Independent Contractor: Generally

MONTANA SUPREME COURT DECISIONS

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.

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.

Mathews v. Liberty Northwest Ins. Corp., 2003 MT 116 The public policy underlying the Workers' Compensation Act generally, and as set out in section 39-71-105, MCA (1999), is violated when an employer offers to pay a worker a higher wage on the condition that the worker present an independent contractor exemption at the time of hire.

Northwest Publishing v. Montana Department of Labor and Industry, 256 Mont. 360, 846 P.2d 1030 (1993) (District Court Case) Traveling salespeople under contract with vacation and travel guides publisher were employees, not independent contractors, where they were not engaged in an independently established trade, occupation, profession or business and thus did not meet the "B" portion of independent contractor test. Because the conjunctive "and" is used in the statutory definition of "independent contractor," the absence of either the "A" or "B" part of the test results in a conclusion of employment.

Larry's Post Co. v. Unemployment Ins. Division, 238 Mont. 190, 777 P.2d 325 (1989) Post yard engaged in business of procuring, cutting, pointing, curing, treating and selling fence posts, poles, and rails was employer of woodcutters where it had contracts with them requiring performance according to specifications, could specify and change the size of posts to be cut, monitored work area to assure that stipulations were followed, had the right to withhold pay to insure compliance, had the right to terminate at will, and paid by piece rate system that was not negotiated by the parties, but dictated by employer.

Johnson v. Montana Department of Labor and Industry, 240 Mont. 288, 783 P.2d 1355 (1989) No employment relationship existed where homeowners hired carpenters to perform remodeling work. "A" portion of AB test was met where homeowners controlled the result of the work, but not the methods the carpenters used, carpenters used their own tools, and right to fire was not clear. Although carpenters were paid on an hourly basis, testimony indicated workers commonly did large jobs on an hourly basis, this was not unusual in the carpentry industry, and homeowners did not know at outset of work exactly what they wanted done or how much they could afford. "B" portion of AB test of independent contractor status was met where worker was in carpentry/construction business and home-owner who hired him for remodeling work was a food broker who sells groceries for a living.

American Agrijusters Co. v. Montana Department of Labor and Industry, 1999 MT 241, 296 Mont. 176 Crop insurance adjusters employed by subsidiary of insurance company that services loss claims were employees, not independent contractors, where company retained right of control, paid for two hour increments of work, offered lease of minimal equipment to workers, and retained right to terminate relationship with ten days notice.

American Agrijusters Co. v. Montana Department of Labor and Industry, 1999 MT 241, 296 Mont. 176 The absence of either the "A" or the "B" portion of the independent contractor test set out in section 39-51-201(14), MCA (1995), results in a conclusion of employment where the statute utilizes the conjunction "and" between the two portions of the test.

American Agrijusters Co. v. Montana Department of Labor and Industry, 1999 MT 241, 296 Mont. 176 The strength of evidence under only one factor of the "A" portion of the independent contractor test may be sufficient to establish employee status. The Court cites Larson's treatise: "For the most part, any single factor is not merely indicative of, but, in practice, virtually proof of, the employment relation; while, in the opposite direction, contrary evidence is as to any one factor at best only mildly persuasive evidence of contractorship, and sometimes of almost no such force at all."

Walling v. Hardy Construction, 247 Mont. 441, 807 P.2d 1335 (1991) Section 39-71-405(2), MCA (1983), relating to liability of a contractor toward uninsured employees of a sub-contractor, does not require the contractor to provide coverage to an actual sub-contractor who is sufficiently independent to carry its own workers' compensation insurance, even where the sub-contractor chooses not to cover himself under the workers' compensation policy he purchased to cover his employees. The statute is read to require the contractor to provide benefits to a subcontractor only if the subcontractor was not in fact an independent contractor under Montana law.

Walling v. Hardy Construction, 247 Mont. 441, 807 P.2d 1335 (1991) Independent contractor status existed where general contractor had written contract with concrete sub-contractor, who supplied his own equipment and employees and controlled his own employees. Independent contractor status was not destroyed where general contractor reserved and exercised right to control the end results of the job and the sequence of work, a condition necessary to ensure the end result on a large project involving numerous employees.

Schrock v. Evans Transfer and Storage, 225 Mont. 348, 732 P.2d 848 (1987) The mere fact that a contract between a trucking company and a driver designates the driver as an independent contractor is not dispositive of the worker's status. The driver must be an independent contractor in fact.

Solheim v. Tom Davis Ranch, 208 Mont. 265, 677 P.2d 1034 (1984) Trucker with his own independent business was independent contractor where he worked for people other than rancher at issue, was free to load and unload as and when wished and to choose own route, speed, time of travel, and driver, was paid per ton of hauled hay, owned his own truck, and could not be replaced while performing a job without liability to the rancher.

Sharp v. Hoerner Waldorf Corp., 178 Mont. 419, 584 P.2d 1298 (1978) Section 92-438.1, RCM (1947), establishes a two-part test that must be met before an individual is classified as an independent contractor. First, he must be free from the control of his employer, under his contract and in fact, in the performance of his services. Second, he must be engaged in an independently established occupation.

