El Dorado Ins. Co. v. Industrial Commission

• Decision Date: 29 January 1976
• Docket Number: No. 1,CA-IC,1
• Citation: 545 P.2d 465,25 Ariz.App. 617
• Parties: EL DORADO INSURANCE COMPANY, Petitioner, v. The INDUSTRIAL COMMISSION of Arizona, Respondent, Florida Continental Express, Respondent Employer, Norman A. Tanner, Respondent Employee. 1363.
• Court: Arizona Court of Appeals

Page 465

545 P.2d 465

25 Ariz.App. 617

EL DORADO INSURANCE COMPANY, Petitioner, v. The INDUSTRIAL COMMISSION of Arizona, Respondent Florida Continental Express, Respondent Employer Norman A. Tanner, Respondent Employee.

No. 1 CA-IC 1363.

Court of Appeals of Arizona, Division 1, Department C.

Jan. 29, 1976.

Rehearing Denied March 4, 1976.

Review Denied April 13, 1976.

Slutes, Zlaket, Sakrison & Wasley by John A. Wasley, Tucson, for petitioner.

Greg L. Folger, Chief Counsel, Industrial Commission of Arizona, Phoenix, for respondent.

Strong & Pugh, P.A. by William K. Strong, Phoenix, for respondent employee.

OPINION

NELSON, Presiding Judge.

Two issues are presented on review of this award of the Industrial Commission. The threshold issue is whether the business relation of respondent Norman A. Tanner and his deceased wife, Theresa L. Tanner, with Florida Continental Express was that of employees or independent contractors. The second issue goes to the question of whether Norman Tanner must show some dependency on his wife, Thereasa Tanner, to entitle him to widower's benefits under A.R.S. § 23--1016(A). A connected question deals with the constitutionality of the conclusive presumption of dependency found in A.R.S. § 23--1064.

Norman and Theresa Tanner were engaged in their occupation of truck driving when they were involved in a one vehicle accident near Hydro, Oklahoma on May 26, 1974. Theresa Tanner died at the scene of the accident. Norman Tanner survived the accident and sustained various injuries, including bruised buttocks, thighs and spleen, torn muscles in the left upper arm, and a broken rib.

On July 8, 1974, Norman Tanner filed a claim for injuries resulting from the May 1974 incident. Tanner alleged that the occurrence arose out of and in the course and scope of his employment with the employer, Florida Continental Express.

On July 31, 1974, the insurance carrier, El Dorado Insurance Company, petitioner herein (El Dorado), issued its notice of claim status denying the compensability of the claim ont he basis that Tanner was not an employee of Florida Continental Express. A widower's claim was also filed on July 8, 1974. Tanner alleged that his wife's death arose out of and in the course and scope of her employment. This claim was also denied on July 31, 1974. A consolidated hearing was held in these matters on December 12, 1974.

In order to resolve the first issue it is necessary to analyze the Tanners' work status from the perspective of both statutory and case law guidelines. A.R.S. § 23--902 sets forth the statutory guidelines to determine whether an individual is an employee or an independent contractor as follows:

'B. When an employer procures work to be done for him by a contractor over whose work he retains supervision or control, and such work is a part or process in the trade or business of the employer, then such contractor and the persons employed by him, and his sub-contractor and persons employed by the sub-contractor, are, within the meaning of this section, employees of the original employer.

C. A person engaged in work for another, and who while so engaged is independent of the employer in the execution of the work and not subject to the rule or control of the person for whom the work is done, but is engaged only in the performance of a definite job or piece of work, and is subordinate to the employer only in effecting a result in accordance with the employer's design, is an independent contractor, and an employer within the meaning of this section. As amended Laws 1973, Ch. 136, § 2, eff. Jan. 1, 1974.'

The governing aspect of the test explained in the case law is the right to control the method of reaching a desired result. Reed v. Industrial Commission of Arizona, 23 Ariz.App. 591, 534 P.2d 1090 (1975); State Compensation Fund v. Le Desma, 23 Ariz.App. 126, 531 P.2d 171 (1975); Employers Mutual Liability Insurance Company of Wisconsin v. Industrial Commission of Arizona, 18 Ariz.App. 403, 502 P.2d 1080 (1972); Nochta v. Industrial Commission of Arizona, 7 Ariz.App. 166, 436 P.2d 944 (1968). As we stated in Reed, supra, 'To determine the right to control, one must look to the Totality of the facts and circumstances of each case examining the sign posts or indicia of control.' 23 Ariz.App. at 593, 534 P.2d at 1092. (Emphasis supplied). None of these indicia is in itself conclusive. When taken together and applied to a particular set of facts, the classification of an individual as an employee or independent contractor becomes more clear. Blasdell v. Industrial Commission et al., 65 Ariz. 373, 181 P.2d 620 (1947). In making the analysis it must be remembered that it is not the exercise of the power to supervise and control, but rather its existence which is to be considered. Scott v. Rhyan, 78 Ariz. 80, 275 P.2d 891 (1954); Industrial Commission v. Meddock, 65 Ariz. 324, 180 P.2d 580 (1947).

