified, I think I recall that you said that during direct that Mr. Upchurch, if there was a 50 hour cap, that Mr. Upchurch would have been the one that put that on there.
A. If there was a time limit, then it would have been at Mr. Upchurch’s direction.

Q. Okay. Mr. Upchurch —

A. And he would have that, I’ll say soft authority, simply because he was set up as the crew leader. I would not want four or five or six guys to be out trying to get a job done with no leadership or no appointed leader whatsoever. Somebody has to direct the job, or it most likely won’t get done or there will be a lot of wasted time.

Q. So there needed to be a chief over all these —

A. Yes.

Q. — independent contractors? Okay. Does Upchurch, Paul Upchurch, is that his name?

A. Yes.

Q. He was the crew leader?

A. Yes.

Q. And you said that you were an agent for ETA Transportation. He would also have been an agent for ETA Transportation, too. Isn’t that right?
A. Only in that he was getting the job done. He was helping to do the work. He was no more — he was — he would have been less an agent of ETA Transportation that I was.

Q. But he was their crew leader?

A. Yes.

[13] With regard to potential contractual liability for terminating an ironworker, Mr. English stated that there were no ramifications when one of the workers took off to do something at home or to do something for another employer. Mr. English also testified that he never terminated any worker; however, Mr. English acknowledged that, if an ironworker only worked at ETA one day per week, the worker would have been asked not to come back. [14] Likewise, with regard to who furnished the tools, equipment, and materials with which the claimant worked, as discussed, ETA purchased a pre-engineered building and, therefore, supplied the building material itself. ETA, either directly or through Mr. English, rented the necessary crane and forklift equipment. Mr. English testified that he purchased a welder and billed ETA for the rental time on that welder, and the claimant had a welder and cutting torch and was reimbursed for the time they were used on the job. Mr. English also supplied the ladders and a hammer drill. ETA either paid directly for expendable materials (welding rods and gas) or reimbursed Mr. English if he procured these supplies. The claimant supplied his personal tools (tool belt, hard hat, spud wrench, and tape measurer). [15] We find these circumstances indicative of an employment at-will relationship, rather than the independent contractor relationship that the respondents assert. Moreover, the testimony of Mr. English and of the claimant indicates that the claimant could be terminated without any liability. Although the respondent exercised little actual day-to-day control over how the iron work was performed, we note that the relevant issue is the right to control the means by which the work was performed, not whether the employer actually exercised control. See, Wright, supra. Here, the respondents paid the claimant by the hour, the claimant was limited as to how many hours per week he could work, and the respondents furnished all of the construction material, expendable materials, and the majority of the equipment and tools. Although the claimant’s time was billed to ETA using invoices created under the label “Andy Stokes Iron Works”, as discussed, these invoices were actually prepared by John English. In fact, the claimant testified that he never operated any business under the name “Andy Stokes Iron Works”, and the claimant testified that he is a union ironworker. [16] While iron work and warehouse expansions are not part of ETA’s regular business, the expanded warehouse clearly would be a part of ETA’s regular business. For this expansion project, ETA purchased its own pre-engineered building and brought in a project manager to oversee construction. Although the project manager accepted bids on some phases of the construction work, this was not the case for ironworkers. The project manager set a schedule as to when the iron work was to be completed, determined how much time to budget, how many iron workers to hire, and with the assistance of Mr. Upchurch, how much to pay the ironworkers. [17] The dissent opines that the claimant failed to prove that any
employee-employer relationship existed between the claimant and respondent. The dissent states that the construction foreman never controlled the claimant’s day-to-day activities. Further, the dissent analogizes the present case to Fittin v. Travis LumberCo., Full Workers’ Compensation Commission opinion filed August 29, 1996 (E314170). In that case, the claimant was hired to build a fence on the respondent-employer’s property. We found that there was no evidence indicating that the respondent-employer ever asserted a right to control the method or means used by the claimant. In Fittin, therefore, we found that the claimant was an independent contractor rather than an employee. [18] However, we note that the substantive facts of the present case more closely resemble those of William D. Reeves v. New ImageSecurity Bars Doors, Full Workers’ Compensation Commission, opinion filed March 25, 1997 (E515779). In Reeves, the respondent-employer paid the claimant an hourly wage to install security doors and also did not impose a great deal of supervision. In