Sharp v. Hoerner Waldorf Corp., 178 Mont. 419, 584 P.2d 1298 (1978) Worker providing janitorial services was employee, not independent contractor, where (1) the employer gave her sometimes changing directions over what to clean, what not to clean, where to clean, and sometimes required her to perform duties other than cleaning, (2) she was paid on a time basis (monthly) rather than on a completed contract basis, (3) either party had the right to terminate the relationship at any time without liability, and (4) the company bought cleaning supplies for claimant in bulk, though she did buy supplies from time to time and obtain reimbursement.

WORKERS' COMPENSATION COURT DECISIONS

Colmore v. UEF/Forgey [3/4/04] 2004 MTWCC 22 Independent contractor status is determined under the A-B test. Under the A part, the claimant must be free from the control of the person or entity hiring him or her. Under the B part, the claimant must be engaged in an independent business. (Note: WCC affirmed in part, and reversed in part, on other grounds in Colmore, et al. v. Uninsured Employers' Fund, 2005 MT 239.)

Colmore v. UEF/Forgey [3/4/04] 2004 MTWCC 22 Where a claimant is hired to do work on an hourly basis as designated on an ongoing basis by the hiring party, and the most significant piece of equipment used in his work is provided by the hiring party, the claimant is an employee, not an independent contractor. (Note: WCC affirmed in part, and reversed in part, on other grounds in Colmore, et al. v. Uninsured Employers' Fund, 2005 MT 239.)

Mortensen v. ICCU [7/12/01] 2001 MTWCC 38 Under unemployment insurance laws, employment status is determined pursuant to the AB test. Part A of the test considers the right of control of the employing party over the hired party. Part B considers whether the hired party is engaged in an independently established business. § 39-51-201(15).

Mortensen v. ICC [7/14/00] 2000 MTWCC 43 Jurisdiction of Workers’ Compensation Court to determine employee vs. independent contractor status is limited to disputes under the Workers’ Compensation and Unemployment Insurance Acts. It does not extend to wage and hour claims.

State Fund v. Montana Sign, Skinner Enterprises, Lifestyle Homes and Andy Skinner [4/4/00] 2000 MTWCC 17 Purported employers filed summary judgment arguing WC claimant was an independent contractor. SJ denied where answer to petition alleges claimant was employee of one of the purported employer companies. Moreover, facts not sufficient to establish uncontroverted IC status where evidence does not tie claimant to IC Exemption tendered and purported agreement for claimant to work as IC is not conclusive under SC precedent. See section 39-71-120, MCA; Schrock v. Evans Transfer and Storage, 225 Mont. 348, 351, 7332 P.2d 848, 850 (1987).

Schimmel v. UEF [4/4/00] 2000 MTWCC 19 Washington court's determination in contract action that claimant contracted to work as an independent contractor is not controlling of IC issue raised in Montana workers' compensation proceeding. Parties cannot evade the substantive requirements of Montana WC law by their contracts. Contractual designation of claimant as an IC is neither conclusive nor entitled to deference.

Jensen v. State Fund [4/2/99] 1999 MTWCC 25 Where insurer has conceded claimant was an employee and not an independent contractor, employer cannot dispute that concession in workers' compensation proceeding.

Grywusiewicz v. State Fund [9/24/98] 1998 MTWCC 67 Car salesman who was also performing carpentry work to remodel a new building for the employer was not an independent contractor. He did not meet the requirement of section 39-71-120, MCA (1997) that he be engaged in an independent trade, occupation or business. Moreover, at the time of the accident, his remodeling carpentry work was interlaced with his work as a salesman and was subject to the employer's direction and control.

Z Works, Inc. v. Barnaby and UEF [3/3/98] 1998 MTWCC 19 Summary judgment granted to UEF establishing liability of uninsured employer where undisputed affidavit proves painter/bookkeeper had not been granted an independent contractor exemption under section 39-71-120, MCA (1995). While the requirement of an exemption may be a trap for employers unschooled in the technicalities of the 1995 legislation, which added the exemption requirement, the Court must apply the law as written. Even assuming claimant told the employer not to purchase workers' compensation insurance, the advice of a bookkeeper or accountant, or even an attorney, cannot relieve the employer from its statutory obligation.

Daenzer v. State Fund/Curtis Bartell [1/29/98] 1998 MTWCC 4 As the logger claimant's employer, petitioner was required to maintain workers' compensation insurance, §39-71-401, MCA (1993), and in failing to do so is personally liable for benefits, §39-71-515(4), MCA (1993). As insurer for the logging company with which petitioner had contracted, State Fund was secondarily liable under section 39-71-405, MCA (1993), but is entitled to indemnification from petitioner.

Thayer v. UEF [12/08/94] 1994 MTWCC 110 Although employer sought to minimize his control over salvage operation workers, the Court was convinced the employer retained the right of control over workers, making them employees for purposes of the Workers’ Compensation Act. The decedent’s designation as an independent contractor by the employer is not conclusive as to his status, nor is the fact that he owned an independent scrap business. Though this satisfied the independently established trade criterion of part (b) of section 39-71-120(1), MCA (1991) for independent contractor status, part (a) was not satisfied where the employer retained control over decedent’s work, paid him by the hour and then piece-meal, and furnished necessary equipment.