Anderson v. Homeless and Housing Coa

• Decision Date: 20 May 2004
• Docket Number: No. 2002-SC-1069-WC.,2002-SC-1069-WC.
• Citation: 135 S.W.3d 405
• Parties: James ANDERSON, Appellant, v. HOMELESS AND HOUSING COA; Donald G. Smith, Administrative Law Judge; and Larry Greathouse, Commissioner, Department of Workers' Claims, Appellees.
• Court: United States State Supreme Court — District of Kentucky

135 S.W.3d 405

James ANDERSON, Appellant, v. HOMELESS AND HOUSING COA; Donald G. Smith, Administrative Law Judge; and Larry Greathouse, Commissioner, Department of Workers' Claims, Appellees.

No. 2002-SC-1069-WC.

Supreme Court of Kentucky.

May 20, 2004.

Glenn M. Hammond, Kristie Goff, Pikeville, Counsel for Appellant.

H. Brett Stonecipher, Ferreri & Fogle, Lexington, Counsel for Appellee.

OPINION OF THE COURT

KRS 342.650(3) exempts from coverage under Chapter 342 those individuals who perform services for a religious or charitable organization in return for aid or sustenance only. The claimant was injured while working for the Homeless and Housing Coalition of Kentucky, Inc. (HHCK), helping to build houses for Habitat for Humanity. It was undisputed that HHCK was a charitable organization. Affirming an Administrative Law Judge's (ALJ's) decision, the Workers' Compensation Board (Board) and the Court of Appeals determined that the claimant received only aid or sustenance for his services and, therefore, was exempt from coverage. Having concluded that such a finding was unreasonable under the evidence, we reverse and remand the claim for further proceedings.

The claimant was born in 1938 and has a high school education as well as six months of computer training. He worked as a coal miner, gas station owner, supply clerk, painter, the owner of an instrument panels company, and for 21 years as a hardware store owner before becoming "burned out on business" and deciding that he "wanted to volunteer some time." The claimant thought that it was in August, 1997, that he contacted HHCK, applied to become an AmeriCorps volunteer, was accepted into the program, and signed a member participation agreement. He worked as a construction supervisor, overseeing as many as twenty other individuals. The claimant testified that he knew he would receive some payment for his services, but he did not remember being told about short term disability or other benefits. Although he was informed that he would be covered if he were hurt on the job, he admitted that he was not told specifically that it would be through workers' compensation. However, his understanding was that he would be covered by workers' compensation. Throughout his testimony, he referred to himself as a "volunteer."

On October 28, 1998, the claimant fell through a ventilation hole in the ceiling of a home on which he was working and injured his left knee, causing him to miss about a month's work. He continued working until his second term ended in August, 1999, at which time he became manager of the local YMCA, earning $18,000.00 per year. In July, 2001, he retired at the age of 62. He testified that he did so because the walking and climbing that were required had become too difficult and that he had neither worked nor sought employment since then. His medical expenses following the accident were paid by HHCK through an accidental medical expense insurance policy. The claimant's application of workers' compensation benefits listed only his spouse as a dependent.

Judith Levey, the Executive Director of HHCK, testified that the organization is a nonprofit corporation that receives and administers grants from the Department of Housing and Urban Development and from AmeriCorps. Its goal is to provide affordable housing for low-income Kentuckians. She testified that the claimant was a member of AmeriCorps, a national volunteer program, from October 7, 1997, through August 31, 1998, and from September 1, 1998, through August, 1999. Ms. Levey indicated that members of the program must undergo an application process and satisfy certain requirements as established by the National and Community Service Act of 1990. See 42 USCA § 12501, et. seq. Those who are accepted serve the community for one or two years through nonprofit corporations, public agencies, and faith-based organizations. The claimant applied and was accepted into the program, after which he completed a member participation agreement and was assigned to work with Pikeville Habitat for Humanity. He did so for two years.

Ms. Levey testified that the AmeriCorps participation agreement made it clear that members were not employees, were not working for wages, and received only a subsistence living allowance in exchange for their service to the sponsor site. Furthermore, project sponsors were required, by law, to agree not to assign members to activities that would displace individuals who would otherwise be employed at the site. Emphasizing that AmeriCorps was a volunteer service program, she testified that members were not considered to be employees and that occupational accidental death and dismemberment insurance was the only type that federal law required; however, HHCK also provided them with an accidental injury policy. She stated that HHCK, itself, had seven employees, two of whom worked part-time. They administered the federal funds, were paid a salary, and were covered by a workers' compensation insurance policy. She indicated, however, that the organization did not have sufficient funding to permit the purchase of workers' compensation insurance for AmeriCorps volunteers.

