Chouteau v. Netco Const.

• Decision Date: 04 May 2004
• Docket Number: No. WD 63171.,WD 63171.
• Citation: 132 S.W.3d 328
• Parties: James Phillip CHOUTEAU, Respondent, v. NETCO CONSTRUCTION and EMC Insurance Companies, Appellants.
• Court: Missouri Court of Appeals

132 S.W.3d 328

James Phillip CHOUTEAU, Respondent, v. NETCO CONSTRUCTION and EMC Insurance Companies, Appellants.

No. WD 63171.

Missouri Court of Appeals, Western District.

May 4, 2004.

Thomas V. Clinkenbeard, Kansas City, MO, for appellant.

Robert H. Schnieders, Oak Grove, MO, for respondent.

Before: RONALD R. HOLLIGER, P.J., ROBERT G. ULRICH and JAMES M. SMART, JJ.

ROBERT G. ULRICH, Judge.

Netco Construction and Employers Mutual Casualty Company (hereinafter "Netco") appeal a workers' compensation award to James Chouteau. Netco asserts that Mr. Chouteau was an independent contractor and not an employee. The Commission's final award is affirmed in part and reversed in part, and the case is remanded to the Commission with directions.

Facts

In 1997, at the time of his accident, James Chouteau worked as a siding and window installer. Netco Construction was in the business of residential remodeling and home improvements. Its business included siding, windows, room additions, kitchen and bathroom remodel, and driveways. On October 1, 1997, Mr. Chouteau and a worker he had hired for the job were installing siding on the home of a Netco customer. A scaffold board on which Mr. Chouteau was standing collapsed, and Mr. Chouteau fell twenty feet to the ground landing on concrete. He suffered severe and permanent injuries including traumatic fractures of his C-2, L-4, and L-2 vertebrae.

At the hearing before the ALJ, the parties stipulated to total benefits of $68,548.11 for permanent partial disability, temporary total disability, and medical expenses. Netco, however, argued that Mr. Chouteau was neither an employee under section 287.020, RSMo 2000, nor a statutory employee under section 287.040, RSMo 2000.¹ Netco further argued that even if Mr. Chouteau were a statutory employee, it was entitled to a reverse judgment against Mr. Chouteau for the total benefits amount because, as the immediate employer, Mr. Chouteau was primarily liable under section 287.040.4 for his own workers' compensation benefits.

Following the hearing, the ALJ found that Mr. Chouteau was a statutory employee of Netco and awarded him benefits in the amount of $68,548.11. The ALJ also found, however, that Netco was entitled to a reverse judgment against Mr. Chouteau for the same amount because Mr. Chouteau was primarily liable for his own workers' compensation benefits under section 287.040.4.

The Commission reversed the ALJ's decision finding that Mr. Chouteau was an employee of Netco on the day of his injury. It awarded Mr. Chouteau workers' compensation benefits totaling $68,548.20 and further found that Netco was not entitled to a reverse judgment. This appeal by Netco followed.

Standard of Review

Article V, section 18 of the Missouri Constitution provides for judicial review of the Commission's award to determine whether the award is "supported by competent and substantial evidence upon the whole record." Section 287.495.1 further indicates that an appellate court reviews only questions of law and may modify, reverse, remand for rehearing, or set aside the award only upon one or more of the following grounds:

(1) That the commission acted without or in excess of its powers;

(2) That the award was procured by fraud;

(3) That the facts found by the commission do not support the award;

(4) That there was not sufficient competent evidence in the record to warrant the making of the award.

In reviewing an award of the Commission, an appellate court "must examine the whole record to determine if it contains sufficient competent and substantial evidence to support the award, i.e., whether the award is contrary to the overwhelming weight of the evidence." Hampton v. Big Boy Steel Erection, 121 S.W.3d 220, 222-23 (Mo. banc 2003). Whether a workers' compensation claimant is an employee is a question of law, not a finding of fact, and is subject to correction by an appellate court. DiMaggio v. Johnston Audio/D & M Sound, 19 S.W.3d 185, 188 (Mo.App. W.D. 2000), overruled on other grounds by Hampton v. Big Boy Steel Erection, 121 S.W.3d 220 (Mo. banc 2003).

Employee or Independent Contractor

Missouri's workers' compensation law defines an employee as a person in the service of any employer under any contract of hire, express or implied, oral or written. § 287.020.1. A claimant establishes an employer-employee relationship by showing that he worked in the service of the alleged employer and the employer controlled the services. DiMaggio, 19 S.W.3d at 188. "The pivotal question in determining the existence of an employer-employee relationship is whether the employer had the right to control the means and manner of the service, as distinguished from controlling the ultimate results of the service." Id.

