Kepa v. Hawaii Welding Co., Ltd.

Decision Date19 January 1976
Docket NumberNo. 5649,5649
Citation56 Haw. 544,545 P.2d 687
CourtHawaii Supreme Court
PartiesSamson K. KEPA, Claimant-Appellee, v. HAWAII WELDING COMPANY, LTD., and First Insurance Company of Hawaii, Employer, Insurance Carrier-Appellant, and J. A. Thompson & Son, Inc., and Industrial Indemnity Co., Employer, Insurance Carrier-Appellee.

Syllabus by the Court

1. The paramount consideration in determining whether alleged special employer is in fact a special employer of worker, in workmen's compensation lent employee cases, is whether the alleged special employer exercises control over the details of the work of the loaned employee and such control strongly supports the inference that a special employment exists.

2. Workmen's compensation laws were enacted as a humanitarian measure, to create legal liability without relation to fault.

3. Workmen's compensation laws represent a socially enforced bargain: the employee giving up his right to recover common law damages from the employer in exchange for the certainty of a statutory award for all work-connected injuries.

4. Since liability is made dependent on a nexus to the job, the essential prerequisite for coverage under workmen's compensation acts is the existence of an employer-employee relationship.

5. In determining whether control of the lent employee has been transferred to a borrowing employer, a factor to consider is whether the lent employee was using heavy equipment that belonged to the lending employer.

6. The relationship between an employer and employee must be entered into in a deliberate manner with the informed consent of both parties.

Walter Davis, Honolulu (Davis, Witherwax, Playdon & Gerson, Honolulu, of counsel), for employer, insurance carrier-appellant.

John A. Roney, Honolulu (Stubenberg Shigemura, Roney & Gniffke, Honolulu, of counsel), for employer, insurance carrier-appellee.

Before RICHARDSON, C. J., KOBAYASHI, OGATA and MINOR, JJ., and LANHAM, Circuit Judge, in place of KIDWELL, J., disqualified.

KOBAYASHI, Justice.

This is an appeal by Hawaii Welding Company, Ltd. (Hawaii Welding) and its insurer, First Insurance Company of Hawaii (First Insurance) from a decision by the Labor and Industrial Relations Appeals Board (Appeals Board). The case was submitted to the Appeals Board to determine which, of two possible companies, was the liable employer of Samson Kepa (Kepa), a claimant under Hawaii's Workmen's Compensation Laws. At the time of the industrial accident which disabled him, Kepa was being paid by Hawaii Welding but was working on a project of appellee, J. A. Thompson & Son, Inc. (Thompson). The Appeals Board decided that Hawaii Welding had not transferred sufficient control over Kepa to Thompson so as to make Thompson the liable employer under HRS § 386-1 of the Workmen's Compensation Act. Hawaii Welding was, therefore, held to be the liable employer. We affirm.

STATEMENT OF THE CASE

In early 1969, Thompson was engaged in a project to install a water line in Kahaluu on the island of Oahu as part of a contract they had with the Board of Water Supply. At a stage of the project, the need for a welder arose, but none of Thompson's welders was available to do the work.

Thompson called Hawaii Welding and requested a welder 'to work as directed'. In addition to other activities, Hawaii Welding was engaged in the business of renting out men and equipment on an hourly basis.

In response to Thompson's request, Hawaii Welding sent Kepa, one of their journeyman welders, to the Kahaluu project site. Kepa came to the job site fully equipped with Hawaii Welding equipment and a few of his own tools. The Hawaii Welding equipment included a pickup truck, oxygen tanks, acetylene tanks, cutting torches, hoses, a welding machine, leads, rods, goggles and jacket.

Kepa's workday typically began at 6:30 a. m. at the Hawaii Welding base yard where he picked up a company truck and drove it to Thompson's Kahaluu project site. Work at the project started at 7:00 a. m. but Kepa was paid his regular wages by Hawaii Welding, starting at 6:30 a. m. For Kepa's services and the use of their equipment, Hawaii Welding charged Thompson a flat hourly rate ($13.20 per hour).

While at the project, Kepa was under the general supervision of the project superintendent, an employee of Thompson. The superintendent informed Kepa of the nature and general details of specific tasks that Kepa was to perform but Kepa had control of the manner, specific details, and methods of his own work. Thompson's supervisor had the right to order Kepa to leave the job site if he was not satisfied with Kepa's work or conduct but he or Thompson did not have the power to fire Kepa from his job with Hawaii Welding.

Thompson's need for a welder was not continuous and so Kepa worked only on days when the project superintendent felt he was needed. The superintendent was quite satisfied with Kepa's work and so whenever he needed a welder, he requested that Hawaii Welding send Kepa. Hawaii Welding was not obligated to send Kepa but did so whenever it could. On July 1, 1969 the superintendent made such a request, at which time Hawaii Welding sent Kepa pursuant to a master purchase order which stated that it would furnish a welder to Thompson 'to work as directed'. This master purchase order was the same one drawn up at the time of Thompson's initial request for a welder. Subsequent requests were generally done by telephone without drawing up new purchase orders.

On July 8, 1969, Kepa was performing a task at the Kahaluu job site that was assigned to him by the project superintendent, He was standing on a wooden-beam strut, that Thompson employees had set up, when the strut collapsed. Kepa fell approximately nine feet and struck portions of his back and the back of his head and thereby sustained compensable injuries under Hawaii's Workmen's Compensation Laws. No one disputes the validity of his claim.

Hawaii Welding's insurer, First Insurance, began paying Workmen's Compensation benefits to Kepa before discovering that he was working on a Thompson project at the time of the accident. Subsequently, Hawaii Welding requested a hearing before the Workmen's Compensation Division of the Department of Labor and Industrial Relations urging that Kepa was an employee of Thompson under HRS § 386-1 when he was injured.

A hearing was held and the Director of Labor and Industrial Relations held that Hawaii Welding was the liable employer. Hawaii Welding and First Insurance appealed from the Director's decision to the Appeals Board. The Appeals Board also found Hawaii Welding to be the liable employer and from this decision the appellants appeal.

RELEVANT STATUTE

HRS § 386-1 Definitions, in pertinent part, provides:

'Employee' means any individual in the employment of another person except where such employment is solely for personal, family, or household purposes.

Where an employee is loaned or hired out to another person for the purpose of furthering the other person's trade, business, occupation, or profession, the employee shall, beginning with the time when the control of the employee is transferred to the other person and continuing until the control is returned to the original employer, be deemed to be the employee of the other person regardless of whether he is paid directly by the other person or by the original employer. The employee shall be deemed to remain in the sole employment of the original employer if the other person fails to secure compensation to the employee as provided in section 386-121.

Whenever an independent contractor undertakes to perform work for another person pursuant to contract, express or implied, oral or written, the independent contractor shall be deemed the employer of all employees performing work in the...

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