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Workers’
Compensation Board
OPINION ENTERED: November 18, 2016
CLAIM NO. 201359476
CATHY MCKENZIE PETITIONER
VS. APPEAL FROM HON. JEANIE OWEN MILLER,
ADMINISTRATIVE LAW JUDGE
A. ARNOLD WORLD RELOCATION
HON. JEANIE OWEN MILLER,
ADMINISTRATIVE LAW JUDGE RESPONDENTS
OPINION
AFFIRMING
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BEFORE: ALVEY, Chairman, STIVERS and RECHTER, Members.
RECHTER,
Member. Cathy McKenzie
(“McKenzie”) appeals from the May 19, 2016 Opinion and Order and the June 24,
2016 Order on Petition for Reconsideration rendered by Hon. Jeanie Owen Miller,
Administrative Law Judge (“ALJ”). The
ALJ determined McKenzie was not an employee of A. Arnold World Relocation (“A.
Arnold”) and dismissed her claim. On
appeal, McKenzie argues the ALJ erred by concluding an employer/employee
relationship did not exist. We affirm.
McKenzie testified by deposition on March 24, 2015, and at
the hearing held March 30, 2016. She has
a high school diploma and a commercial driver’s license. Her entire work history since 1979 is as a
team driver with her husband.
Testimony was elicited concerning McKenzie’s relationship
with A. Arnold. She had previously known
Steve Yacko (“Yacko”), Vice
President of Fleet Development and Interstate Operations for A. Arnold, when
she drove for Beacon’s Movers, a prior employer. Yacko later
contacted McKenzie about driving for A. Arnold.
She agreed and began driving for A. Arnold on June 19, 2013 using a
truck she and her husband owned.
McKenzie and her husband were paid a percentage of each
moving job, mileage, and weight. A dispatcher
would contact her regarding available jobs and she would decide which jobs to
accept. She could decline any route and
could terminate the relationship at any time.
McKenzie acknowledged she believed she was an independent
contractor. She also understood it was
her responsibility to obtain workers’ compensation insurance for herself and
any workers she hired. A. Arnold had no
specific rules regarding when she drove other than to follow DOT rules.
McKenzie injured her leg on June 25, 2013 when a crate fell
on her. She last worked on a job through
A. Arnold in September, 2013. She and
her husband sold their truck in September, 2013.
Yacko testified by deposition on
November 12, 2015. He indicated McKenzie
was an owner/operator. Yacko authenticated copies of the application and
independent contractor agreements between A. Arnold and McKenzie, which were
attached as exhibits to his deposition. Yacko explained that all of A. Arnold’s drivers are
independent contractors who receive a Form 1099 indicating the amount of their
commissions. He acknowledged those who
drive for A. Arnold are not allowed to drive for other companies, and the
company provides a trailer bearing its logo which was used by McKenzie. Though A. Arnold provides log books, the
owner/operators pay for gas, truck maintenance, moving crews, lodging and any
other expenses. The independent
contractor agreement requires that the owner/operator obtain workers’
compensation insurance though they are invited to obtain workers’ compensation
through A. Arnold’s policy with Vanliner if they pay
through a deduction. He was not aware of
any other independent contractors for A. Arnold who obtained coverage through
Zurich. Yacko
did not know why Zurich made workers’ compensation payments to McKenzie.
After explaining the requirements of Ratliff v. Redmon, 396 S.W.2d (Ky. 1965) and Uninsured
Employers’ Fund v. Garland, 805 S.W.2d 116 (Ky. 1991), the ALJ found as
follows:
In applying the Redmon factors as
discussed in Chambers, supra,
and Garland, supra, to the
present case, the undersigned is convinced Plaintiff was an independent
contractor and, thus, not covered under the provisions of KRS 342 as an
employee. The Redmon
factors include:
(1) The nature of the work as related to
the business general[ly] carried on by the alleged
employer.
Here, we have a motor carrier who is required to follow a litany of
federal regulations (both as it relates to the Plaintiff here, but also as to
the Department of Transportation, the consuming public etc.) The nature of the business is well defined in
industry practice and administrative rules and regulation. These entities are seen as separate legal
entities with inter-connected activities but who perform separate and distinct
portions of a contract with a consumer.
