Dep't of Labor & Indus. v. Workers' Comp. Appeal Bd.

• Decision Date: 26 June 2018
• Docket Number: No. 27 EAP 2017,27 EAP 2017
• Parties: DEPARTMENT OF LABOR AND INDUSTRY, Uninsured Employers Guaranty Fund v. WORKERS' COMPENSATION APPEAL BOARD (LIN AND EASTERN TASTE) Appeal of: Fu Xiang Lin
• Court: Pennsylvania Supreme Court

187 A.3d 914

DEPARTMENT OF LABOR AND INDUSTRY, Uninsured Employers Guaranty Fund
v.
WORKERS' COMPENSATION APPEAL BOARD (LIN AND EASTERN TASTE)

Appeal of: Fu Xiang Lin

No. 27 EAP 2017

Supreme Court of Pennsylvania.

Argued: March 6, 2018
Decided: June 26, 2018

Joseph C. Huttemann II, Esq., Frank Joseph Udinson II, Esq., Martin Law LLC, for Fu Xiang Lin.

Amber Marie Kenger, Esq., Cindy Elaine Sheaffer, Esq., Pennsylvania Workers' Compensation Appeal Board, for Workers' Compensation Appeal Board.

Brian Jay Kredo, Esq., Mednick, Mezyk & Kredo, P.C., for Eastern Taste.

Eric G. Preputnick, Esq., Pennsylvania Bureau of Workers' Compensation, Craig A. Schroll, Esq., Pennsylvania Department of Labor & Industry, for Uninsured Employers Guaranty Fund.

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

JUSTICE WECHT

In this appeal, we consider whether an individual contracted to perform renovations for a restaurant falls within the Construction Workplace Misclassification Act

187 A.3d 916

("CWMA" or "the Act"), 43 P.S. §§ 933.1 – 933.17, such that he may be eligible for compensation under the Workers' Compensation Act.¹ The Commonwealth Court determined that the CWMA is inapplicable under these circumstances, that the claimant otherwise failed to establish that he was an employee of the restaurant, and that he accordingly is ineligible for workers' compensation benefits. We affirm the order of the Commonwealth Court.

The material facts are undisputed. On February 21, 2011, Fu Xiang Lin began performing remodeling work for Eastern Taste, a restaurant that had not yet opened for business. Lin and three other individuals were hired by Lin's sister-in-law, Sai Zheng Zheng, who was the owner of Eastern Taste. They did not sign a written contract, but Lin was to be paid for his services on a per diem basis. Zheng's husband, Kond Bin Wang, oversaw the project. Wang told Lin what sort of work needed to be done, but he did not direct Lin's specific activities because Lin was a seasoned remodeler. Lin had worked in remodeling for fifteen years, and he was the most experienced individual involved in the project. Although Wang purchased the materials necessary for the project, Lin brought and used his own tools. Lin was hired only to complete the remodeling work, and he was not expected to work at the restaurant after it opened.

On March 28, 2011, while repairing a chimney, Lin fell from a beam and landed on a cement floor, suffering serious injuries. In addition to numerous bone fractures, the impact caused trauma to Lin's spinal cord, rendering him paraplegic. On December 22, 2011, Lin filed a workers' compensation claim petition against Eastern Taste. On February 27, 2012, because Eastern Taste did not maintain workers' compensation insurance, Lin additionally filed a petition for benefits from the Uninsured Employers Guaranty Fund (the "Fund").² Both Eastern Taste and the Fund filed answers denying, inter alia , the existence of an employment relationship. Lin's claim petitions were consolidated and assigned to Workers' Compensation Judge Bruce Doman (the "WCJ") for disposition.

At a hearing before the WCJ on April 27, 2012, Lin testified on his own behalf. Eastern Taste presented the testimony of Wang and Gheng Renkuar, another individual who worked on the remodeling project. Based upon the testimony, the WCJ concluded that the "critical facts in this matter are essentially undisputed," and made the following findings:

a. Eastern Taste is a restaurant, not a construction business.

b. [Lin] was hired to do remodeling before the restaurant had ever opened.

c. The most experienced person on the job in the construction business was [Lin].

d. The owner's husband was in charge of what needed to be done.

e. [Lin] was paid on a per diem basis to do it along with three others.

f. [Lin] used his own tools and van. The owner's husband provided tools and materials as well.

