Carpet Exchange of Denver, Inc. v. Industrial Claim Appeals Office of State of Colo.

• Decision Date: 25 March 1993
• Docket Number: No. 92CA1478,92CA1478
• Citation: 859 P.2d 278
• Parties: CARPET EXCHANGE OF DENVER, INC., Petitioner, v. THE INDUSTRIAL CLAIM APPEALS OFFICE OF the STATE OF COLORADO and Division of Employment and Training, Respondents. . II
• Court: Colorado Court of Appeals

Page 278

859 P.2d 278

CARPET EXCHANGE OF DENVER, INC., Petitioner, v. THE INDUSTRIAL CLAIM APPEALS OFFICE OF the STATE OF COLORADO and Division of Employment and Training, Respondents.

No. 92CA1478.

Colorado Court of Appeals Div. II.

March 25, 1993.

Rehearing Denied May 6, 1993.

Certiorari Denied Sept. 20, 1993.

Doussard, Hodel, Markman & Wells, Thomas G. Hodel, Lakewood, for petitioner.

No appearance for respondent Industrial Claim Appeals Office.

No appearance for respondent Div. of Employment and Training.

Opinion by Judge HUME.

Carpet Exchange of Denver, Inc., seeks review of the final order of the Industrial Claim Appeals Panel, which ruled that workers who installed floor covering purchased by the company's customers were in employment covered by the Colorado Employment Security Act, § 8-70-101, et seq., C.R.S. (1986 Repl.Vol. 3B). We affirm the order in part and set it aside in part.

Under § 8-70-115(1)(b), C.R.S. (1992 Cum.Supp.), an employment relationship is presumed whenever one person performs services for another. This presumption can be rebutted if the putative employer proves both of the requirements of § 8-70-115(1)(b). Allen Co. v. Industrial Commission, 762 P.2d 677 (Colo.1988).

I.

To rebut the presumption in favor of covered employment, a putative employer must prove that a worker "is free from control and direction in the performance of the service, both under his contract for the performance of service and in fact...." Section 8-70-115(1)(b), C.R.S. (1992 Cum.Supp.). The term, "control and direction," means a general right to control. Allen Co. v. Industrial Commission, supra.

Terminability at will, the right to terminate a worker at any time without liability, is an important factor in distinguishing employees from independent contractors on the basis of control because the right to discharge a worker gives the power to control the smallest detail and method of work. See Allen Co. v. Industrial Commission, supra.

Here, although there was conflicting evidence, the referee made no findings of fact on whether the workers were terminable at will, but relied on other factors. We agree with Carpet Exchange's contention that the findings of fact on those factors established that the workers were free from control and direction.

We note that although the definition of employment under the Colorado Employment Security Act is broader than the common law master-servant relationship, Industrial Commission v. Northwestern Mutual Life Insurance Co., 103 Colo. 550, 88 P.2d 560 (1939); Wagner & Sons Construction, Inc. v. Pagels, 720 P.2d 987 (Colo.App.1986), the freedom from control requirement of § 8-70-115(1)(b), C.R.S. (1992 Cum.Supp.), is derived from the common law control test for distinguishing servants from independent contractors. Accordingly, although cases applying the common law control test are not determinative, they are relevant in determining whether workers are free from control under § 8-70-115(1)(b).

The common law control test is also used to distinguish independent contractors from employees under the Workers' Compensation Act, § 8-40-101, et seq., C.R.S. (1992 Cum.Supp.) See Industrial Commission v. Bonfils, 78 Colo. 306, 241 P. 735 (1925). Workers' compensation cases are therefore also relevant here. See Allen Co. v. Industrial Commission, supra.

Servants or employees are subject to control over the means and methods of the work as well as the ends or results. See Farmers Reservoir & Irrigation Co. v. Fulton Investment Co., 81 Colo. 69, 255 P. 449 (1927); Arnold v. Lawrence, 72 Colo. 528, 213 P. 129 (1923). Independent contractors, however, are not free of all control. They may be subject to control sufficient to ensure that the end result contracted for is reached, even though they are not subject to control over the means and methods of accomplishing that result. See Industrial Commission v. Maryland Casualty Co., 65 Colo. 279, 176 P. 288 (1918); Restatement (Second) of Agency § 220, comment e (1958); 1B A. Larson, Workmen's Compensation Law §§ 44.21 to 44.23 (1992).

Consequently, the floor plans or diagrams given to the workers here when they accept a job do not support the existence of general control over the means of doing the work because they simply define the job to be done or the result to be accomplished.

This is also true of the company's requirement that the workers obtain company approval of any additional work requested by customers if they expect to be paid for the extra work by the company this simply redefines the job or result contracted for, rather than demonstrating general control over means and methods.

Similarly, the company's right to inspect the work, its requirement that the workers remedy customer complaints without further pay, and its retention of $600 from the workers' pay to cover the cost of remedial work that might later be performed by other installers do not indicate control over the methods of performing the work. Rather, these factors are designed only to ensure the end result.

The referee expressly found that the workers provided their own equipment and vehicles and had complete control over their helpers, both of which are factors showing lack of control by the company. See Brush Hay & Milling Co. v. Small, 154 Colo. 11, 388 P.2d 84 (1963); Restatement (Second) of Agency, supra, at § 220(2)(e) and comment k; 1B Larson, supra, at § 44.34.

The company's requirement that installers be covered by workers' compensation insurance is not evidence of an employment relationship because independent contractors may be deemed employees under §§ 8-41-401 and 8-41-402, C.R.S. (1992 Cum.Supp.), the statutory employment provisions of the Workers' Compensation Act. Alternatively, independent contractors are often required to provide such coverage as a condition of their contracts.

The only facts found by the referee that support the existence of a right of control by the company over the means of performing the work were the requirements that the workers report to the warehouse by 8:30 a.m. to obtain work for that day and call customers by 9:00 a.m. to schedule the installation and the general "ethics guidelines" that set a minimal dress code, forbade foul language and drinking on the job, and excluded children from job sites.

However, this kind of control does not constitute control over the means and methods of installing floor covering. To the contrary, the facts found by the referee establish that the workers were free from control over the means and methods of performing that work.

II.

To satisfy the second requirement of § 8-70-115(1)(b), C.R.S. (1992 Cum.Supp.), the putative employer must prove the worker "is customarily engaged in an independent trade, occupation, profession, or business related to the service performed." To be customarily engaged in an independent business, a worker must actually and customarily provide similar services to others at the same time he or she works for the putative employer. Locke v. Longacre, 772 P.2d 685 (Colo.App.1989); See National Claims Associates, Inc. v. Division of Employment, 786 P.2d 495 (Colo.App.1989).

The purpose of this requirement is to protect the security of workers who receive substantially all of their earnings from one employer. Locke v. Longacre, supra. Accordingly, performance of occasional or insubstantial services for others does not establish that a worker is customarily engaged in an independent trade, occupation, or business. See National Claims Associates, Inc. v. Division of Employment, supra.

Here, although most of the workers who testified at the hearing performed occasional installations for others, they performed substantially all of their installation work for Carpet Exchange and were, therefore, not...