Glick v. H. A. Montgomery Co., Docket No. 7291

• Citation: 177 N.W.2d 724,22 Mich.App. 678
• Decision Date: 26 March 1970
• Docket Number: No. 1,Docket No. 7291,1
• Parties: David GLICK, Plaintiff-Appellant, v. The H. A. MONTGOMERY COMPANY and Royal Indemnity Company, Defendants-Appellees
• Court: Court of Appeal of Michigan (US)

Page 724

177 N.W.2d 724

22 Mich.App. 678

David GLICK, Plaintiff-Appellant, v. The H. A. MONTGOMERY COMPANY and Royal Indemnity Company,

Defendants-Appellees.

Docket No. 7291.

Court of Appeals of Michigan, Division No. 1.

March 26, 1970.

Leave to Appeal Denied June 9, 1970.

Released for Publication June 26, 1970.

Kalem E. Garian, Highland Park, for plaintiff-appellant.

John R. Brown, Detroit, for defendants-appellees.

Before QUINN, P.J., and R. B. BURNS and FITZGERALD, JJ.

R. B. BURNS, Judge.

Plaintiff appeals a four to three decision of the workmen's compensation appeal board reversing a finding by the referee that plaintiff was an employee of defendant H. A. Montgomery Company at the time he was injured in a fall from a ladder at defendant's premises on November 18, 1964. The question to decide is whether for purposes of workmen's compensation plaintiff was an employee of defendant at the time of his injury.

Plaintiff became a journeyman electrician in 1929 and so remained. He never obtained a contractor's license. In 1959, at age 65, plaintiff commenced drawing social security payments. To supplement his income he worked on a part-time employment basis for his brother, an electrical contractor, until 1962, after which time he did part-time journeyman electrical repair work on his own. In late 1964, plaintiff's part-time work was performed almost exclusively for defendant, a chemical manufacturing corporation. Between the 15th and 20th of each month plaintiff would go to the plant and oil all the motors and do general repair and maintenance work on the electrical equipment. He was also on call for any breakdown or sudden repair work required. He was not authorized to do any new work or work requiring a permit. For that defendant hired electrical contractors.

The majority of the appeal board determined plaintiff to be an independent contractor rather than defendant's employee. They based this conclusion on the following facts:

'1. Plaintiff provided the same service for other factories and homes.

'2. He deliberately limited his earnings to a total of not more than $100 a month for social security purposes.

'3. No social security tax was deducted by the defendant.

'4. No income tax was deducted by the defendant.

'5. The plaintiff filed an income tax profit and loss from business, Form C.

'6. No W-2 Form filed by the defendant or requested by the plaintiff.

'7. Plaintiff only worked when called, other than once a month for machine oiling.

'8. Plaintiff worked unsupervised.

'9. His work as a tradesman is especially amenable to an independent contractor status.

'10. He kept his own records and did his own billing.

'11. Tax records indicated he did business under a business name.

'12. He earned additional profit through markups on materials.

'13. He used his own tools.

'14. He hired additional help when necessary.'

The dissenting opinion is more persuasive and we quote that portion which analyzes the above points.

'The unrebutted proofs presented paint an entirely different picture of the economic realities existing between the disputing parties than does the 14 brush strokes used by my associate in his opinion. Before we turn to the unrebutted proofs which in my opinion show the true status of the economic relationship existing between the defendant and the plaintiff herein, let us examine the 14 reasons assigned by my associate for holding that plaintiff was an independent contractor.

'Several of the 14 reasons assigned as showing an independent contractor relationship flow from the same proofs and are tantamount to restatements of the first stated. An example of this are items 3, 4, 5, 6, and 11 which relate to the income tax records of the parties which show that defendant did not deduct taxes from the sums paid plaintiff and he, being an honest individual, did keep records of his earnings and did report and pay taxes to the federal government upon the sums received. I cannot believe that evidence, which really shows nothing more than that an employer did not comply with federal rules which require him to withhold taxes from his employee's paycheck, is proof that no contract of hire existed between the parties. Such approach would permit any employer to escape the red tape necessary to collect these taxes by simply stating the legal jingle that the 'person is not my employee.' then proving his own statement by showing that to taxes were deducted from the payments made for the services rendered. In my opinion very little, if any, of the economic realities referred to by Mr. Justice Smith are involved in the defendant's failure to deduct taxes from the sums paid plaintiff. Furthermore, in the dissent entered by Mr. Justice Smith in Powell v. Employment Security Commission (1956), 345 Mich. 455, 75 N.W.2d 874, which was later adopted as controlling law, federal tax records such as those relied upon by Mr. Bowerman, were given the following weight in testing the economic realities between the parties:

"It is unnecessary to stress that the ruling of the United States treasury department, made in response to appellants' request, does not control our determination upon these facts. I agree with my Brother that it is not necessary to pass upon the impact of the Federal act on the question here presented.'

'In Item #1 Mr. Bowerman states that plaintiff provided the 'same services' for other factories and homes. What were the services provided? In reality nothing but plaintiff's labor which was of a skilled nature. Plaintiff does not deny that he did sell his labor to another employer prior to 1964 on a part-time basis and that he did on occasion do minor electrical repair jobs for neighbors

'In reporting and paying his income tax to the collector of internal revenue, plaintiff did use the name Glick Electrical Service upon Federal tax returns, but he could not state why. He had never registered this name with the county, but his brother, who was in the contracting business, had done so. Plaintiff had previously worked for his brother and in all probability did at that time report his income as coming from the Glick Electrical Service. The proofs show that plaintiff had never been a partner in the business with his brother, and there is no evidence which shows that plaintiff advertised himself to the community as being in the electrical contracting business, he had no regular payroll, nor employees.

'In Item #2 my associate states that plaintiff deliberately limits his earnings for social security purposes. This economic reality test which leads my associate to conclude that plaintiff was an independent contractor hardly needs comment here; suffice to state, that many thousands of retirees who work part time after their retirement will be surprised to discover that they have suddenly become independent businessmen, not involved with the economic pitfalls of a contract of hire where they are now employed on a part-time basis.

'Item #7 is another way of saying what was said in Item #2. Plaintiff was hired to oil machines between the 15th and 20th of each month and was called to make repairs only when electrical repairs were needed on the part of defendant.

'Item #8 finds that plaintiff worked unsupervised, but the unrebutted proofs recorded on pages 11, 12, 13, 26, 27, and 28 of the record show to the contrary.

'Members of the Electrical Workers Union will be surprised to discover, by the test set forth in Item #9, that they are 'amenable to an independent contractor status' and are 'liable to be brought to account' and made 'answerable' for their work status when they suffer injury. (Last two quotes from Webster's International--see Amenable).

'Defendant did not require plaintiff to punch a time clock, and plaintiff kept a record of the hours he worked and submitted this statement to defendant. Payment at the rate of $4.50 per each hour worked was then made by the defendant. No taxes were deducted and plaintiff did keep records of the sums received and reported these sums on his Federal income tax returns. It would seem to me that Item #11 should get little weight in assessing the economic realities of the relationship existing between the parties.

'Item #12 would...