187 A.3d 917

WCJ Decision, 4/17/2013, at 3. The WCJ further found that Lin's work was not conducted "in the regular course" of Eastern Taste's business, and that Lin's "employment was casual in character." Id.³ Accordingly, the WCJ concluded that Lin failed to prove that he was an employee⁴ of Eastern Taste, and, thus, that Lin was ineligible for workers' compensation benefits.

Nonetheless, the WCJ recognized that "the result would be entirely different" if the CWMA applied. Id. at 4. In relevant part, the CWMA prohibits the "improper classification of employees" as independent contractors so as to avoid liability for workers' compensation benefits, and provides that "an individual who performs services in the construction industry for remuneration" may be classified as an independent contractor only if certain conditions are met. 43 P.S. § 933.3(a).⁵ The WCJ concluded that the CWMA was inapplicable to Eastern Taste because it "is a restaurant in the restaurant business and not in the construction business." WCJ Decision, 4/17/2013, at 4.

With regard to the relationship between Wang and Lin, the WCJ observed that Wang merely informed Lin what tasks he wanted to be completed, and it was Lin's job to do them. The WCJ opined that "[t]his is essentially the same relationship that property owners typically have with painters, plumbers, electricians, carpenters and other remodelers. These specialists bring their time and expertise." Id. Essentially, the WCJ concluded that, although these types of contractual relationships may involve construction activities, the individual who hires such a specialist is not "in the construction industry" for purposes of the CWMA. Because the CWMA was inapplicable, the WCJ determined that Lin's classification as an independent contractor rather than an employee was not improper under 43 P.S. § 933.3. Accordingly, the WCJ entered an order denying Lin's claim petitions.

Lin appealed the WCJ's order to the Workers' Compensation Appeal Board ("Board"). On January 6, 2015, the Board reversed, concluding that Lin's employment was not "casual" in nature, and that Lin was an employee of Eastern Taste for purposes of workers' compensation. However, because the Board based its decision upon the general definition of an employee under the Workers' Compensation Act, it did not consider the applicability of the CWMA. The Board remanded to the WCJ to make any necessary findings and to enter an award of compensation. On October 28, 2015, in accordance with the Board's order, the WCJ made additional

187 A.3d 918

findings regarding the extent of Lin's injuries, wages, and litigation costs, then entered an order granting Lin's claim petition against Eastern Taste, with the Fund secondarily liable for the payment of compensation.

The Fund appealed the WCJ's order to the Board. However, because the Board previously had considered the dispositive legal issue, the Fund merely sought to make the Board's earlier order final for purposes of appeal to the Commonwealth Court.⁶ The Board obliged on March 23, 2016, and the Fund appealed the Board's order to the Commonwealth Court.

On February 17, 2017, the Commonwealth Court reversed the Board's order, holding that Lin is ineligible for workers' compensation benefits. Dep't of Labor & Indus., Uninsured Emp'rs Guar. Fund v. W.C.A.B. (Lin & Eastern Taste ), 155 A.3d 103 (Pa. Cmwlth. 2017). As was the case before the WCJ and the Board, the dispositive question was whether Lin was an employee of Eastern Taste or an independent contractor. Because independent contractors cannot recover workers' compensation benefits, the Commonwealth Court noted, "[w]hether one's status is that of an employee or independent contractor ‘is a crucial threshold determination that must be made before granting workers' compensation benefits.’ " Id. at 109 (quoting Universal Am–Can, Ltd. v. W.C.A.B. (Minteer) , 563 Pa. 480, 762 A.2d 328, 330 (2000) ).

The Commonwealth Court first reviewed the Board's stated bases for reversal of the WCJ's decision and determined that the Board relied upon facts that were inconsistent with the WCJ's findings. Stressing that the WCJ's findings of fact are binding upon the Board if supported by substantial evidence, the Commonwealth Court observed that the Board "exceeded its authority by making ‘findings,’ which, at a minimum, went beyond those made by the WCJ." Id. Because the WCJ's findings were supported by substantial evidence, the court concluded that "the Board engaged in impermissible fact-finding and then relied on those ‘facts’ to support its conclusion that [Lin] was an employee." Id. In other words, "[t]he Board did not base its legal conclusion on the facts as found by the WCJ, and that was error." Id. (emphasis in original).

After rejecting the Board's "findings" and confining its inquiry to the facts as found by the WCJ, the Commonwealth Court analyzed whether those facts supported the conclusion that Lin was an employee of Eastern Taste, as opposed to an independent contractor. To resolve that question, the Commonwealth Court relied upon the multifactorial inquiry that this Court set forth in Universal Am–Can , which directs a court to consider:

Control of manner work is to be done;

...