Hughes v. Industrial Commission

• Decision Date: 22 June 1976
• Docket Number: CA-IC,No. 1,1
• Citation: 551 P.2d 962,27 Ariz.App. 152
• Parties: Charlotte HUGHES, Petitioner, v. The INDUSTRIAL COMMISSION of Arizona, Respondent, Alice Nedelec (Alice's House of Real Estate), Respondent Employer. 1422.
• Court: Arizona Court of Appeals

Page 962

551 P.2d 962

27 Ariz.App. 152

Charlotte HUGHES, Petitioner, v. The INDUSTRIAL COMMISSION of Arizona, Respondent Alice Nedelec (Alice's House of Real Estate), Respondent Employer.

No. 1 CA-IC 1422.

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

June 22, 1976.

Rehearing Denied Aug. 19, 1976.

Robert Morrison, Sierra Vista, for petitioner.

Greg L. Folger (former Chief Counsel), by Calvin Harris, The Industrial Commission of Ariz., Phoenix, for respondent.

OPINION

NELSON, Judge.

On this review of an Industrial Commission award, we are called upon to determine whether the employer in question was subject to the provisions of the Arizona Workmen's Compensation Act because she had three or more workers in her employ.

Charlotte Hughes (Hughes), the petitioner herein, was employed as a receptionist by Alice Nedelec d.b.a. Alice's House of Real Estate (Alice's). Hughes alleged that she sustained an industrial injury which resulted in the amputation of the right ring finger and other injuries to the right hand. At the time of the incident, Alice's was not insured under the Arizona Workmen's Compensation Law.

While Alice's carried no workmen's compensation coverage, the law is clear that if three or more workmen are employed, the Act comes into operation. Respondent Industrial Commission has argued that the real estate salesmen associated with Alice's were correctly characterized as independent contractors rather than employees. This classification of the salesmen allows the employer to invoke one of the exceptions to coverage under the Workmen's Compensation Act. A.R.S. § 23--902(C). The applicable statutory provisions are A.R.S. § 23--902(B) and (C):

'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 contractors 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.'

The right to control the method of reaching a desired result is the governing aspect in determining whether an individual is an employee or independent contractor. El Dorado Insurance Company v. Industrial Commission, 25 Ariz.App. 617, 545 P.2d 465 (1976); Reed v. Industrial Commission, 23 Ariz.App. 591, 534 P.2d 1090 (1975). 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).

After the Industrial Commission hearing, the hearing officer found that Hughes offered no evidence as to whether the defendant employer retained supervision or control of the work performed by the three commissioned salesmen and whether their work was part of the trade or business of the employer. It was further found that there was insufficient evidence from which to draw a reasonable inference or to establish the exact nature of the relationship between the named employer and the salesmen as independent contractors or employees. In essence, the hearing officer found that Hughes had failed to sustain her burden of proof.

We disagree with the conclusions of the hearing officer that Alice's was not subject to the provisions of A.R.S. § 23--902 and A.R.S. § 23--901, and that the Commission was without jurisdiction to grant relief.

Hughes contends that the rules of the Real Estate Commission and the Arizona Revised Statutes pertaining to the licensing of brokers and salesmen (see A.R.S. §§ 32--2101 et seq.) support her position that a real estate salesman is under the complete control of the broker. It is further urged that a reading of the statute precludes a finding that a real estate salesman is an independent contractor.

To sustain her argument, petitioner cites Faith Realty and Development Company v. Industrial Commission of Colorado, 170 Colo. 215, 460 P.2d 228 (1969). We believe that the case supports Hughes' contention that real estate salesmen are employees and not independent contractors. In the Faith Realty case, reliance was placed upon the Colorado Real Estate Brokers and Salesmen License Law. Recognizing that protection of the public was the main goal of the Act, the court stated:

'To accomplish that purpose the Act, we think, envisions an employer-employee relationship because it clothes the broker not only with the right to control his salesmen but it also charges him with a duty to do so.' C.R.S.1963, 117--1--5(5). 170 Colo. at 220, 460 P.2d at 230.

The Arizona Courts have also cited protection of the public as being the underlying purpose of the state's real estate law. Bonasera v. Roffe, 8 Ariz.App. 1, 442 P.2d 165 (1968).

Specific elements of the Colorado Real Estate statute were relied on in the Faith Realty case, supra. We find the analogous portions of the Arizona Real Estate statute to be relevant here: (1) a broker must retain the license of each salesman he employs (A.R.S. § 32--2128, C.R.S.1963, 117--1--6); (2) the license should be returned to the Commissioner when the licensee leaves his employ (A.R.S. § 32--2128, C.R.S.1963, 117--1--7); (3) the license of a broker or salesman is subject to revocation if the licensee represents or attempts to represent without consent, a real estate broker other than his employer (A.R.S. § 32--2153A(12), C.R.S.1963, 117--1--12(f)). In addition to...