(2) The extent of control exercised by the
alleged employer.
A. Arnold hired plaintiff and her husband to work as an owner/operator,
not employees. Although the plaintiff
points to a “job application” it is clear she and her husband worked as a
partnership and she understood she was an owner/operator (of their tractor) and
considered herself an independent contractor.
Significantly, A. Arnold could not require the Plaintiff to accept any
particular job, and Plaintiff testified she and her husband would make a
decision on whether to take the particular job offered to them based on a
variety of factors. Additionally, the
plaintiff, along with her husband, would decide whether to hire extra labor and
these laborers were paid by the plaintiff and her husband. The plaintiff paid for fuel, maintenance and
repairs, and otherwise bore all costs of doing business. A. Arnold did not have any control over
Plaintiff’s route, schedule or method of the completion of any particular
job. There was no supervisor to whom
Plaintiff reported. A dispatcher was
contacted twice a day – in order to provide the Defendant an “update” on the
progress of the trip. The Defendant
points to page 3 of the Independent Contractor Agreement that notes: “The
Contractor shall have absolute discretion with respect to the manner and method
of performing services pursuant to the contract.” The Plaintiff acknowledged she and her
husband would decide whether to hire movers to load and unload the truck, and
could determine the number of movers to hire.
Plaintiff and her husband had autonomy to organize their work in the
manner that best suited them, and this included the decision to control how
much money or “profit” was made on the specific job relative to the expenses
they incurred. This certainly was not an
itemized or set wage, they were not paid by the hour,
nor were their material and labor set by the defendant.
It is noted and has been considered that A Arnold did provide a trailer,
decal, orientation, safety training, and some personal equipment. But in the test of balancing the elements of
control versus the requirements of Federal transportation regulations etc., the
undersigned see[sic] these elements and actions as more akin to a broker or
general contractor than an employer.
The Defendant/employer argues Federal regulations control certain
aspects of the relationship between an owner/operator and carrier. Under 49 CFR 376.12, the carrier must take
steps to ensure that its drivers have tags, decals, and that the carrier
assumes some degree of responsibility for the driver’s operation of that
equipment. However, 49 CFR 376.12(c)(4) specifies that nothing in those provisions is intended
to affect whether the driver is an independent contractor or employee of the
authorized carrier. 49 CFR 376.12
required A Arnold to take certain steps, such as providing tags, decals, etc.
for claimant’s truck, but that same regulation also prohibits any inference
that the carrier’s compliance establishes an employment relationship.
The Defendant also persuasively points to a Sixth Circuit case which
states in part: “It is common practice for motor carriers who operate under the
authority of the ICC, i.e. ‘authorized carriers,’ to lease equipment from
independent contractors who are not regulated by the ICC.” Prestige Casualty
Company v. Michigan Mutual Insurance Company, 99 F.3d 1340, 1342 (6th
Cir. 1996). These federal
regulations and cases illustrate that the plaintiff cannot make a compelling
argument that A Arnold exercised control over her work.
(3) The professional skill of the alleged
employee.
As previously discussed, Plaintiff was an experienced driver with
specific license to drive the tractor that she and her husband owned. She and her husband had been contractors for
three different carriers in the calendar year before they contracted with the
Defendant in June. They had been driving
for carriers who moved individuals and businesses since 1979. Indeed, it was her experience, along with her
husband’s, that prompted Steve Yacko to contact them
regarding contracting with the Defendant.
This is not a job or business one can enter or perform without specific
knowledge, skills and license/certifications (ACL)[sic]. This issue migrates [sic] in favor of the
independent contractor status of the plaintiff.
(4) The true intent of the parties.
It is this fourth and final factor that weighs most heavily in favor of
an independent contractor status. The
Plaintiff specifically acknowledges that she considered herself an independent
contractor. She testified she applied as
a[n] “owner/operator” – she had always considered herself and her husband as
independent contractors. It is obvious
that the Defendant hired her as an independent contractor – as they had
consistently done with all of their drivers.
