Kiele v. Steve Henderson Logging

• Decision Date: 01 November 1995
• Docket Number: No. 21116,21116
• Citation: 127 Idaho 681,905 P.2d 82
• Parties: Dennis W. KIELE, Claimant-Respondent, v. STEVE HENDERSON LOGGING, Employer and Associated Loggers Exchange, Surety, Defendants-Appellants. North Idaho, April 1995 Term
• Court: Idaho Supreme Court

Page 82

905 P.2d 82

127 Idaho 681

Dennis W. KIELE, Claimant-Respondent, v. STEVE HENDERSON LOGGING, Employer and Associated Loggers Exchange, Surety, Defendants-Appellants.

No. 21116

Supreme Court of Idaho,

North Idaho, April 1995 Term.

Nov. 1, 1995.

Moffat, Thomas, Barrett, Rock & Fields, Chartered, Boise, for appellant. John Barrett argued.

Gregory C. Dickison, Moscow, for respondent.

SCHROEDER, Justice.

I. BACKGROUND AND PRIOR PROCEEDINGS

This is an appeal of an Industrial Commission ruling which determined that the respondent, Dennis Kiele, was acting in the capacity of an employee of the appellant, Steve Henderson Logging, at the time that he was totally and permanently disabled in an accident while operating a road grader. On cross-appeal respondent Kiele requests attorney fees pursuant to I.C. § 72-804.

The claimant, Dennis W. Kiele (Kiele), was permanently and totally disabled August 5, 1992, while operating a road grader on a logging project located on state land near Kooskia. At the time of the accident, Kiele operated a small ranch in the area. However, he had done contract logging off and on throughout his adult life, and he owned a road grader.

On the day of the accident Kiele was hired by Steve Henderson, owner of Steve Henderson Logging, Inc. (Henderson Logging), to grade a road on a timber sale project that Henderson had contracted with Kooskia Timber to log. Henderson Logging hired Kiele to do the road grading because its road grader and operators were busy on another job, and the road was due to be inspected by an Idaho Department of Lands resource manager who had expressed concerns about the condition of the logging road. Henderson Logging was responsible for building and maintaining the logging roads and for related erosion control pursuant to its contract with Kooskia Timber.

Kiele and Henderson met at the site of the logging project at 6 a.m. the day of the accident and drove the length of the road to be graded so that Henderson could show Kiele what work needed to be done to pass inspection by the Department of Lands resource manager, and thus comply with Henderson Logging's contract with Kooskia Timber. Once Kiele was lined out, Henderson left and Kiele proceeded on his own.

Kiele and Henderson did not discuss the terms by which Kiele would be paid for the road grading work. However, Henderson had previously paid Kiele at the rate of $55 per hour for another road grading project. They did not discuss tax withholding and worker's compensation. In the past Kiele had reported his earnings from operating his equipment on a "Schedule C" tax form and paid the appropriate self-employment tax listing himself as "self employed." After the accident Henderson did not pay Kiele for the short time that he worked, and Kiele never filed a wage claim.

Kiele filed a claim for disability benefits on January 21, 1993. Henderson Logging denied that an employee-employer relationship existed at the time of the accident. Following a hearing the Industrial Commission Referee (the Referee) filed her Findings of Fact, Conclusions of Law, and Proposed Order in which she concluded that Kiele was an employee of Henderson Logging at the time of the accident. The Referee's findings and conclusions were adopted in full by the Industrial Commission. After various supplemental proceedings the Commission concluded that Kiele was totally and permanently disabled and thus entitled to benefits.

II. THE INDUSTRIAL COMMISSION UTILIZED ERRONEOUS EVIDENCE IN ITS CONCLUSION THAT KIELE WAS AN EMPLOYEE AT THE TIME OF THE ACCIDENT WHICH REQUIRES A REMAND

Idaho Code § 72-102 defines employee and independent contractors as follows:

(10) "Employee" is synonymous with "workman" and means any person who has entered into the employment of, or who works under contract of service or apprenticeship with, an employer....

(14) "Independent contractor" means any person who renders service for a specified recompense for a specified result, under the right to control or actual control of his principal as to the result of his work only and not as to the means by which such result is accomplished.

