California Bar Journal
OFFICIAL PUBLICATION OF THE STATE BAR OF CALIFORNIA - MARCH 2001
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Workers' Compensation Law Section
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Who’s Who In Workers’ Compensation

For an injury to be work-related, it is vitally important to determine employment status 

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By PATRICIA A. HIGA
and WILLIAM E. MALECKI
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Patricia A. Higa William E. MaleckiOur previous article (Workers’ Compensation Law for the General Practitioner, California Bar Journal, June 2000) started with the general principal that when a person is injured at work, or suffers an injury or illness which is deemed to be work-related, in most cases, the employee’s sole remedy will be recovery of workers’ compensation benefits. For a person’s injury or illness to come under the provisions of workers’ compensation law, the injury must arise out of and occur in the course of employment, commonly referred to as the AOE/COE determination.

One of the most important parts of the “AOE/COE” formula, the two “E’s,” is employment. The Labor Code (3300-3371) sets forth the primary statutory basis for determining whether an employment relationship exists. All statutory citations are to the Labor Code, unless indicated.  The person seeking compensation must be an employee (3351) and the person or entity from whom compensation is sought must be an employer (3300). It is presumed that any person rendering service for another is an employee (3300).

This determination is vitally important because workers’ compensation has been established by the California Constitution and Labor Code to be the exclusive remedy for work-related injuries. Thus persons deemed employees will be provided benefits by those persons or entities deemed employers and will generally have no action at law for damages. While non-employees, in certain cases, may have a basis for a tort action, they will not have the protection of the no-fault statutory workers’ compensation benefits.

Who is an employer?

The Labor Code broadly defines who is deemed to be an “employer.” It includes the State of California, counties, cities, public agencies, and every person which has any natural person in service. (3300) “Person” is defined as any person, association, organization, partnership, business trust, limited liability company, or corporation which has any natural person in service. (18)

Excluded from the definition are bowling team sponsors and private, nonprofit organizations sponsoring a criminal sentenced to community service. (3301)

General and special employers

In certain cases a person may have two employers for one job. When one employer, (the “general”) lends an employee to another employer (the “special”) and allows the borrowing employer to directly supervise the employee, a special employment relationship arises.

Potentially, both the general and special employers are liable for any injuries to the employee. Where there is a general and a special employer, the worker is generally barred from maintaining a civil action against the other employer.

This situation arises most frequently in the case of temporary employment agencies. The general employer’s workers’ compensation insurance carrier is liable for the entire cost of compensation payable due to a work-related injury unless the special employer had the employee on his or her payroll at the time of injury; the special employers’ carrier is then solely liable. (Insurance Code 11663)

Who is an employee?

The Labor Code defines an “employee” to mean every person in the service of an employer. (3351) Any person rendering service for another is presumed to be an employee. (3357)  The presence or absence of a written contract is irrelevant. Even an illegally employed person is considered an employee. (3351)

Persons deemed to be employees

Although the definition of employee is very broad, Labor Code 3351, 3351.5, 3352.94, and 3361-3368 provide detailed provisions listing specific persons who are included as employees. These include aliens, minors, elected officials, civil servants and most domestic employees.

Also included are detailed provisions regarding various officers, directors, general partners, managers of partnerships and limited liability companies.

Various persons performing public service are specifically included: registered disaster service workers, volunteer firefighters, reserve fish and game wardens, paid and volunteer firefighters,  pilots of fire fighting aircraft and members of a sheriff’s posse. In addition, trainees of the State Department of Rehabilitation, county in-home support service providers, state prison inmates doing assigned work, and specially commissioned authors are also considered employees. Others normally excluded may be deemed employees by the public agency for which they are working including reserve police officers, volunteer park workers, juvenile court wards and traffic offenders on work projects on public property, volunteer reserve sheriffs, school volunteers, any other public or charity volunteers.

Who is not an employee?

There two classes of persons specifically deemed not to be employees: persons expressly excluded and independent contractors (3357)

Labor Code 3352 et seq. expressly excludes several categories of persons from the definition of employee: most volunteers, unpaid county clerks and sheriff deputies, camp volunteers, public agency and charity volunteers, fire agency consultants, ski lift and ski patrol volunteers, and persons performing services in return solely for aid or sustenance from a charity.