Mr. Yakco’s [sic] testimony makes the intent
of the Defendant very clear. The only
deviation to the independent contractor label came from the Plaintiff when she
described her attorney as noting that “they’ve got me down as an employee”. (Hearing Transcript, p. 36).
It is important to note that no evidence was submitted by either party
that listed Plaintiff as an employee (for insurance or any other purpose). Plaintiff testified that every company with
whom she contracted (including the Defendant) required her to have her own
workers’ compensation insurance – to not only cover herself and her husband –
but also any of the laborers that they hired to assist them in the move. (Id., p. 36).
The undersigned has considered the extensive evidence in this case
particularly related to the question of whether Plaintiff was [an] employee of
the Defendant. The undersigned finds
that Plaintiff was not an employee of the Defendant, A Arnold World Relocation,
at the time of her injury on June 25, 2013.
Accordingly, the provisions of KRS 342. et. seq. do not apply
to the Plaintiff in this situation and the claim for benefits pursuant to KRS
342. et. seq. must be
dismissed. The remaining contested
issues will not be addressed upon this finding as they are now moot.
McKenzie’s petition for reconsideration, raising the same
arguments she makes on appeal, was denied.
The ALJ indicated that, in analyzing the control factor, she had
considered the fact McKenzie was not permitted to drive for other
companies. The ALJ also indicated other
factors as outlined in the opinion weighed more heavily in favor of an independent
contractor relationship. The ALJ noted
the issue of independent contractor versus employee was preserved at the
benefit review conference and remained as a contested issue at the formal
hearing. Finally, the ALJ noted the fact
that McKenzie was voluntarily paid and/or covered by A. Arnold’s insurance
company was not a significant factor in determining whether she was an
independent contractor or an employee.
The ALJ reiterated that no evidence was submitted by either party
indicating McKenzie was listed as an employee for insurance or any other
purpose.
On appeal, McKenzie argues the ALJ erred by concluding an
employer/employee relationship did not exist.
She argues the ALJ failed to give adequate weight to certain facts, and
failed to apply certain facts to the Ratliff v. Redmon
factors. First, McKenzie contends the
nature of the business is the same as the job she performed. A. Arnold is a moving company and she worked
as a mover. Second, A. Arnold exercised
a great deal of control by not permitting its drivers to drive for other
companies. Third, she has no specialized
skill that would separate her skill level from that of any other owner/ operator. Finally, she contends the fact that A.
Arnold’s carrier covered her for two years after the injury is evidence of the
employer’s true intent and compels a finding she was an employee. Additionally, she contends her acceptance of
the coverage evinces her true intent.
She asserts that by submitting the claim to its carrier, A. Arnold
ratified the employer/ employee relationship.
As the claimant in a workers’ compensation proceeding, McKenzie had the burden of proving each of the essential
elements of her cause of action including
the existence of an employee-employer relationship. Snawder
v. Stice, 576 S.W.2d 276 (Ky. App. 1979).
Because she was unsuccessful in that burden, the question on appeal is whether
the evidence compels a different result. Wolf Creek
Collieries v. Crum, 673 S.W.2d 735 (Ky. App. 1984). “Compelling evidence” is
defined as evidence that is so overwhelming, no reasonable person could reach the same conclusion as the
ALJ. REO Mechanical v. Barnes, 691 S.W.2d 224 (Ky. App. 1985)
superseded by statute on other grounds as stated in Haddock v.
Hopkinsville Coating Corp., 62 S.W.3d 387 (Ky. 2001).
A proper legal analysis of
the employee/ independent contractor question involves consideration of "at least" the four factors set
forth in Chambers. UEF v. Garland, id. at
119. There, the Supreme Court
stated:
A reviewing court must give
great deference to the conclusions of the fact-finder on factual questions if
supported by substantial evidence and the opposite result is not
compelled. When considering questions of
law, or mixed questions of law and fact, the reviewing court has greater
latitude to determine whether the findings below were sustained by evidence of
probative value.
