Hemmerling v. Happy Cab Co., S-94-173

• Decision Date: 05 May 1995
• Docket Number: No. S-94-173,S-94-173
• Citation: 530 N.W.2d 916,247 Neb. 919
• Parties: Stephen R. HEMMERLING, Appellant, v. HAPPY CAB CO., Appellee.
• Court: Nebraska Supreme Court

Page 916

530 N.W.2d 916

247 Neb. 919

Stephen R. HEMMERLING, Appellant, v. HAPPY CAB CO., Appellee.

No. S-94-173.

Supreme Court of Nebraska.

May 5, 1995.

Syllabus by the Court

1. Workers' Compensation: Appeal and Error. A judgment, order, or award of the compensation court after review shall have the same force and effect as a jury verdict in a civil case.

2. Workers' Compensation: Appeal and Error. A judgment, order, or award of the compensation court may be modified, reversed, or set aside only upon the grounds that (1) the compensation court acted without or in excess of its powers; (2) the judgment, order, or award was procured by fraud; (3) there is not sufficient competent evidence in the record to warrant the making of the order, judgment, or award; or (4) the findings of fact by the compensation court do not support the order or award.

3. Master and Servant. Where the inference is clear that there is, or is not, a master and servant relationship, the matter is a question of law.

4. Workers' Compensation: Independent Contractor: Words and Phrases. An independent contractor is one who, in the course of an independent occupation or employment, undertakes work subject to the will or control of the person for whom the work is done only as to the result of the work and not as to the methods or means used. Such a person is not an employee within the meaning of the workers' compensation statutes.

5. Independent Contractor: Employer and Employee. There is no single test to determine whether a worker is an employee or an independent contractor, but the determination must be made from all the facts in the case. Control or the right of control is the chief factor to be considered when identifying one acting on behalf of another as an employee or an independent contractor; it is not the conclusive factor.

6. Independent Contractor: Employer and Employee: Contracts. Employer-employee and employer-independent contractor relationships arise from the contract between the parties.

7. Independent Contractor: Contracts. When there is a written contract between the parties which denominates and describes the relationship as that of independent contractor, and nothing in the manner of performance by the parties is inconsistent with the relationship described, then the independent contractor is not deemed to be an employee as a matter of law.

Howard A. Kaiman, for appellant.

Patrick B. Donahue, of Cassem, Tierney, Adams, Gotch & Douglas, for appellee.

WHITE, C.J., CAPORALE, FAHRNBRUCH, LANPHIER, and WRIGHT, JJ.

LANPHIER, Justice.

While operating a Happy Cab Co. taxicab, appellant, Stephen R. Hemmerling, was involved in a traffic accident and suffered personal injuries. Hemmerling's claim for workers' compensation benefits was denied, and Hemmerling filed a petition in the Workers' Compensation Court. In his petition, Hemmerling stated that the matters in dispute were "whether accident occured [sic] arising out of course of employment, extent of disability[,] whether plaintiff was an employee, medical bills." The court held that Hemmerling was an independent contractor on the date of the accident and not an employee. Therefore, the court denied Hemmerling's claim for workers' compensation benefits without reaching any of the other disputed matters. Hemmerling appealed to the Workers' Compensation Court review panel, which affirmed the denial of benefits. Hemmerling appealed the review panel's decision to the Nebraska Court of Appeals, which also held that Hemmerling was an independent contractor rather than an employee and affirmed the lower courts' denial of benefits. Hemmerling v. Happy Cab Co., 94 NCA No. 44, case No. A-94-173, 1994 WL 646113 (not designated for permanent publication). We granted Hemmerling's petition for further review and reverse the holdings of the lower courts. The contractual agreements between the parties placed the right of control over the taxicab in Happy Cab, and Happy Cab in fact exercised extensive control over the taxicab and its only driver, Hemmerling. Therefore, as a matter of law, Hemmerling is an employee rather than an independent contractor and thus is entitled to workers' compensation coverage. We remand the cause for a determination of the remaining matters in dispute.

STATEMENT OF FACTS

On June 1, 1992, while Hemmerling was operating a Happy Cab taxicab, the taxicab was struck from behind by a rental truck, and Hemmerling was injured. Hemmerling testified that after the accident, he suffered lightheadedness and ringing in his ears. Hemmerling tried to return to work, but he did not feel he could safely drive a cab, and left the occupation.

