Wilkinson v. Palmetto State Transp. Co., 26646.

• Citation: 676 S.E.2d 700,382 S.C. 295
• Decision Date: 04 May 2009
• Docket Number: No. 26646.,26646.
• Court: United States State Supreme Court of South Carolina
• Parties: Lea Ann WILKINSON (surviving spouse) for Scott R. WILKINSON (deceased), Claimant, Respondent, v. PALMETTO STATE TRANSPORTATION COMPANY, Employer, and Canal Insurance Company, Carrier, Petitioners.

676 S.E.2d 700

382 S.C. 295

Lea Ann WILKINSON (surviving spouse) for Scott R. WILKINSON (deceased), Claimant, Respondent, v. PALMETTO STATE TRANSPORTATION COMPANY, Employer, and Canal Insurance Company, Carrier, Petitioners.

No. 26646.

Supreme Court of South Carolina.

Heard January 22, 2009.

Decided May 4, 2009.

Rehearing Denied May 28, 2009.

Duke K. McCall, Jr., of Leatherwood, Walker, Todd & Mann, of Greenville, for Petitioners.

Kathryn Williams, of Greenville, for Respondent.

Justice KITTREDGE:

This workers' compensation case involves the jurisdictional question of whether the claimant was an employee or independent contractor. We granted a writ of certiorari to review the court of appeals decision holding the claimant was an employee. Wilkinson ex rel. Wilkinson v. Palmetto State Transp. Co., 371 S.C. 365, 638 S.E.2d 109 (Ct.App.2006). We reverse, and hold the claimant was an independent contractor for workers' compensation purposes. In connection with our jurisprudence in evaluating whether a claimant is an employee or an independent contractor for workers' compensation purposes, we overrule the test announced in Dawkins v. Jordan, 341 S.C. 434, 439, 534 S.E.2d 700, 703 (2000).¹

Scott R. Wilkinson was a long-haul truck driver for Palmetto State Transportation Company. After a period of admitted employment, Wilkinson opted to alter his relationship with Palmetto, and the parties entered into a formal independent contractor arrangement. The detailed contract was honored by Wilkinson and Palmetto, including the provision giving Wilkinson sole authority over "the means and methods of the performance of all transportation services." In resolving this jurisdictional question, we view the evidence as clearly preponderating in favor of an independent contractor relationship.

I.

Palmetto is an interstate motor carrier. Wilkinson began as an employee for Palmetto, as a long-haul truck driver, in January of 1998. About a year later, Wilkinson and Palmetto agreed to alter their employment relationship to that of an independent contractor. To this end, Wilkinson purchased a tractor and the parties executed an "Equipment Lease Contract." The contract sets forth in detail the respective rights and responsibilities of the parties.

Of particular relevance in determining the nature of the parties' relationship are the following contract features. Wilkinson and Palmetto intended "to create the relationship of CARRIER and INDEPENDENT CONTRACTOR and not an EMPLOYER-EMPLOYEE relationship." The parties negotiated an increased rate per mile. Wilkinson was solely responsible for all expenses associated with acquiring, financing, maintaining and insuring the tractor. Wilkinson assumed further responsibility for "the means and methods of the performance of all transportation services," including, if necessary, hiring and supervising other drivers for the leased tractor. In this regard, the obligation for withholding and employment taxes fell to Wilkinson. Wilkinson also agreed "to carry Workers Compensation coverage in the limits statutory [sic] within the State of South Carolina." Wilkinson ultimately complied with this contract provision by purchasing an occupational accident policy from Zurich American Insurance Company, which provided for a lump sum of $50,000 and monthly payments of $2,000 for 100 months, in the event of death.² Termination of the contract required thirty days' notice, and a wrongful termination entitled the non-breaching party to recover damages.

Wilkinson died on May 16, 2002, in a motor vehicle accident while driving his tractor for Palmetto. The Zurich policy was paid to Wilkinson's spouse, Lea Ann. Lea Ann also filed a workers' compensation claim, contending that her husband was Palmetto's employee. Palmetto, through its workers' compensation insurance carrier, defended on the basis Wilkinson was an independent contractor. The workers' compensation commission, circuit court and court of appeals found that Wilkinson was an employee, and therefore his spouse was entitled to workers' compensation benefits. The basis for this finding of compensability comes from the employee/independent contractor test announced in Dawkins v. Jordan, which we now overrule.

II.

A.

We are presented with the question whether Wilkinson was, at the time of his fatal accident, an employee or independent contractor. Because the question is jurisdictional, the Court may take its own view of the preponderance of the evidence. S.C. Workers' Comp. Comm'n v. Ray Covington Realtors, Inc., 318 S.C. 546, 547, 459 S.E.2d 302, 303 (1995).

