39-71-401, MCA

39-71-401, MCA

MONTANA SUPREME COURT DECISIONS

Big Sky Colony, Inc. v. Dep't of Labor & Industry [12/31/12] 2012 MT 320 The workers’ compensation system generally applies to all employers engaged in commercial activities. The inclusion of religious organizations that engage in commercial activities within this system does not single out religious beliefs, nor does their inclusion regulate or prohibit any conduct because it is undertaken for religious reasons.

[1999] Colmore, et al. v. Uninsured Employers' Fund, 2005 MT 239 The Workers’ Compensation Court properly determined that decedent, who performed fencing repair work for a ranch owner, was not a casual employee where he was hired to complete a task in furtherance of an existing business. It is not significant that the employer was engaged in other businesses, or that decedent’s employment was only temporary. It is important that the decedent was employed to work in the course of appellant’s agricultural business (for which he claimed $140,983 in deductions on his federal income tax) and that the decedent’s only occupation at the time was to repair and replace fences for appellant.

[1999] Wild v. Montana State Compensation Fund, 2003 MT 115 A worker may be an independent contractor at the time the Department of Labor approves an application for the IC exemption, but change status as a factual matter later. An employer may not ignore a later reality simply because the person was once issued an IC exemption.

[1999] Wild v. Montana State Compensation Fund, 2003 MT 115; Mathews v. Liberty Northwest Ins. Corp., 2003 MT 116 The Montana Supreme Court applies a two-step process in determining whether an individual qualifies for independent contractor status. First, the Court looks to the "control factors", that is: (1) direct evidence of right or exercise of control; (2) method of payment; (3) furnishing of equipment; and (4) right to fire. Second, the Court looks to whether the individual is engaged in an independently established trade, occupation, profession, or business. Unless both parts of the test are satisfied by a convincing accumulation of undisputed evidence, the worker is an employee and not an IC.

[1999] Wild v. Montana State Compensation Fund, 2003 MT 115; Mathews v. Liberty Northwest Ins. Corp., 2003 MT 116 Section 39-71-401(3), MCA (1999), does not conclusively preclude any factual inquiry into whether an employee/employer relationship exists once the worker has been issued an exemption under the section.

[1999] Wild v. Montana State Compensation Fund, 2003 MT 115; Mathews v. Liberty Northwest Ins. Corp., 2003 MT 116 A worker may be an independent contractor at the time the Department of Labor approves an application for the IC exemption, but change status as a factual matter later. An employer may not ignore a later reality simply because the person was once issued an IC exemption.

[1999] Wild v. Montana State Compensation Fund, 2003 MT 115; Mathews v. Liberty Northwest Ins. Corp., 2003 MT 116 Although section 39-71-401(3), MCA (1999), provides that an independent contractor exemption approved by the Department of Labor and Industry is conclusive as to IC status and precludes the applicant from obtaining workers compensation benefits, an employer has the obligation to make an initial good faith inquiry to determine whether the worker is an independent contractor in fact, as opposed to merely in name. An employer who fails to inquire whether the worker in fact meets the control and independently established business test cannot rely on the exemption.

[1999] Gonzales v. Walchuk and Ekblad, 2002 MT 262 Although the section plainly states that an application for independent contractor status approved by the DOL is conclusive as to independent contractor status, the presumption presupposes than an applicant knowingly and voluntarily completed and submitted the application to the DOL. Where appellant, an immigrant from Mexico with limited English skills, testified at deposition that her alleged employer told her the IC form was "not important" and only necessary for "tax purposes," and that she did not understand what it was, she raised a genuine issue of material fact as to whether the certificate was obtained by fraud, which would nullify the presumption. In a case alleging that plaintiff's employers failed to provide her with a safe workplace and workers' compensation insurance, the district court erred by granting summary judgment for defendants on basis of the IC presumption.

[1993] Total Mechanical Heating & Air Condition, et al. v. ERD/UEF, 2002 MT 55 It is the responsibility of the statutory employer (see section 39-71-117, MCA) and no one else, to provide workers' compensation insurance.

WORKERS' COMPENSATION COURT DECISIONS

Jensen v. Uninsured Employers' Fund [02/13/14] 2014 MTWCC 5 The owner of the house where Petitioner was injured was exempt from the WCA pursuant to the casual employment provision of § 39-71-401(2)(b), MCA, since he derived no tax benefits from owning the property and netted only $6,655 in rent over fifteen months and therefore, had no profit motive in owning the house. The scant attention he paid to the property from afar did not rise to the level of the “substantial time and labor for management and operation” test so as to constitute a rental business as required by Weidow v. Uninsured Employers’ Fund.

