State ex rel. Ugicom Enters. v. Morrison, 2021-0674
| Court | United States State Supreme Court of Ohio |
| Citation | 2022 Ohio 1689 |
| Docket Number | 2021-0674 |
| Parties | The State ex rel. Ugicom Enterprises, Inc., Appellant, v. Morrison, Admr., Bureau of Workers' Compensation, Appellee. |
| Decision Date | 24 May 2022 |
2022-Ohio-1689
The State ex rel. Ugicom Enterprises, Inc., Appellant,
v.
Morrison, Admr., Bureau of Workers' Compensation, Appellee.
No. 2021-0674
Supreme Court of Ohio
May 24, 2022
Submitted January 25, 2022
Appeal from the Court of Appeals for Franklin County, No. 17AP-895, 2021-Ohio-1269.
Zashin & Rich Co., L.P.A., and Scott Coghlan, for appellant.
Dave Yost, Attorney General, and Jacquelyn McTigue, Assistant Attorney General, for appellee.
PER CURIAM
{¶ 1} The question presented in this appeal is whether some evidence supported the determination of appellee, Sarah Morrison, administrator of the
Bureau of Workers' Compensation, that appellant, Ugicom Enterprises, Inc., an underground-cable-installation provider, had misclassified its workers for workers' compensation purposes as independent contractors rather than as employees. The Tenth District Court of Appeals determined that some evidence supported the bureau's determination that the workers were Ugicom's employees and denied Ugicom's request for a writ of mandamus ordering vacatur of the bureau's decision. We affirm.
I. BACKGROUND
A. Ugicom I
{¶ 2} In 2009, the bureau audited Ugicom to ensure that Ugicom had paid the correct amount of workers' compensation premiums for the period of January 1, 2004, through June 30, 2009.[1] Mary Jo Eyink, an auditor with the bureau, conducted the audit. Based on her findings, Eyink determined that Ugicom had exercised "too much control" over workers to whom it had issued Internal Revenue Service ("IRS") Forms 1099, leading the bureau to designate those workers as Ugicom's employees for workers' compensation purposes and resulting in a $346, 817.55 invoice to Ugicom for unpaid premiums.[2]
{¶ 3} After unsuccessfully challenging those findings through the bureau's administrative process, Ugicom filed an original action in the Tenth District Court of Appeals, seeking a writ of mandamus ordering vacatur of the bureau's decision that the workers were Ugicom's employees. See State ex rel. Ugicom Ents., Inc. v. Buehrer, 10th Dist. Franklin No. 13AP-527, 2014-Ohio-4942, ¶ 1, 7-9 ("Ugicom I "). The court of appeals granted the writ on the ground that the bureau had erred
in relying on the 20-factor test under R.C. 4123.01(A)(1)(c) for determining whether a "person who performs labor or services pursuant to a construction contract" is an employee for workers' compensation purposes. Ugicom I at ¶ 14, 28. The court of appeals explained that the test was inapplicable because this "case does not concern a construction contract, as that term is defined in R.C. 4123.79(C)(2)." Id. at ¶ 14. The court of appeals directed the bureau to issue a new order addressing Ugicom's challenge. Id. at ¶ 28.
B. Ugicom's operations
{¶ 4} In response to Ugicom I, the bureau set the matter for a hearing before an adjudicating committee to assess Ugicom's operations under the common-law right-to-control test for determining whether a worker is an employee or an independent contractor. See R.C. 4123.291(A) (empowering "[a]n adjudicating committee appointed by the administrator of workers' compensation to hear any matter specified" within the statute). Both Eyink and Fred Kibuuka, Ugicom's vice president, testified at the hearing. Eyink elaborated on her audit findings, and Kibuuka described Ugicom's operations. The audit findings and hearing testimony reflect the following facts about Ugicom's operations.
{¶ 5} Ugicom performs underground-cable installations, mainly in residential areas, as a subcontractor for Time Warner Cable Company ("TWC"). TWC uses its website to dispatch jobs to Ugicom, which Ugicom then retrieves through its web-based system and assigns to cable installers. An installer logs on to the system each morning to obtain the job's details and logs back on in the evening to confirm completion of the job, which generates an invoice from Ugicom to TWC. Ugicom does not require the installer to accept the job assignment. And Ugicom determines the amount that it will pay for a job; the installer does not submit a bid.
{¶ 6} TWC provides a badge to each installer who passes a TWC-coordinated drug test and background check. The badge has an identification
number that is registered with TWC's dispatch department. After receiving clearance from TWC, the installer may begin working for Ugicom. Photographs in the record before us show a work van with a sign on its door that says "Ugicom Enterprises, Inc., Contractor for Time Warner Cable" and a vest worn by an installer that says "Contractor for Time Warner Cable."
