  Our 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.
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