Whether a claimant is an employee or an independent contractor is a factual determination. Mortimer v. Riviera Apartments, 122 Idaho 839, 844, 840 P.2d 383, 388 (1992). The Court will not overturn factual findings made by the Commission when those findings are supported by substantial and competent evidence, even if conflicting evidence exists. Id. See also Idaho Const. art. 5, § 9; I.C. § 72-732.

The test in determining whether a worker is an independent contractor or an employee is whether the contract gives, or the employer assumes, the right to control the time, manner and method of executing the work, as distinguished from the right merely to require certain definite results. Ledesma v. Bergeson, 99 Idaho 555, 558, 585 P.2d 965, 968 (1978); I.C. § 72-102(14).

Four factors are used to determine whether a right to control exists: 1) direct evidence of the right, 2) method of payment, 3) furnishing major items of equipment, and 4) the right to terminate the relationship at will. Mortimer, 122 Idaho at 844, 840 P.2d at 388. When applying the right to control test the Commission must balance each of the elements present to determine their relative weight and importance, since none of the elements in itself is controlling. Roman v. Horsley, 120 Idaho 136, 138, 814 P.2d 36, 38 (1991); In Matter of Hanson, 114 Idaho 131, 134, 754 P.2d 444, 447 (1988).

When doubt exists as to whether an individual is an employee or an independent contractor under Idaho's Worker's Compensation Act, the act must be given a liberal construction by the Industrial Commission in its fact finding function in favor of finding the relationship of employer and employee. Mortimer, 122 Idaho at 845, 840 P.2d at 389; Olvera v. Del's Auto Body, 118 Idaho 163, 165, 795 P.2d 862, 864 (1990).

The Referee placed considerable weight upon the terms of the contract between Kooskia Timber, Inc. and Henderson Logging in determining that Kiele was an employee of Henderson Logging, making the following findings:

Under the Kooskia Timber Contract, Henderson had the obligation to provide the equipment, personnel, experience and operating know-how to undertake the logging work set forth in the contract (Exhibit 1, p. 2). The contract presumed that Henderson's personnel would be employees, as inferred by the requirement that Henderson provide workers' compensation insurance for all employees.

The Referee construed the contract to create quasi estoppel to bar Henderson Logging from claiming Kiele was not an employee:

Here, Henderson entered into a contractual agreement with Kooskia Timber knowing that he was to supervise his personnel and provide workers' compensation insurance. He now claims that he did not supervise or control Claimant, which is in violation of his agreement. Likewise, Claimant testified that he assumed he was covered as one of the crew. Claimant was one of the crew. To allow Henderson to unilaterally abrogate his duties under the contract at Claimant's expense i[s] inequitable. Henderson did not properly delegate any duties to Claimant under the contract. The Referee finds that Henderson retained the right and duty to control Claimant under the contract and did actually control Claimant by showing him where to grade rather than leaving it up to Claimant's discretion or expertise.

The parties agree that the Referee misconstrued Henderson Logging's contract with Kooskia Timber in concluding that, "the contract presumed that Henderson's personnel would be employees, as inferred by the requirement that Henderson provide worker's compensation insurance for all employees." Using this erroneous conclusion the Referee further concluded that, because Henderson Logging was required to supervise its personnel, Henderson Logging was contractually bound to supervise Kiele. These misconstructions of the contract cannot form a basis for the conclusion that Kiele was an employee. The question then is whether absent the Referee's erroneous reliance on the misinterpretation of the contract as direct evidence of Henderson's right to control Kiele's performance there is substantial and competent evidence to support the Commission's conclusion that Kiele was acting

[127 Idaho 684] in the capacity of an employee of Henderson Logging at the time of the accident. This requires analysis of the four factors set forth in Mortimer, 122 Idaho at 844, 840 P.2d at 388.

A. Direct Evidence of the Right to Control or Exercise of Control

The only direct evidence of Henderson's right to control or exercise of control over Kiele's work cited by the Referee was: (1) Henderson showed Kiele where to grade rather than leaving it up to his discretion or expertise; and (2) Henderson retained primary responsibility for road maintenance and erosion control under the contract with Kooskia...