Under settled law, the determination of whether a claimant is an employee or independent contractor focuses on the issue of control, specifically whether the purported employer had the right to control the claimant in the performance of his work. Ray Covington Realtors, 318 S.C. at 547, 459 S.E.2d at 303; Chavis v. Watkins, 256 S.C. 30, 32, 180 S.E.2d 648, 649 (1971). In evaluating the right of control, the Court examines four factors which serve as a means of analyzing the work relationship as a whole: (1) direct evidence of the right or exercise of control; (2) furnishing of equipment; (3) method of payment; (4) right to fire. Ray Covington Realtors, 318 S.C. at 548, 459 S.E.2d at 303; Chavis, 256 S.C. at 32, 180 S.E.2d at 649; Tharpe v. G.E. Moore Co., Inc., 254 S.C. 196, 200, 174 S.E.2d 397, 399 (1970); see also Dawkins v. Jordan, 341 S.C. 434, 439, 534 S.E.2d 700, 703 (2000).

In Dawkins, this Court took the additional step of imposing a framework for weighing the standard factors in a manner that favored, unduly we now believe, a finding of employment:

[F]or the most part, any single factor is not merely indicative of, but, in practice, virtually proof of, the employment relation; while, in the opposite direction, contrary evidence is as to any one factor at best only mildly persuasive evidence of contractorship, and sometimes is of almost no such force at all.

Id. at 439, 534 S.E.2d at 703 (quoting Arthur Larson & Lex K Larson, 3 LARSON'S WORKERS' COMPENSATION LAW § 61.04 (2000)). We overrule Dawkins' analytical framework, for it most assuredly skews the analysis to a finding of employment. We return to our jurisprudence that evaluates the four factors with equal force in both directions.³ See Ray Covington Realtors, 318 S.C. at 547-48, 459 S.E.2d at 303; Chavis, 256 S.C. at 32, 180 S.E.2d at 649; Tharpe, 254 S.C. at 198-200, 174 S.E.2d at 398-99.

B.

We are persuaded the four factors preponderate in favor of a finding that Wilkinson was an independent contractor. In evaluating the four factors, we are guided initially by the parties' independent contractor agreement. But more importantly, we are guided by the parties' conduct, which mirrored the terms of the contract. See Kilgore Group, Inc. v. S.C. Employment Sec. Comm'n, 313 S.C. 65, 68-69, 437 S.E.2d 48, 50 (1993) (noting that "in determining the nature of [the parties'] relationship," the contract "has considerable weight," but recognizing that "language in the contract merely declaring the relationship is that of an employer/independent contractor is not dispositive").

This Court remains sensitive to the general principle sanctioned by the Legislature that workers' compensation laws are to be construed liberally in favor of coverage. That principle, however, does not go so far as to justify an analytical framework that preordains the result. Moreover, that principle should not trump an unchallenged independent contractor arrangement where the parties' conduct follows the agreement in every material respect. Materiality, in this context is measured by the factors of right or exercise of control, method of payment, furnishing of equipment and right to fire. The policy considerations favoring a finding of compensability are further diminished where, as here, the independent contractor procures workers' compensation coverage or its functional equivalent.

1. Direct Evidence of the Right or Exercise of Control

It is not uncommon in the long-haul trucking industry for carriers to utilize drivers who own and operate their own tractors, known as owner-operators. These arrangements must be carefully scrutinized to ensure that the actual relationship between the trucking company and the purported independent contractor truly reflects the parties' stated agreement. We are sensitive to the unequal bargaining power that may exist between the trucking company and the driver. In this regard, it naturally follows that a trucking company, with a desire to avoid a workers' compensation claim, may be tempted to have "its cake and eat it, too." The result would be an ostensible independent contractor arrangement where the trucking company exercises almost complete control over the method and manner of the transportation services.

Cognizant of these concerns, we have reviewed the actual relationship between Wilkinson and Palmetto. Palmetto utilizes approximately eighty drivers in its business, the vast majority of whom are employees. Wilkinson started as an employee, but desired to drive his own tractor and become an owner-operator. He did so, as reflected in the parties' contract.

As noted above, the contract provided that Wilkinson "shall determine the means and methods of the performance of all transportation services." We find that, true to the contract, Wilkinson exercised the right of control as to the transportation services. The fact that Palmetto contacted Wilkinson for potential assignments and provided the pickup location does not change the result. Wilkinson retained the right to refuse any assignment. If Wilkinson agreed to an assignment and made the pickup, he exercised complete control over the delivery and chose his travel routes without direction from Palmetto. The nature of the relationship between Wilkinson and Palmetto is incompatible with that of an employee-employer. Concerning the right and exercise of control, this...