. . . .
The proper legal analysis
consists of several tests from Ratliff and requires consideration of at
least four predominant factors: (1) the nature of
the work as related to the business generally carried on by the alleged
employer; (2) the extent of control exercised by the alleged employer; (3) the
professional skill of the alleged employee; and (4) the true intent of the
parties.
Id. at 117, 118-119; See also UEF
v. Poynter, 829 S.W.2d 430 at 431.
McKenzie’s arguments
are essentially a request for this Board to reweigh the evidence and direct a
finding in her favor, which we are not permitted to do. Whittaker v. Rowland, 998 S.W.2d 479 (Ky. 1999). The ALJ identified the appropriate
factors set forth in Ratliff v. Redmon, and
the four dominant factors set forth in Uninsured Employers’ Fund v. Garland. The
ALJ addressed the factors set forth above, and determined McKenzie was an
independent contractor.
McKenzie has identified evidence supporting a different conclusion, however there was substantial evidence presented supporting the ALJ’s determination. The ALJ found persuasive the fact McKenzie entered into a written independent contractor agreement, outlining her and A. Arnold’s responsibilities. This agreement clearly indicates the parties’ intent was to create an independent contractor relationship. McKenzie acknowledged she believed she was an independent contractor and it had been her practice to enter into an independent contractor relationship with other moving companies in the past. Based upon a review of this agreement, along with the testimony from McKenzie and Yacko, it was reasonable for the ALJ to conclude McKenzie was an independent contractor rather than an employee.
Assuming arguendo that the factors of the skill
involved and the nature of the work as related to the business generally
carried on by A. Arnold weighed in favor of McKenzie, the ALJ could still find
that other factors were more significant.
Here, the ALJ explicitly stated she found the factor of the true intent
of the parties to be the most probative.
The ALJ also concluded the control factor weighed in favor of an
independent contractor relationship. The
ALJ considered the entirety of the evidence and acted within her discretion to
determine which evidence to rely upon.
It cannot be said the ALJ’s conclusions are so unreasonable as to compel
a different result. Ira
A. Watson Department Store v. Hamilton, 34 S.W.3d 48 (Ky. 2000).
Finally, McKenzie highlights the fact A. Arnold’s carrier
initially paid temporary total disability and medical benefits during the
pendency of this claim. She argues the
company essentially ratified her status as an employee through these payments,
and should not have been permitted to later contest the employer/employee
relationship. We disagree. No evidence
established the reason benefits were extended to McKenzie by Zurich. Yacko testified he
did not know why Zurich extended coverage and no other testimony was sought as
to why benefits were paid. The ALJ noted
no evidence submitted by either party listed McKenzie as an employee for
insurance or any other purpose. Instead,
McKenzie appears to argue the relationship should be implied. The ALJ has the discretion
to determine all reasonable inferences to be drawn from the evidence. Miller v. East Kentucky Beverage/Pepsico,
Inc., 951 S.W.2d 329 (Ky. 1997); Jackson v. General Refractories Co.,
581 S.W.2d (Ky. 1979). We are not
persuaded that the payment of benefits, even if by mistake, amounts to an
acceptance of the entire claim as a matter of law.
Because substantial evidence supports the ALJ’s
determination that McKenzie was not an employee, we may not disturb the ALJ’s
ruling. Accordingly, the May 19, 2016
Opinion and Order and the June 24, 2016 Order on Petition for Reconsideration
rendered by Hon. Jeanie Owen Miller, Administrative Law Judge, are hereby AFFIRMED.
ALL CONCUR.
COUNSEL
FOR PETITIONER:
HON NICHOLAS MURPHY
401 W AMIN ST #1910
LOUISVILLE, KY 40202
COUNSEL
FOR RESPONDENT:
HON DOUGLAS A U’SELLIS
600 E MAIN ST #100
LOUISVILLE, KY 40202
ADMINISTRATIVE
LAW JUDGE:
HON JEANIE OWEN MILLER
PREVENTION PARK
657 CHAMBERLIN AVENUE
FRANKFORT, KY 40601