Ms. Levey testified that the stipend for AmeriCorps members at the relevant time was $8,340.00. It was paid by HHCK but funded by AmeriCorps. When asked why the claimant's W-2 for 1998 showed earnings of $15,652.08, she explained that Pikeville Habitat for Humanity provided HHCK with an extra $6,660.00, which increased his living allowance to $15,000.00, and that the remaining $652.08 may have been for mileage reimbursement. She stated that some sponsors provide extra funds for the living allowance because of difficulties in finding local housing or simply because the organization is able to provide additional help to the AmeriCorps member. When asked why the claimant's W-2 indicated that he was an employee, she responded that HHCK viewed him as being a volunteer who worked for aid and sustenance only.

Appended to Ms. Levey's deposition were copies of the agreements that the claimant signed on December 8, 1997, and July 20, 1998. Both agreements referred to the claimant as a "member." Among other things, they provided that a member was entitled to receive an annual taxable living allowance of $8,340.00 and applicable FICA, income taxes, and unemployment insurance; health care insurance; a child care allowance, if the member qualified; mileage and expense reimbursement and, in certain instances, an advance for travel, lodging and meals; occupational accidental death and dismemberment coverage; and, upon successful completion of the program, a taxable education award of $4,725.00. In return, the member agreed to provide 1,700 hours of service within the agreement's one-year period and to abide by certain rules of conduct.

KRS 342.640 provides, in pertinent part, as follows:

The following shall constitute employees subject to the provisions of this chapter, except as exempted under KRS 342.650: (1) Every person, including a minor, whether lawfully or unlawfully employed, in the service of an employer under any contract of hire or apprenticeship, express or implied, and all helpers and assistants of employees, whether paid by the employer or the employee, if employed with the knowledge, actual or constructive of the employer;

...

(3) Every person in the service of the state or any of its political subdivisions or agencies, or of any county, city of any class, school district, drainage district, tax district, public or quasipublic corporation, or other political entity, under any contract of hire, express or implied, and every official or officer of those entities, whether elected or appointed, while performing his official duties shall be considered an employee of the state...

(4) Every person performing service in the course of the trade, business, profession, or occupation of an employer at the time of the injury[.]

KRS 342.650 exempts certain "employees" from coverage, including:

(3) Any person performing services in return for aid or sustenance only, received from any religious or charitable organization.

Neither KRS 342.640 nor KRS 342.650 refers to the term "volunteer" or any of its variants.

Arguing that he was not exempt from coverage under Chapter 342, the claimant relies upon Sears v. Oakwood Training Facility Department of Human Resources, Ky.App., 623 S.W.2d 232 (1980), but that reliance is misplaced. Sears v. Oakwood concerned whether a participant in the federally-funded Foster Grandparent Program who worked at a Kentucky Department of Human Resources facility for mentally retarded children was covered by Chapter 342. Ms. Sears worked approximately 20 hours per week. She was paid $1.60 per hour, plus lunch and $1.00 per day for transportation. She maintained that her work was done "in the service of the state" and, therefore, that she was a covered employee under KRS 342.640(1) and (3). The Department asserted, however, that she was excluded from coverage by KRS 342.650(3) because she performed services for aid and sustenance only. Its argument was that she received only a "stipend" or reimbursement for the out-of-pocket expenses she incurred as a volunteer. Furthermore, the money that she received was not subject to any tax or charge, and it was not treated as wages or compensation for the purpose of unemployment, temporary disability, retirement, public assistance, or any similar benefit or minimum wage law.¹ Id. at 234.

Although the fact-finder determined that Ms. Sears was not an employee within the meaning of KRS 342.640, the decision was reversed on appeal. Noting that the program in which Ms. Sears worked was administered through a Department employee, that the Department was a state agency, that Ms. Sears performed services under the direction of an Oakwood employee, that she was required to work twenty hours per week, that she was paid by the hour, and that her services were in keeping with...