In most cases, volunteers are persons who receive no remuneration for the services other than meals, transportation, lodging or reimbursement for incidental expenses. Also, domestic workers are excluded if they were employed less than 52 hours or earned less than $100 during the 90 calendar days immediately preceding the date of the injury or if they are employed by his or her parent, spouse or child.

Additionally, amateur athletes, referees, umpires, score keepers and officials are excluded, as are most out of state law enforcement officers, unregistered disaster service workers, certain student apprentices, military firefighters, operators and employees of independent firefighting aircraft.

Independent contractors

An independent contractor is defined as any person who: 1) renders service for a specified recompense for a specified result, 2) is under the control of his principal as to the result of his work only and not as to the means by which such result is accomplished. (3353)

Where there is proof that a worker was performing services for a principal at time of injury, the burden rests on the principal to establish that the injured worker was an independent contractor or was otherwise excluded. (Durae v Industrial Accident Comm. (1962) 206 Cal. App. 2d 691). In workers’ compensation proceedings, establishing the status of a person as an independent contractor is an affirmative defense. (Greenaway v Workmen’s Comp. Appeals Bd. (1969) 269 Cal. App. 2d 49)

The question of whether a specific person is an employee or an independent contractor has been the subject of substantial litigation. The primary case on the subject is S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d  341. In Borello, the Supreme Court held that farm laborers were employees of the land owner, rather than skilled independent contractors, despite the terms of a written contract to the contrary.

The court stated that necessary factors to be evaluated were: right of control over the manner and means used, whether the task is part of the principal’s regular business, whether the workers have a distinct business with equipment or employees which is subject to profit or loss, the skill and supervision required, mode of payment, bargaining position of the parties and their intent.

The court noted that the public policy under Labor Code 3202 is that entitlement to benefits should be liberally construed so as to extend benefits and that the party seeking to avoid liability has the burden to prove independent contractor status under 3357.

Borello also noted that the test for determining employment in a workers’ compensation case is necessarily different from the common law factors determining the respondeat superior liability of the alleged employer, due to the remedial public policy purposes of the workers’ compensation system: prompt and certain compensation for injuries for the employee and protection from tort liability for the employer. Thus determinations by other entities, such as the Internal Revenue Service, are not dispositive of employment status.

Their decisions and the decisions of tribunals interpreting such determinations will not be given absolute res judicata or collateral estoppel effect.

The Insurance Commissioner does, however, have jurisdiction to determine employment status for workers’ compensation premium determinations. (See Insurance Code 11737(c))

A well-articulated list of relevant factors is contained in Pergvica v. Industrial Accident Comm. ((1947) 29 Cal.2d 857.)

They are: 1) whether or not the one performing services is engaged in a distinct occupation or business; 2) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of a principal or by a specialist; 3) the skill required in the particular occupation; 4) whether the principal or the worker supplies instrumentalities, tools and the place of work; 5) the length of time services are to be performed; 6) method of payment, whether by time or by the job; 7) whether or not the work done is the regular business of the principal; and 8) whether the parties believe they are creating an employment relationship.

Construction workers

There is a rebuttable presumption, affecting the burden of proof, that a worker performing services for which a contractor’s license is required or who is working for such a person is an employee.

Proof of independent contractor status includes the following: 1) the worker is responsible for the result of the work and not the means by which it is accomplished, 2) the worker is customarily engaged in an independent business, 3) the workers’ independent contractor status is bona fide and not a subterfuge to avoid employee status. (2750.5)

The tests indicated in the Pergvica case are relevant to determinations regarding construction work, but due to the presumption, greater satisfaction of such factors will be required.

Conclusion

In light of the statutory presumption that any person rendering service for another is presumed to be an employee (3357), the burden on the party seeking to avoid liability to prove independent contractor status, and the strong public policy that the question of entitlement to workers’ compensation benefits should be liberally construed so as to extend benefits (3302), in most cases an employment relationship will be found to exist.

Patricia A. Higa is an attorney with Pacific Gas & Electric and a member of the executive committee of the Workers’ Compensation Section of the State Bar. William E. Malecki is an attorney with the State Compensation Insurance Fund, a certified specialist in workers’ compensation law and a member of the executive committee of the Workers’ Compensation Section of the bar.