Other indicia set forth by the cases include: the duration of the employment, the method of payment, the standard of performance the individual must meet, the collection from wages for state and federal income tax, social security payments and workmen's compensation premiums. See e.g.: Scott v. Rhyan, supra; Blasdell v. Industrial Commission, supra; Daggett v. Nebraska-Eastern Express Inc., 252 Iowa 341, 107 N.W.2d 102 (1961); and Hansen v. Adent, 238 Minn. 540, 57 N.W.2d 681 (1953).

El Dorado urges that the opinion of the court in Reed v. Industrial Commission of Arizona, supra, is dispositive of the first issue--mandating the classification of the Tanners as independent contractors, rather than employees. We do not agree. While the Reed case and the instant case are similar in many respect, there are, as the hearing officer found, important distinctions in the facts and circumstances of the two cases.

Reed, a truck driver, was killed in an accident near Benson, Arizona. His widow's claim for compensation was denied on the basis that Reed was not an employee. The hearing officer agreed with this position. In analyzing the 'right to control', the Court in Reed looked to the specific facts and circumstances. Each factor analyzed can be contrasted with the Tanners' case. Reed owned the tractor and trailer that he operated as well as the chains and tarpaulins necessary for the job. Norman Tanner owned only the tractor that he drove. The trailer and the equipment on it were obtained from Florida Continental Express.

In Reed, supra, the Court emphasized the fact that Reed evidenced a particular skill for the job. Inasmuch as the Tanners held good driving records and were a desirable driving team, they too demonstrated skill. The presence of a skill is not, however, sufficient to characterize the Tanners as independent contractors. Under Reed's contract with Movers of California, an owner-operator would haul goods as needed, could refuse to haul any particular shipment, and could haul goods for other movers between jobs. Under the agreement with Florida Continental Express, Tanner could not perform services for other employers. The Tanners were completion of a task. The Tanners were paid on an approximate weekly basis with payments amounting to 25% Of gross revenue. This 25% Was apportioned between them so that the payment amounted to 12 1/2% Apiece. Movers of California did not deduct any state or federal income tax payments from the amount Reed was paid, nor did it deduct any social security payments. The Tanners' wage earnings were subject to withholding for taxes. Social security information was also shown on the payroll records. Workmen's Compensation premiums were paid on the Tanners' wages.

Other salient factors in the hearing officer's determination that the Tanners were employees rather than independent contractors include the facts that the Tanners made out an 'Application for Employment' and that there was a separate and distinct leasing situation.

Reed requires that an analysis of the right to control be done on a case-by-case basis. The hearing officer below considered various documents and exhibits in the file as well as other relevant factors. It was his conclusion that In this case the facts established an employer-employee relationship. Where an award is made the inquiry goes to whether or not there was sufficient evidence to warrant the decision made by the trier of fact. Daggett v. Nebraska-Eastern Express, Inc., supra. After a careful review of the record, we find that there was sufficient evidence to warrant the decision of the hearing officer that the Tanners were employees of Florida Continental Express Company. It is not the role of this Court to weigh the evidence. We must view the evidence in a light most favorable to sustaining the award. Malinski v. Industrial Commission of Arizona, 103 Ariz. 213, 439 P.2d 485 (1968).

As to the second question here for review, it is argued by El Dorado that Norman Tanner must show some dependency upon Theresa Tanner to entitle him to death benefits under A.R.S. § 23--1046. Respondent Tanner was awarded death benefits under A.R.S. § 23--1046(A)(2) read in conjunction with A.R.S. § 23--1064(A)(2) which provides that a husband is conclusively presumed to be totally dependent upon a wife whom he was not voluntarily abandoned at the time of the injury.

El Dorado further argues that the Arizona Constitution Art. 18, § 8, mandates a determination of dependency prior to a compensation award. This is not the case. The constitutional provision states that dependents will be defined By law. This phrase clearly stands for the proposition that the Legislature is free to define 'dependents' as it sees fit. Presumably this is what the Legislature has done in enacting A.R.S. § 23--1046 and A.R.S. § 23--1064.

Prior to 1973, A.R.S. § 23--1064 allowed the dependency presumption to apply to a husband only if he was 'mentally or physically incapacitated from wage-earning', and had not abandoned his wife at the time of the injury. I...