addition, the respondents directed the claimant to sign a written agreement which designated the claimant as an “independent contractor.” However, we found that merely because the parties have entered into a written agreement does not mean that a claimant is automatically an independent contractor. See,also, Julian v. Landstar Ligon, Full Workers Compensation Commission, opinion filed November 13, 1998 (E713015). In Julian, the claimant entered into an agreement describing him as an “independent contractor.” Nevertheless, the conduct and practices of the parties indicated that the claimant was an employee. [19] In short, the record indicates that the respondents had the right to control the means and method by which the claimant was to perform his work. The respondents provided the design for the “add-on” to their warehouse and required that they approve any changes to the design. The respondents could require the claimant to redo any work not meeting their approval. The claimant considered himself to be an at-will employee, and the respondents could terminate his employment without liability. The respondents hired him to work for $15.00 per hour and instructed him not to work over 50 hours per week. At the time the claimant was injured, the respondents were furnishing all the building materials, expendable supplies, torches, a forklift, and a boom truck, and most of the tools. At the end of each week, the respondents issued the claimant a check from their bank account. All of these factors are relevant to an analysis pursuant toFranklin v. Arkansas Kraft, Inc., 5 Ark. App. 264, 635 S.W.2d 286
(1982), and Sands v. Stombaugh, 11 Ark. App. 38, 665 S.W.2d 902
(1984), and indicate to us that the claimant was an at-will employee, and not an independent contractor as the dissent asserts. Therefore, we find that the decision of the administrative law judge must be affirmed. [20] 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). [21] 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). [22] IT IS SO ORDERED. [23] _______________________________
ELDON F. COFFMAN, Chairman _______________________________ PAT WEST HUMPHREY, Commissioner [24] Commissioner Wilson dissents. [25] DISSENTING OPINION
[26] I must respectfully dissent from the majority’s opinion finding that the claimant was an employee of the respondents. In my opinion, the claimant failed to prove by a preponderance of the evidence that any employee-employer relationship existed between him and the respondent. [27] I find the preponderance of the evidence establishes that the claimant was an independent contractor and not an employee. The claimant’s income was reported on a 1099, not a W-2. The employer was in business as a truckload transportation broker, consolidator freight forwarder, and product process operation. The claimant was employed as an ironworker to expand the respondent’s warehouse. The claimant was not told how to hang the iron. Mr. English, the foreman, never controlled the worker’s day to day activities. Mr. English, as project manager, never told the workers when they could or could not take a lunch break. The claimant also signed an independent contractor agreement which indicated what the job was, the completion date, and the maximum cost for the job. The claimant’s employment was a one time job. In addition, the claimant was paid an hourly wage. Further, the claimant’s work for the respondent was not an integral part of the respondent’s day to day activities. The respondent was in the business of loading and shipping goods, not in the construction business. [28] The instant case is very similar to Fittin v. Travis LumberCo., (Claim No. E314170)FC Opinion August 29, 1996. In Fittin, the employer hired the claimant to build a fence around his property and they entered into an agreement whereby the claimant would be paid by the hour. The employer furnished the materials, the posthole digger and the nail gun and told the claimant the number of fenceposts he wanted to use. Subsequent to the completion of the fence, the claimant was asked to build a lean to and guardrail on the employer’s property. It was at that time when the claimant sustained an injury. In determining that the claimant was an independent contractor, the Commission noted that even though the employer exercised some control over the final product, he did not assert the right to control the means or method by which the claimant completed the products. The claimant was contracted to produce a product with certain specifications was told what the project was and provided the materials to complete the project. The claimant in Fittin was also paid by the hour and no taxes were withheld from his paycheck. The Commission noted that while the employer was in the business of supplying construction materials, the claimant was in the job of doing construction work and this was not an integral part of the employers business. [29] Therefore, after considering all the factors set forth in theFranklin case, I find that the claimant has failed to prove that he is anything more than an independent contractor and therefore he is not entitled to any workers’ compensation benefits from the respondent employer. Therefore, I must respectfully dissent from the majority opinion. [30] __________________________ MIKE WILSON, Commissioner