{¶ 7} Ugicom requires the installers to sign a one-year independent-contractor agreement and to provide their own liability insurance. The contract contains a noncompete clause that forbids an installer from providing similar services to a competitor of Ugicom while the contract is in force. Either party may terminate the contract with 60 days' written notice. The contract requires the installer to respond to service requests within two hours.
{¶ 8} The installers furnish their own hand tools for the jobs (generally, a shovel and a spade) and provide their own transportation, cell phones, and laptop computers. The cable that the installers bury into the ground is custom to TWC, so the installers must obtain it from TWC.
{¶ 9} The installers are permitted to work any day or time, provided they obtain the customer's consent to be on the customer's property, and they typically complete between six and ten jobs per day. According to Eyink, "[i]t's just a matter of [the installers'] standing] on a spade and lifting up some dirt and going down and lifting up some [more] dirt." Kibuuka noted, however, that the installers also connect the cable to the outside of the home and test its connection.
{¶ 10} The installers are paid by the job and earn on average between $50, 000 and $60, 000 per year, although some installers make as much as $90, 000 per year. According to Eyink's audit notes, Ugicom pays the installers once per month by direct deposit; but at the hearing, Eyink testified that the installers are paid weekly. Taxes are not withheld from the payments to the installers, and no benefits are provided, although sometimes Ugicom will deduct from a payment the costs attributable to damage caused by the installer.
{¶ 11} In addition to the installers, Ugicom uses the services of Paul Lule, who performs quality-control checks on 20 percent of the jobs, verifying that the lines were buried correctly. By comparing the income reflected on Lule's Form 1099 for a particular year with that reported to the IRS for the same year, Eyink determined that Lule's sole source of income for the year had been Ugicom.
C. The bureau's administrative determinations
{¶ 12} Relying principally on the right-to-control test espoused in Gillum v. Indus. Comm., 141 Ohio St. 373, 48 N.E.2d 234 (1943), and Bostic v. Connor, 37 Ohio St.3d 144, 524 N.E.2d 881 (1988), the bureau's adjudicating committee determined that Ugicom had misclassified the installers and Lule as independent contractors. Ugicom then sought review by the administrator's designee. See R.C. 4123.291(B) ("An employer who is adversely affected by a decision of an adjudicating committee appointed by the administrator may appeal the decision of the committee to the administrator or the administrator's designee"). Ugicom did not present any new testimony to the administrator's designee, relying instead on the arguments of its counsel. The designee affirmed the adjudicating committee's decision, adopting its statement of facts and legal rationale and "find[ing] that, under the common law test of Gillum and Bostic, Ugicom exercises control over the workers[, ] and * * * the Bureau's auditor's conclusion that the workers are employees [was] correct based on these facts and under the law."
D. Ugicom II
{¶ 13} Ugicom then filed an original action in the court of appeals, requesting a writ of mandamus vacating the bureau's decision. 2021-Ohio-1269, ¶ 1 ("Ugicom II "). The magistrate recommended denial of the writ, concluding that the bureau did not abuse its discretion in determining that the workers were employees. Id. at ¶ 83. The court of appeals overruled Ugicom's objections to the magistrate's decision and adopted it as its own. Id. at ¶ 27. This appeal followed.
II. ANALYSIS
{¶ 14} To establish its entitlement to a writ of mandamus, Ugicom must prove (1) a clear legal right to the relief requested, (2) a clear duty on the part of the bureau to provide it, and (3) the lack of an adequate legal remedy in the ordinary course of the law. See State ex rel. T.S. Trim Industries, Inc. v. Indus. Comm., ___ Ohio St.3d ___, 2021-Ohio-2709, ___ N.E.3d ___, ¶ 14. “The [bureau] is the exclusive finder of fact in workers' compensation matters; a court's role in adjudicating a mandamus complaint is to determine whether the [bureau] abused its discretion by entering an order that is not based on some evidence in the record.” State ex rel. Digiacinto v. Indus. Comm., 159 Ohio St.3d 346, 2020-Ohio-707, 150 N.E.3d 933, ¶ 13.
{¶ 15} "Because an independent contractor is not an employee for purposes of workers' compensation law, the resolution of [the question whether the worker is actually an employee] determines the employer's obligation to contribute to * * * the State Insurance Fund." Bostic, 37 Ohio St.3d at 145, 524 N.E.2d 881. The factfinder ordinarily decides this question, and it does so by considering "who had the right to control the manner or means of doing the work." Id. at 145-146. This is "the key factual determination." Id. at 146.
{¶ 16} The right-to-control test is not marked by a bright-line rule but rather a set of nonexhaustive factors. See Gillum, 141 Ohio St. at 374-375, 48 N.E.2d 234, quoting 27 American Jurisprudence, Indicia of Relationship, Section 5, at 485 (" 'there is no absolute...
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