At the time of the hearing in Workers' Compensation Court, Happy Cab operated approximately 95 cabs. Richard Anderson, president of Butler Holdings Company, which owns Happy Cab, testified that the Nebraska Public Service Commission (PSC) requires the cabs to be owned by the cab company. The cab company then leases the cabs to drivers. On September 13, 1991, the parties executed two agreements, a rental agreement and an equipment lease agreement.

In the rental agreement, Happy Cab is referred to as "Equipment Company" and Hemmerling is referred to as "Renter." Under the rental agreement, Happy Cab provided a taxicab to Hemmerling for a term of 1 month, such term to be automatically renewed unless canceled pursuant to the terms of the agreement. Hemmerling agreed to pay Happy Cab $275 per week for the use of the taxicab. Hemmerling was required to pay all expenses in operating and maintaining the taxicab. Further, paragraph 6 of the rental agreement states:

Renter represents that it is renting this equipment in lieu of buying this or a comparable motor vehicle to permit Renter to enter into an independent contractor agreement with a certificated motor carrier approved by Equipment Company wherein Renter will provide a qualified and approved driver and fully maintained equipment to supplement the motor vehicle fleet of the motor carrier pursuant to the applicable directives of the Nebraska Public Service Commission.

By the terms of the second agreement, the equipment lease agreement, also executed on September 13, Hemmerling leased the taxicab to Happy Cab for a term of 1 year. Anderson testified that the lease agreement was drafted by the PSC and that the leases of all current cab operators had to be submitted to the PSC on a monthly basis.

In the equipment lease agreement, Hemmerling is referred to as the "lessor" and Happy Cab is referred to as the "lessee." The following terms of the equipment lease agreement are pertinent to this issue:

2. LESSOR*, LESSEE* shall pay for all gasoline, oil and other operating expenses, and all repairs necessary to keep such equipment in good running condition throughout the term of this lease. LESSOR*, LESSEE* shall be responsible and pay all necessary licenses for such equipment as may legally be required....

....

4. Possession and control of the equipment during the period of this lease is entirely vested in the Lessee, in such way as to be good against all the world, including the Lessor. Operation of the equipment shall be under the exclusive control and supervision of the Lessee which will be operated by Lessee in the ordinary course of Lessee's business.

5. The driver of the equipment shall be exclusively the employee of the LESSOR*, LESSEE* and the will pay the salaries of the personnel necessary to operate the equipment, and all cost of Workmen's Compensation Insurance or other employee insurance and taxes required by law.

(Emphasis supplied.)

Paragraphs 2 and 5 contain the alternative terms "lessor" and "lessee." The agreement states the parties were to strike the party (marked by an asterisk) which did not apply. The parties failed to strike the inapplicable party in both paragraphs. By the terms of the above agreements, Hemmerling had use of the cab on a 24-hour basis. Hemmerling had no set working hours but, according to PSC rules, could drive no more than 12 hours during a 24-hour period. Hemmerling could make personal use of the cab, but he could not subcontract the vehicle to another driver or set up his own taxi service. Although Happy Cab did not set hours for its drivers, it would call drivers to work if needed. If called, the driver was not required to respond.

Hemmerling kept all the fares generated by driving the cab. Drivers obtained passengers by taking orders off the radio. A driver would request an order for a fare from the dispatcher by first driving to a specified zone and calling the dispatcher by radio to notify the dispatcher that the driver was available in the zone. An order was then offered to the driver on a basis of "first come, first served." If the driver refused the order, the order would then be offered to the next driver. Once a driver refused an offer, Happy Cab required the driver to drive to another zone before that driver could receive another offer.

Drivers could solicit their own business independently of the dispatch service. Passengers could be solicited at the airport, the bus depot, and hotels. However, drivers were not allowed to carry beepers or cellular phones in their cabs. Anderson testified that drivers were not permitted phones or beepers for safety reasons.

Organizations such as the public schools and the Department of Social Services contracted with Happy Cab for cab service and paid for or charged this service directly to Happy Cab. In those instances, 100 percent of the fares generated were turned over to the driver by Happy Cab.

New drivers were required to complete an application stating their work history and to obtain a permit from the Omaha police department. Pursuant to Happy Cab policy, drivers were subject to drug screening and a criminal history background check before being hired. New drivers were given a collection of documents entitled "Taxicab Trainee Guide." The trainee guide contained information...