Brief Fact Summary. The Industrial Commission of Utah ruled that defendant subcontractor was an employee of the contractor and directed the contractor and the Utah State Insurance Fund to pay worker’s compensation benefits to the subcontractor. Plaintiffs, contractor and Utah State Insurance Fund, appealed.
Synopsis of Rule of Law. If an employer hires a contractor, that contractor, his employees, and all subcontractors under him are “employees” if the employer controls or supervises the contractor’s work, and such work is a part or process in the employer’s trade or business.
It is not the actual exercise of control that determines whether an employer-employee relationship exists; it is the right to control that is determinative.View Full Point of Law
Issue. Was Frisby an “employee” as defined by Utah’s worker’s compensation statute and thus entitled to benefits in connection with injuries sustained in his capacity as a subcontracted worker?
Held. Yes. Where an employer controls or supervises the contractor’s work and such work is a part or process in the employer’s trade or business, those working under him are considered employees.
Dissent. The dissent is of the opinion that the majority’s factual analysis is faulty, i.e., the evidence submitted to the commission would lead to the inevitable conclusion that “was treated in all respects as an independent contractor,” and thus not an employee per statutory requirement. The fine point with which the dissent takes issue is whether Appellant retained the degree of supervision as to make him an employer. As the dissent believes Appellee to be an independent contractor, this element was not satisfied and thus the decisions of the Board should have been reversed.
Discussion. The Utah Supreme Court began by enumerating its powers of review with respect to the state agency: “In reviewing an order of the Industrial Commission of Utah, an appellate court may only set aside an order if the commission acted without or in excess of its powers or the findings of fact do not support the award.” The court then broadly states the public policy fostering autonomy for such agencies: “An appellate court must sustain an order unless it is unsupported by any substantial credible evidence and is, therefore, arbitrary and capricious. Furthermore, as to questions of mixed law and fact, an appellate court will not substitute its judgment for that of the agency as long as the commission’s interpretation has “warrant in the record” and a reasonable basis in the law.”
With regard to the specific issue, Appellee’s status and the entitlement flowing from that status, the court noted, “where any employer procures any work to be done wholly or in part for him by a contractor over whose work he retains supervision or control, and such work is a part or process in the trade or business of the employer, such contractor, and all persons employed by him, and all subcontractors under him, and all persons employed by any such subcontractors, shall be deemed, within the meaning of this section, employees of such original employer.[Emphasis in original].” Further, the court states, “If an employer hires a contractor, that contractor, his employees, and all subcontractors under him are “employees” if the employer controls or supervises the contractor’s work, and such work is a part or process in the employer’s trade or business.” The court, addressing the Appellant’s principal objection, then pointed out, “It is possible for an individual to be an “independent c
ontractor” in a common law sense, and yet be a “statutory employee” for workmen’s compensation purposes.” This, of course begs the question: What constitutes an “employer”? The court sees the crux of the matter as one of control, “It is not the actual exercise of control that determines whether an employer-employee relationship exists; it is the right to control that is determinative.” Hence, even where, as here, a subcontractor may have a degree of independence, per strict statutory interpretation the legislative intent was to provide a safeguard so that, as the court states, either a court or a state agency may fulfill the purpose of “construing [a statute’s] provisions to secure its humane objectives.” The court concludes, “The entire statutory scheme indicates a desire on the part of the legislature to extend the protection of these laws to those who might not be deemed employees under the legal concepts governing the liability of a master for the tortious acts of his servant. Thu
s, “The Workmen’s Compensation Act (Act) is to be construed liberally to further the statutory purposes of providing relief from injuries caused by industrial accidents.”