Little Donkey Enterprises, Inc. v. State Acc. Ins. Fund

• Citation: 845 P.2d 1298,118 Or.App. 54
• Parties: LITTLE DONKEY ENTERPRISES, INC., Petitioner, v. STATE ACCIDENT INSURANCE FUND, Respondent. 8
• Decision Date: 11 August 2001
• Court: Oregon Court of Appeals

Page 1298

845 P.2d 1298

118 Or.App. 54

LITTLE DONKEY ENTERPRISES, INC., Petitioner, v. STATE ACCIDENT INSURANCE FUND, Respondent.

88-11-01; CA A72333.

Court of Appeals of Oregon.

Argued and Submitted Sept. 18, 1992.

Decided Feb. 3, 1993.

Michael J. Gentry, Portland, argued the cause for petitioner. With him on the briefs were Montgomery W. Cobb, David R. Simon and Tooze Shenker Holloway & Duden, Portland.

David L. Runner, Asst. Atty. Gen., Salem, argued the cause for respondent. With him on the brief were Charles S. Crookham, Atty. Gen., and Virginia L. Linder, Sol. Gen., Salem.

Before RICHARDSON, ^* C.J., and DE MUNIZ and LEESON, ^** JJ.

DE MUNIZ, Judge.

Petitioner seeks review of an order of the Department of Insurance and Finance (DIF) on remand after our decision in Little Donkey Enterprises, Inc. v. SAIF, 107 Or.App. 400, 812 P.2d 25 (1991).

We restate the facts for convenience. Petitioner is a transportation management company. It does not own any trucks; it links shippers with truck carriers. Its only facility is an office in a mall complex, where it performs bookkeeping, dispatching and administrative functions. During the audit year 1986-87, it contracted with 29 owner-operators of Class A trucks (18 wheelers) to haul loads for petitioner's shipper customers. Petitioner collected payments from the shippers for loads hauled and paid the owner-operators a percentage of those amounts.

Respondent assessed premiums to petitioner for owner-operators with whom petitioner had contracted. Petitioner requested a hearing. DIF upheld the assessment with respect to owner-operators who operate under petitioner's common carrier license on the theory that, because petitioner retained the right to control the owner-operators' duties and responsibilities, they are petitioner's employees.

In our earlier review, the parties had argued about whether the owner-operators are independent contractors or employees of petitioner. We held that substantial evidence supported DIF's determination that the owner-operators are employees. We also held that, regardless of their status as employees, additional inquiry was necessary to determine whether they might be exempt from compensation coverage under ORS 656.027 as sole proprietors, partners or corporate officers. 107 Or.App. at 403, 812 P.2d 25. We remanded to DIF for it to consider that issue.

On remand, DIF concluded that one owner-operator that had been included in the assessment should have been excluded, because the corporation for whom that trucker worked maintained its own workers' compensation insurance. DIF modified the assessment accordingly. It found no evidence indicating that any other owner-operators should be excluded from coverage.

On this review, petitioner contends that DIF applied an incorrect legal standard in determining which owner-operators are sole proprietors, partners or corporate officers for the purpose of the exemption under ORS 656.027. We conclude that, in our first opinion, we gave ORS 656.027 a broader reading than the language of the statute justifies and that we should not have remanded the case to DIF for reconsideration.

At the relevant time, ORS 656.027 provided, in part:

"All workers are subject to ORS 656.001 to 656.794 except those nonsubject workers described in the following subsections:

" * * * * *

"(7) Sole proprietors.

"(8) Partners who are not engaged in work performed in direct connection with the construction, alteration, repair, improvement, moving or demolition of an improvement on real property or appurtenances thereto.

"(9) A corporate officer who is also a director of the corporation and has a substantial ownership interest in the corporation, regardless of the nature of the work performed by such officer."

In 1989, the legislature amended the statute by adding a condition to subsection (7) that "[w]hen labor or services are performed under contract, the sole proprietor must qualify as an independent contractor." Or.Laws 1989, ch. 762, § 4. The legislature also added language to the exemptions for partners and corporate officers in subsections (8) and (9).

In our first opinion, we inferred that the pre-1989 version of the statute exempted persons who are sole proprietors, partners or corporate officers, "even if they did not qualify as independent contractors." 107 Or.App. at 403, 812 P.2d 25. We were wrong. We now conclude that the 1989 amendments did not substantively change the exemptions. As we read ORS 656.027(7), in both its pre-amendment and amended incarnations, a person who is a sole proprietor of a business is not eligible for workers' compensation coverage for acts performed in that capacity, unless that person has elected to be covered under ORS 656.128. The cases cited in our earlier opinion are not to the contrary. See Bernards v. Wright, 93 Or. App. 192, 760 P.2d 1388 (1988); Lockard v. The Murphy Company, 49 Or.App. 101, 109 n. 6, 619 P.2d 283 (1980), rev. den., 290 Or. 519 (1981). A person may simultaneously function as the sole proprietor of a business and as an employee of another business. That person is not barred from coverage while working in the latter capacity. See Maroon v. Great Western Construction, 107 Or.App. 510, 513-514, 811 P.2d 1389 (1991). Any suggestion to the contrary in our first opinion in this case is disapproved.

There is no indication that, with respect to their relationships with petitioner, the owner-operators functioned in any of the capacities excluded from coverage under ORS 656.027(7), (8) or (9). In our first opinion, we held that substantial evidence supported...