Hoste v. Shanty Creek Management, Inc., Docket No. 185014

• Citation: 561 N.W.2d 106,221 Mich.App. 144
• Decision Date: 21 January 1997
• Docket Number: Docket No. 185014
• Parties: Lawrence J. HOSTE, Plaintiff-Appellant, v. SHANTY CREEK MANAGEMENT, INC., Hartford Insurance Group, and Second Injury Fund, Defendants-Appellees.
• Court: Court of Appeal of Michigan (US)

Page 106

561 N.W.2d 106

221 Mich.App. 144

Lawrence J. HOSTE, Plaintiff-Appellant, v. SHANTY CREEK MANAGEMENT, INC., Hartford Insurance Group, and Second Injury Fund, Defendants-Appellees.

Docket No. 185014.

Court of Appeals of Michigan.

Submitted Sept. 18, 1996, at Detroit.

Decided Jan. 21, 1997, at 9:05 a.m.

Released for Publication April 9, 1997.

Moceri, Hoste and Bejin, P.C. by Douglas W. Hoste (Daryl Royal, Dearborn, of counsel), Mt. Clemens, for plaintiff-appellant.

Cox, Hodgman & Giarmarco by Marsha M. Woods, Troy, for Shanty Creek Management, Inc., and Hartford Insurance Group.

Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, and Angelita Espino, Assistant Attorney General, for the Second Injury Fund.

Before WAHLS, P.J., and FITZGERALD and L.P. BORRELLO ^*, JJ.

WAHLS, Presiding Judge.

Plaintiff appeals by leave granted the opinion and order of the Worker's Compensation Appellate Commission reversing the magistrate's award of disability benefits. We remand this matter to the commission to reinstate the magistrate's award.

On January 27, 1990, Schuss Mountain hosted a Plymouth Challenge Ski Race. Plaintiff, a member of the National Ski Patrol, was asked by the ski school director for Schuss Mountain to forerun the course, establishing the route for the competitors and assuring that the course was safe. Forerunning the course required plaintiff to ski aggressively. As plaintiff approached the bottom of the hill, he misjudged a gate and fell. He sustained a fracture of the C7 vertebra, causing paralysis from which he is unlikely to recover.

After defendants stopped their voluntary payment of worker's compensation benefits, plaintiff filed an application for hearing or mediation, and extensive hearings were conducted before the magistrate. The Second Injury Fund was added as a defendant on the basis of plaintiff's other employment as an electrician with Hoste Brothers, Inc. The central questions litigated were whether plaintiff was an employee of Shanty Creek Management, Inc., and whether his primary employment as an electrician constituted dual employment for which he should be compensated under § 372 of the Worker's Disability Compensation Act, M.C.L. § 418.372; M.S.A. § 17.237(372).

The magistrate concluded that although plaintiff did not receive any wages from Shanty Creek, he received benefits in the form of a ski pass and discounts on food and beverages that did constitute income. Compensation does not have to be in the form of wages to entitle an employee to disability benefits. Plaintiff did qualify as an employee of Shanty Creek under § 161(1)(b) of the WDCA, M.C.L. § 418.161(1)(b); M.S.A. § 17.237(161)(1)(b) because he rendered services to it. The magistrate found it compelling that Shanty Creek hired a professional to perform ski patrol duties during the week when National Ski Patrol members were unavailable. The magistrate concluded that plaintiff was an employee subject to the act and that his wages from Shanty Creek were $89 a week. Plaintiff's wages from Hoste Brothers were $966 a week. Plaintiff was totally and permanently disabled, and the resulting benefit was $427 a week, with the Second Injury Fund liable for 91.6 percent of the award.

Both Shanty Creek and the Second Injury Fund appealed to the Worker's Compensation Appellate Commission. The commission reversed the magistrate's award, characterizing the relationship between plaintiff and the ski resort as one of accommodation. It concluded that plaintiff was no different than any other skier using a complimentary lift ticket. Relying on this Court's opinion in Amerisure Ins. Cos. v. Time Auto Transportation, Inc., 196 Mich.App. 569, 493 N.W.2d 482 (1992), the commission applied the common-law economic reality test to determine plaintiff's employment status. The commission found that none of the eight principles identified in McKissic v. Bodine, 42 Mich.App. 203, 201 N.W.2d 333 (1972), supported a conclusion that plaintiff was an employee.