An independent contractor, in contrast, is one who, exercising an independent employment, contracts to do a piece of work according to his own methods, without being subject to the control of his employer, except as to the final result of his work. Cole v. Town & Country Exteriors, 837 S.W.2d 580, 584 (Mo.App. E.D.1992), overruled on other grounds by Hampton v. Big Boy Steel Erection, 121 S.W.3d 220 (Mo. banc 2003). An employee is distinguished from an independent contractor by the amount of control exercised by the alleged employer. Id. If the alleged employer's actual control or right to control the work performance is not readily apparent from the evidence, several factors must be considered: (1) whether the work is part of the regular business of the employer; (2) whether the employment is a distinct occupation requiring special skills; (3) whether the alleged employee may hire assistants; (4) whether the work is usually done under supervision; (5) whether the alleged employee must supply his own tools, equipment, supplies, and materials; (6) the existence of a contract for a specific piece of work at a fixed price; (7) the length of time the person is employed; (8) the method of payment, whether by time or by the job; and (9) the extent to which the alleged employee may control the details of his work, except as to final results. Id. Whether a claimant is an employee or an independent contractor is determined on a case-by-case basis. Wilmot v. Bulman, 908 S.W.2d 139, 142 (Mo. App. S.D.1995), overruled on other grounds by Hampton v. Big Boy Steel Erection, 121 S.W.3d 220 (Mo. banc 2003).

The evidence established that Netco is in the business of home remodeling, subcontracting projects such as electrical, plumbing, roofing, and siding. It requires its subcontractors to carry workers' compensation insurance, and if a subcontractor does not carry such insurance, Netco deducts an amount from the subcontractor's check to cover the insurance.

Netco subcontracted some of its siding and window jobs to Mr. Chouteau. Seventy percent of Mr. Chouteau's income was derived from Netco assignments. The remaining thirty percent of his income originated from side projects he obtained on his own, under the name Chouteau Construction, by contracting directly with homeowners. Shortly before Mr. Chouteau's accident, Netco offered to hire Mr. Chouteau as a permanent employee. The parties, however, could not agree on a salary, so their arrangement continued unchanged.

When Mr. Chouteau performed a siding or window job for Netco, Netco would supply the materials for a job. Mr. Chouteau, however, owned and supplied all of his own tools. Netco paid Mr. Chouteau a flat rate per job based on the size of the job and the parties' agreed-upon price per square foot. Netco paid Mr. Chouteau by check but did not withhold any taxes. Occasionally, Mr. Chouteau hired and paid a worker to help him complete an assignment from Netco. Netco had no input as to who Mr. Chouteau hired. Ken Pratt, Netco's project manager, did not supervise the manner in which Mr. Chouteau performed a job but would inspect the job for quality and timeliness. Mr. Chouteau retained full control over the manner in which he completed a job for Netco. Accordingly, Mr. Chouteau was an independent contractor and not an employee of Netco under section 287.020.1.

Statutory Employee

Because Mr. Chouteau was not an employee of Netco, he was not entitled to compensation as an employee under section 287.120. However, a contractor or employee of a contractor may be entitled to compensation under certain circumstances as a statutory employee under section 287.040. Cole, 837 S.W.2d at 584. Section 287.040 constitutes an exception to the rule of non-liability of the principal to an independent contractor or its employees. Id. Section 287.040.1 provides:

Any person who has work done under contract on or about his premises which is an operation of the usual business which he there carries on shall be deemed an employer and shall be liable under this chapter to such contractor, his subcontractors, and their employees, when injured or killed on or about the premises of the employer while doing work which is in the usual course of his business.

The purpose of the statute to is "to prevent employers from circumventing the requirements of the Act by hiring independent contractors to perform work the employer would otherwise perform." Busselle v. Wal-Mart, 37 S.W.3d 839, 841 (Mo.App. S.D.2001)(quoting Bass v. Nat'l Super Mkts., Inc., 911 S.W.2d 617, 621 (Mo. banc 1995), cert. denied, 517 U.S. 1208, 116 S.Ct. 1825, 134 L.Ed.2d 930 (1996)). The statute is to be construed liberally with close cases decided in favor of workers' compensation coverage. Id. (quoting Bass, 911 S.W.2d at 621).

"Where the facts are not in dispute as to the nature of the agreement and the work required by it, the existence or absence of statutory employment is a question of law for the courts to decide." Sexton v. Jenkins & Assoc., Inc., 41 S.W.3d 1, 4 (Mo. App. W.D.2000)(quoting Bass, 911 S.W.2d at 621).

Statutory employment exists when: (1) the work is performed pursuant to a contract; (2) the injury occurs on or about the premises of...