Wild v. Fregein Construction, 02-198.
| Decision Date | 29 April 2003 |
| Docket Number | No. 02-198.,02-198. |
| Citation | 2003 MT 115,315 Mont. 425,68 P.3d 855 |
| Parties | Kelly WILD, Petitioner and Appellant, v. FREGEIN CONSTRUCTION, Employer, and Montana State Compensation Insurance Fund, Respondent and Respondent. |
| Court | Montana Supreme Court |
Lucas J. Foust, Foust Law Firm, Bozeman, Montana; Jim Hunt, Hunt & Molloy, Helena, Montana, for Appellant.
Greg E. Overturf, Special Assistant Attorney General, Montana State Fund, Helena, Montana, for Respondent.
Lawrence A. Anderson, Great Falls, Montana (MTLA); Michael S. Kakuk, Hoovestal, Kakuk & Fanning, Helena, Montana, Jacqueline T. Lenmark, Keller, Reynolds, Drake, Johnson & Gillespie, Helena, Montana (MBIA), for Amicus.
¶ 1 Kelly Wild appeals a judgment of the Workers' Compensation Court dismissing his claim for benefits and concluding that the existence of a Certificate of Independent Contractor Exemption previously issued to Wild conclusively precluded any inquiry into whether Wild was an independent contractor (IC) or an employee. We reverse and remand for further proceedings consistent with this Opinion.
¶ 2 On appeal, Wild raised one broad issue which we restated for purposes of oral argument as follows:
¶ 3 1. Whether § 39-71-401(3), MCA, as a matter of law, conclusively precludes any factual inquiry into whether an employer/employee relationship exists once the worker has been issued the exemption contemplated by § 39-71-401(3), MCA.
¶ 4 2. Whether § 39-71-401(3), MCA, read in conjunction with § 39-71-120, MCA, requires the employer to make an initial good faith inquiry of the worker to determine that he or she does, in fact, meet the control and independently established business tests before the employer employs the worker as an IC.
¶ 5 3. Whether the public policy underlying the Workers' Compensation Act (the Act) generally and as set out in § 39-71-105(1), (2) and (3), MCA, is violated when the employer offers to pay the worker a higher wage on the condition that the worker present an exemption at the time of hire.
¶ 6 On October 17, 2000, Wild suffered serious and debilitating injuries to his head, shoulder and ribs when he fell off a roof while working for Fregein Construction. Wild filed a claim for workers' compensation benefits, but his claim was denied because he holds a Certificate of Independent Contractor Exemption.
Wild continued to timely file applications for renewals of his exemption up through and including March 6, 1998. The corresponding certificate of exemption was issued effective April 1, 1998 to April 1, 2001.
¶ 8 In July 2000, after Wild's roofing business failed, he approached Russ Fregein looking for work. Two of Fregein's employees had just quit. Wild told Fregein that he had pawned his roofing equipment and that he needed money to survive.
¶ 9 Fregein later testified that he offered Wild the choice of either working for $20 per hour as an IC or $15 per hour as a "legit" employee. Wild chose to take the higher wage and work as an IC. Fregein admitted that paying Wild as an IC was also to Fregein's economic benefit. At the time he hired Wild, Fregein paid a workers' compensation premium of 53.6% based upon an individual's rate of pay. Consequently, Fregein would have been required to pay an additional $8 for each hour Wild worked for Fregein Construction as an employee resulting in a total payment of $23 per hour rather than the $20 per hour he agreed to pay Wild as an IC.
¶ 10 Wild testified that during the first few weeks he worked for Fregein, he completed work on at least one job left over from his own roofing business. Similarly, Fregein testified that, to his knowledge, Wild worked exclusively on Fregein's projects after August 2000 until he was injured on October 17, 2000.
¶ 11 Fregein did not receive a copy of Wild's exemption until one or two weeks after Wild started to work. Fregein admitted that having an exemption was not a prerequisite for working at his company; he would have hired Wild even if Wild had not had an exemption; and Wild would not have been treated any differently, except for pay, if he were not able to produce an exemption. During the time that Wild worked for Fregein Construction, another individual working as an IC pursuant to an exemption was later paid as an employee without any change to his work duties or status because, according to Fregein, that individual wanted to pay taxes and "you know, to make it legit." After Wild fell and could no longer work, Fregein hired other employees; he did not hire any other ICs.
¶ 12 On February 1, 2001, Wild filed a Petition for Hearing with the Workers' Compensation Court to recover benefits for the injuries he sustained while working for Fregein Construction. Thereafter, the parties agreed to submit the matter to the Worker's Compensation Court on a stipulated record that included only two depositions with exhibits.
¶ 13 On February 12, 2002, the Workers' Compensation Court issued its Findings of Fact, Conclusions of Law and Judgment wherein the court dismissed Wild's claim for benefits and held that the existence of the exemption previously issued to Wild when he owned his own roofing business conclusively precluded "a post-injury factual inquiry into whether claimant was in fact an independent contractor or an employee." Wild appeals from this judgment.
¶ 14 We review a decision of the Workers' Compensation Court to determine whether that court correctly interpreted the law as it applies to the facts of the case at issue. Lockhart v. New Hampshire Ins. Co., 1999 MT 205, ¶ 13, 295 Mont. 467, ¶ 13, 984 P.2d 744, ¶ 13 (citing Pinyerd v. State Compensation Ins. Fund (1995), 271 Mont. 115, 119, 894 P.2d 932, 934). When determining whether the Workers' Compensation Court's conclusions of law are correct, this Court's review is plenary. Thompson v. CIGNA, 2000 MT 306, ¶ 17, 302 Mont. 399, ¶ 17, 14 P.3d 1222, ¶ 17 (citing Liberty Northwest Ins. Corp. for Brand S Lumber v. State Compensation Ins. Fund, 1998 MT 169, ¶ 7, 289 Mont. 475, ¶ 7, 962 P.2d 1167, ¶ 7).
¶ 15 Whether § 39-71-401(3), MCA, as a matter of law, conclusively precludes any factual inquiry into whether an employer/employee relationship exists once the worker has been issued the exemption contemplated by § 39-71-401(3), MCA.
¶ 16 The statutes in effect on the day of an injury determine the benefits to which an injured worker is entitled. Buckman v. Montana Deaconess Hosp. (1986), 224 Mont. 318, 321, 730 P.2d 380, 382 (citations omitted). Because Wild was injured on October 17, 2000, the 1999 Workers' Compensation Act controls.
¶ 17 In this case, the Workers' Compensation Court determined that the fact that Wild held an exemption as provided for in § 39-71-401(3), MCA (1999), conclusively precluded "a post-injury factual inquiry into whether claimant was in fact an independent contractor or an employee." Thus, the court dismissed Wild's claim for benefits.
¶ 18 Wild argues on appeal that the Workers' Compensation Court erred in determining that just because Wild held an exemption at the time he worked for Fregein, he was an IC. Wild contends that when an employer is fully aware of all of the facts that make a worker an employee, the employer cannot accept the exemption as valid. He maintains that under such circumstances, an employer should not be able to hide behind the exemption and avoid an employer/employee relationship. Wild further argues that if the Workers' Compensation Court's reasoning is adopted, employers will be able to pressure employees to "opt out" of the workers' compensation system by suggesting that exemptions be obtained even when workers are clearly employees. Not only is this bad public policy, it is in violation of Montana's statutory laws which require employers to have workers' compensation coverage and which do not allow employees to waive their rights under the Act.
¶ 19 The provision of the Act at issue in this case, § 39-71-401(3), MCA (1999), provides, in pertinent part:
¶ 20 In the construction of a statute, we are ...
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