Jensen Tech Servs. v. Labor Comm'n
| Decision Date | 03 February 2022 |
| Docket Number | 20200194-CA |
| Citation | 506 P.3d 616 |
| Parties | JENSEN TECH SERVICES and Sentinel Insurance Company Ltd., Petitioners, v. LABOR COMMISSION and Sergio Herrera, Respondents. |
| Court | Utah Court of Appeals |
Ryan P. Atkinson, Scarlet R. Smith, and Matthew A. Jones, Salt Lake City, Attorneys for Petitioners
Gary E. Atkin, Salt Lake City, and Marsha S. Atkin, Attorneys for Respondent Sergio Herrera
Opinion
¶1 On a job-by-job basis, Sergio Herrera agreed to provide IT services for Jensen Tech Services’ (Jensen) clients. While performing one of these unsupervised work orders, Herrera fell from a ladder, injuring his ankle. When Herrera sought compensation, the Utah Labor Commission (the Commission) ultimately identified Herrera as Jensen's employee and thus ruled that he qualified for workers’ compensation benefits. However, after reviewing the record before us, we set aside the Commission's decision and instruct the Commission to reconsider the issue in accordance with the following opinion.
The Agreement further stated that Herrera would be paid based on completed work orders and that, "[a]s an independent contractor," Herrera did not enter an employer–employee relationship, could not act as Jensen's agent, would provide his own tools and materials, and would be responsible for his own taxes and withholdings as well as necessary insurance, taxes, and withholdings for any subcontractors or consultants hired by Herrera. And although Herrera testified that he was free to accept work from others or refuse available jobs, for a period of time he received so many jobs from Jensen that he sought no other work.
¶3 Generally speaking, Herrera would call Jensen's dispatch or check its online portal to receive a work order that instructed him on where and when to perform the work. If he found the job parameters acceptable, Herrera would take the job and, upon arriving at the worksite, check-in with the customer and Jensen using the online portal. During each job, Jensen provided Herrera with a "phone line" and "consumables ... [or] special cable ... use[d] to access some of the clients’ switches and routers," as well as the cables for installation and a laptop for connecting the IT switches. The tools and equipment that Herrera provided for himself included transportation, working tools, drills, cutters, screwdrivers, a phone-line tracer, a ladder, and a personal cell phone—camera included. Herrera's actual work went unsupervised even though Jensen's owner and other Jensen contractors sometimes worked at the same job site. But upon finishing the work order, Herrera checked out through the online portal, sent pictures of his work to the customer and Jensen (depending on the job requirements), and either received Jensen's approval or was required to return and "correct the work without pay." Jensen received payment for the work order's satisfactory completion and then paid Herrera, usually by the job and sometimes by the hour (at times including mileage), but did not withhold taxes and instead provided Herrera with a 1099 tax form.3
¶4 While attending to the work order relevant to this case, Herrera stood atop a twelve-foot A-frame ladder, and as he ran a phone cable to an alarm system, the ladder fell out from under him. Despite his efforts to hang from the ceiling with his hands, Herrera dropped "about 16 feet," crashing feet first onto the concrete floor and injuring his left ankle. Herrera called Jensen's dispatch and was instructed to go to the hospital, where he was diagnosed "with a left tibial fracture
and ligament injuries in his left ankle." Following surgery and physical therapy, Herrera began working for a different company several months later.
¶5 Around that same time, Herrera applied for workers’ compensation benefits, seeking payment for "medical expenses, follow-up care, and compensation" for the period that had passed since the accident. Jensen and Sentinel Insurance Company contested the application. In response, an administrative law judge (the ALJ) conducted an evidentiary hearing to determine if Herrera qualified as a Jensen "employee" for workers’ compensation purposes. Following the hearing, the ALJ entered findings of fact nearly identical to those recited above. The ALJ concluded that, based on an application of these facts to various legal factors used to identify independent contractors, Herrera did meet the definition of an independent contractor and thus did not qualify for workers’ compensation benefits. The ALJ accordingly denied Herrera's application.
¶6 Herrera sought review from the Commission. Although it adopted many of the ALJ's findings of fact, the Commission rejected the ALJ's conclusion and determined that Herrera was Jensen's employee and qualified for workers’ compensation benefits. In making this determination, the Commission relied on the facts that Herrera performed the same work as Jensen itself, that Herrera testified to working a full-time schedule for Jensen, and that Jensen could require Herrera to correct unsatisfactory installations. The Commission also relied on its understanding of the word "employee" and on the Agreement. According to the Commission, the Agreement contained ambiguity regarding the meaning of the word "buyer" and the scope of the Agreement's noncompete clause. The Commission stated that, because the Agreement contained ambiguity, and "[b]ecause Jensen controlled the terms of the [Agreement] that it required ... Herrera to sign, the ambiguity must be construed against Jensen." The Commission determined that the Agreement "limited [Herrera] from competing with Jensen and obtaining work from a ‘buyer’ outside of his work with Jensen," including "preventing ... Herrera from seeking work from even prospective clients outside of his work with Jensen," thus suggesting that "Jensen retained a right to control" Herrera that is fundamental to an employer–employee relationship as opposed to independent-contractor status.
¶7 On remand, the ALJ awarded Herrera benefits. When Jensen requested the Commission's review, the Commission affirmed the ALJ's order and reiterated the same findings of fact. And in its conclusion, the Commission mentioned that Jensen provided necessary equipment, "such as cable and a laptop," and emphasized the Agreement's noncompete provision and Jensen's right to approve the final work product.
¶8 Jensen now seeks judicial review.
¶9 Jensen asserts that the Commission failed to properly and completely employ the correct legal standard in determining Herrera's status as an employee as opposed to an independent contractor.4 "Whether the Commission applied the correct legal standard is a question of law we review for correctness." YESCO v. Labor Comm'n , 2021 UT App 96, ¶ 13, 497 P.3d 839 ; see also Utah Code Ann. § 63G-4-403(4)(d) (LexisNexis 2019) (). And when an agency misapplies the governing law in making a decision, we may set aside the resulting decision with instructions to reconsider the issue. See Oliver v. Labor Comm'n , 2013 UT App 301, ¶¶ 14–15, 318 P.3d 777.
¶10 Jensen contends that although the Commission referenced the right-to-control analysis, which governs this case, it "failed to continue with the analysis." We agree. While our caselaw has established a robust right-to-control test and associated analysis to assist in applying the governing statutes, the Commission did not fully engage with that analysis.
¶11 Utah Code provides that "[a]n employee ... who is injured ... by accident arising out of and in the course of the employee's employment ... shall be paid ... compensation for loss sustained on account of the injury." Utah Code Ann. § 34A-2-401(1)(a) (LexisNexis 2019). Thus, before benefits can be issued, a key question is whether the requesting individual is actually an "employee."
¶12 An "employee" is "a person in the service of any employer, ... who employs one or more workers or operatives regularly in the same business, ... under any contract of hire[,] ... not including any person whose employment ... is casual[ ] and ... not in the usual course of the trade, business, or occupation of the employee's employer." Id. § 34A-2-104(1)(b).
Id. § 34A-2-103(2)(b)(i) (Supp. 2021). Our jurisprudence's "right to control" test is anchored in these statutes. See Utah...
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Christensen v. Labor Comm'n & Salt Lake Cnty.
...standard to the County's actions that post-date Christensen's complaint. 37 See Jensen Tech Services v. Labor Comm'n, 2022 UT App 18, ¶ 9, 506 P.3d 616 ("[W]hen an agency misapplies the governing law in making a decision, we may set aside the resulting decision with instructions to reconsid......