[2001] Door v. State Fund & UEF [5/5/04] 2004 MTWCC 42 Business with at least fifty-one percent Native American ownership is exempt from workers' compensation insurance coverage requirements only if its operations are exclusively on a reservation. The exemption is inapplicable to a trucking firm whose trucks utilized roads outside the reservation to deliver goods even though the goods originated and ended within the reservation. § 39-71-401(1)(m), MCA (2001).

[2001] Door v. State Fund & UEF [5/5/04] 2004 MTWCC 42 Business with fifty-one percent Native American ownership is not exempt from workers' compensation insurance coverage requirements where an integral part of its business occurs outside the reservation even though it hires the off-reservation work to be performed by an independent contractor. A cattle ranching operation's trucking of cows from upper to lower pastures is an integral part of the business even though the trucking was done by an independent contractor. § 39-71-401(1)(m), MCA (2001).

[1999] Colmore v. UEF/Forgey [3/4/04] 2004 MTWCC 22 Casual employees are not subject to workers’ compensation insurance or liability provisions. § 39-71-401(2)(b), MCA (1999). (Note: WCC affirmed on this ground in Colmore, et al. v. Uninsured Employers' Fund, 2005 MT 239.)

[1999] Colmore v. UEF/Forgey [3/4/04] 2004 MTWCC 22 Where the party hiring another to do fencing on a ranch for which the hiring party deducts costs of the ranch operations as a business expense on his federal income tax return; where the hiring party maintains significant farm equipment on the ranch; and where the hiring party plans to develop for agricultural purposes, the party employed to do fencing is not a casual employee under section 39-71-401(2)(b), MCA (1999). § 39-71-116(7), MCA (1999). (Note: WCC affirmed on this ground in Colmore, et al. v. Uninsured Employers' Fund, 2005 MT 239.)

[1993] Dahl v. UEF [5/2/00] 2000 MTWCC 25.On remand from the Supreme Court, which held that companies receiving workers from temporary employment agencies must maintain their own WC coverage and cannot rely on their temporary agency to provide coverage, the WCC held that section 39-71-116(29), MCA (1993), which defines "temporary worker," was not unconstitutionally vague. On its face, the statute distinguishes between temporary and permanent employees and limits the use of temporary employees to emergency situations or to fill in for permanent employees on leave. This definition is comprehensible as applied to employees at issue.

[1995] Synthetic Technologies Corp. and Weatherguard Corp. v. ERD/UEF [9/1/99] 1999 MTWCC 55 WCC affirmed DOL decision that corporations employing "shareholders" were uninsured and liable for penalties. Exemption under section 39-71-401, MCA (1995) for 20% shareholders did not apply because "shareholders" did not in fact own stock where they could be divested of ownership by others without compensation and one person had obtained "irrevocable proxy" for all shares.

[1993] Bouldin v. UEF/Larry Hurt or Roger Lucas Construction [10/22/97] 1997 MTWCC 58 Under section 39-71-401(3), MCA (1995), the independent contractor exemption (based on an application approved by the Department) is conclusive and precludes petitioner from obtaining benefits. Where the parties stipulated an IC exemption was in effect governing the work of a carpenter, and that the parties hiring the petitioner checked on the existence of the exemption and relied on the exemption, the WCC rejects petitioner's argument that the Court must separately determine the existence of criteria set out in section 39-71-120, MCA (1995). While section 39-71-120, MCA (1995), lays out the substantive criteria for making the independent contractor determination, section 39-71-401(3), MCA, provides that the Department of Labor is the forum for making that determination and once the determination is made, i.e., the exemption is issued, that determination is conclusive.

[1991] Hammer v. UEF [5/31/96] 1996 MTWCC 40 Claimant temporarily living with alleged employer per terms of release on her own recognizance from criminal charges was employee within WCA where she worked for board and room. She was not exempt from the WCA under section 39-71-401(c), MCA (1991) as a dependent member of the employer's family for whom an exemption may be claimed by the employer under the federal Internal Revenue Code because she was not his stepdaughter and did not live with him for an entire year. She was, however, exempt from the WCA under a provision relating to work for "aid and sustenance only." [Note: this decision was affirmed by the Montana Supreme Court in Hammer v. Uninsured Employers' Fund, 280 Mont. 371, 929 P.2d 883 (1996).]