Payment of Independent Contractor

Independent Contractor: Payment

MONTANA SUPREME COURT DECISIONS

Mathews v. Liberty Northwest Ins. Corp., 2003 MT 116 The fact that a workers' pay, whether the worker was designated an independent contractor or not, was solely dependent on the number of hours the person worked, suggested employee status.

Walling v. Hardy Construction, 247 Mont. 441, 807 P.2d 1335 (1991) Independent contractor status was indicated where general contractor of school construction project could not "fire" concrete sub-contractor without terminating written contract and incurring liabilities. Fact that contract gave general contractor the right to fire employees of the concrete sub-contractor did not negate independent contractor status where sub-contractor himself could not be "fired" from project without contractual ramifications.

Walling v. Hardy Construction, 247 Mont. 441, 807 P.2d 1335 (1991) Independent contractor status was not destroyed where general contractor contracted with sub-contractor for concrete work on school construction project and contract provided for payment of 23 cents per square foot of completed concrete. The Supreme Court found this method of payment at best a neutral factor, and more indicative of independent contractor status when it was considered that the general contractor paid its employees on an hourly basis and the sub-contractor's receipt of compensation was conditioned on fulfilling contractual requirements.

Walling v. Hardy Construction, 247 Mont. 441, 807 P.2d 1335 (1991) When payment is by quantity or percentage, the method of payment test largely cancels itself out and becomes neutral.

Larry's Post Co. v. Unemployment Ins. Division, 238 Mont. 190, 777 P.2d 325 (1989) Employment status suggested by method of paying woodcutters every two weeks for the number of posts cut, rather than by the job, and by fact that all woodcutters were paid at the same piece rate according to price list attached to contract. Woodcutters did not negotiate the price per post, nor were contracts awarded on basis of competitive bids -- both factors that, if present, would suggest and independent contractorship.

Johnson v. Montana Department of Labor and Industry, 240 Mont. 288, 783 P.2d 1355 (1989) Although pay on an hourly basis is, as a general rule, strong evidence of employment status, carpenters hired by homeowner to perform remodeling work were independent contractors even though they were paid on an hourly basis where testimony indicated worker commonly did large jobs on an hourly basis, this was not unusual in the carpentry industry, and homeowner did not know at outset of work exactly what they wanted done or how much they could afford.

American Agrijusters Co. v. Montana Department of Labor and Industry, 1999 MT 241, 296 Mont. 176 Subsidiary of insurance company that provided claims adjusting services paid crop adjusters by a unit of time where it paid on a per diem basis but pro-rated for partial days by breaking work days down into quarters, which was effectively pay for two-hour increments.

American Agrijusters Co. v. Montana Department of Labor and Industry, 1999 MT 241, 296 Mont. 176 "Payment on a time basis is a strong indication of the status of employment. Payment on a completed project basis is indication of independent contractor status. Payment on a piece-work or commission basis is consistent with either status." See also, Walling v. Hardy Constr. (1991), 247 Mont. 441, 449, quoting Larson.

Solheim v. Tom Davis Ranch, 208 Mont. 265, 677 P.2d 1034 (1984) Payment on a completed project basis is consistent with, though not conclusive of, independent contractor status. Fact that trucker, who had independent business, was paid $28 per hauled ton of hay weighed heavily against his later contention he was an employee.

Sharp v. Hoerner Waldorf Corp., 178 Mont. 419, 584 P.2d 1298 (1978) Paying janitorial worker on a time basis (monthly), rather than on a completed contract basis, was a strong indication of employment status.

MONTANA WORKERS' COMPENSATION DECISIONS

Hallquist v. Independent Contractor Central Unit [06/10/10] 2010 MTWCC 16 Where auto mechanics who were allegedly employees were paid by percentage, the Court concluded the factor was neutral in its determination of whether the mechanics were employees.

Emergency Preparedness Systems v. Scobie [08/17/09] 2009 MTWCC 28 One area that may be considered in evaluating the method of payment is the manner in which the individual treated income in tax filings. Where the employee did not initially report his commissions as wages, but rather reported his commissions on a Schedule C as profit from his own independent business, the Court held that this factor weighed in favor of independent contractor status.

Bowler v. Independent Contractor Central Unit [08/14/08] 2008 MTWCC 42 Payment by the hour is a strong indication of an employer-employee relationship, while payment on a completed-project basis is an indication of independent contractor status. Walling v. Hardy Constr., 247 Mont. 441, 449, 807 P.2d 1335, 1339 (1991). Where there is a dispute concerning the amount of the hourly wage but no dispute that an hourly wage was paid, a strong indication of the employer relationship exists.

Kinney v. UEF [03/05/07] 2007 MTWCC 10 Payment by the hour is a strong indication of an employer-employee relationship, while payment on a completed-project basis is an indication of independent contractor status. Walling v. Hardy Constr., 247 Mont. 441, 449, 807 P.2d 1335, 1339 (1991). Petitioner stated his alleged employer agreed to pay him $10 per hour. His alleged employer testified that she believed Petitioner would bid his work so that he would make approximately $10 per hour for his labor on each contract. On the only day Petitioner worked, no one kept track of his hours. If Petitioner was to be paid on an hourly basis, it seems unlikely that neither party would be able to account for his time.

Colmore v. UEF/Forgey [3/4/04] 2004 MTWCC 22 Payment by the hour is a strong indication of employment rather than independent contractor status. (Note: WCC affirmed in part, and reversed in part, on other grounds in Colmore, et al. v. Uninsured Employers' Fund, 2005 MT 239.)