This Court must affirm the findings of fact of the commission if they are supported by any competent evidence. Holden v. Ford Motor Co., 439 Mich. 257, 267-269, 484 N.W.2d 227 (1992). A decision of the commission is subject to reversal if the commission operated within the wrong legal framework or if the decision was based on erroneous legal reasoning. O'Connor v. Binney Auto Parts, 203 Mich.App. 522, 527, 513 N.W.2d 818 (1994). Here, the commission erred as a matter of law in its application of the economic reality test and in its characterization of plaintiff's employment as an accommodation relationship.

At the time of plaintiff's injury, § 161(1) provided the statutory definition of an employee:

(1) As used in this act, "employee" means:

* * * * * *

(d) Every person performing service in the course of the trade, business, profession, or occupation of an employer at the time of the injury, provided the person in relation to this service does not maintain a separate business, does not hold himself or herself out to and render service to the public, and is not an employer subject to this act. [M.C.L. § 418.161(1)(d); M.S.A. § 17.237(161)(1)(d) ].

In Amerisure, supra, this Court held that all three provisions of § 161(1)(d) must be satisfied in order to find an individual an employee. The claimant must establish that he does not maintain a separate business, does not hold himself out to and render service to the public, and is not an employer subject to the act. Id., at 574, 493 N.W.2d 482. When there is a question concerning whether the individual is an independent contractor, the terms of the statute must be construed in conjunction with the economic reality test. Id., at 573, 493 N.W.2d 482.

Our review of the record shows that plaintiff met the three requirements of § 161(1)(d). The testimony of the owner of the ski resort established that use of members of the National Ski Patrol was an integral part of the operation of the resort. When members of the National Ski Patrol were unavailable, the resort hired a paid, professional ski patroller to service the resort. Plaintiff was performing service in the course of the business of an employer at the time of the injury. He was compensated for his services through benefits received from the resort. Compensation does not have to be in the form of money to qualify an employee for coverage under the act. Betts v. Ann Arbor Public Schools, 403 Mich. 507, 515, 271 N.W.2d 498 (1978). Plaintiff did not maintain a separate business as a ski patroller, did not hold himself out independently as a person providing such service to the public, and was not an employer subject to the act.

The commission erred in its analysis of the individual factors of the economic reality test. The economic reality test involves four basic factors: (1) control of the worker's duties; (2) payment of wages; (3) the right to hire, fire, and discipline; and (4) performance of the duties toward the accomplishment of a common goal. Williams v. Cleveland Cliffs Iron Co., 190 Mich.App. 624, 627, 476 N.W.2d 414 (1991). In applying these factors, the totality of the circumstances surrounding the work must be examined, with no single factor controlling. Tucker v. Newaygo Co., 189 Mich.App. 637, 639-640, 473 N.W.2d 706 (1991). The economic reality test has also been expressed as eight principles detailed in McKissic, supra, which the commission applied. The tests are basically the same, and each provides a rational framework for review. Williams, supra, 627, 476 N.W.2d 414. The McKissic factors are:

First, what liability, if any does the employer incur in the event of the termination of the relationship at will?

Second, is the work being performed an integral part of the employer's business which contributes to the accomplishment of a common objective?

Third, is the position or job of such a nature that the employee primarily depends upon the emolument for payment of his living expenses?

Fourth, does the employee furnish his own equipment and materials?

Fifth, does the individual seeking employment hold himself out to the public as one ready and able to perform tasks of a given nature?

Sixth, is the work or the undertaking in question customarily performed by an individual as an independent contractor?

Seventh, control, although abandoned as an exclusive criterion upon which the relationship can be determined, is a factor to be considered along with payment of wages, maintenance of discipline and the right to engage or discharge employees.

Eighth, weight should be given to those factors which will most favorably effectuate the objectives of the statute. [McKissic, supra, 208-209, 201 N.W.2d 333.]

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