Illinois Truck Driver who was Misclassified as an Independent Contractor is Entitled to Workers Comp. Benefits

tractor trailerFindLaw reports a case before the workers compensation appellate division in Illinois in which a truck driver was seeking workers compensation benefits from a company that was in the business of transporting machinery.  The court set forth the factors to be considered and then applied the factors to the truck driver’s situation.  The court’s detailed analysis demonstrates how fact-specific each case is and how important it is to review the facts with the criteria for determining if a worker is an employee or independent contractor.   The court said:

“Whether a claimant is classified as an independent contractor or an employee is crucial, for it is the employment status of a claimant which determines whether he is entitled to benefits under the Act. Earley v. Industrial Comm’n, 197 Ill.App.3d 309, 314 (1990); see also Roberson v. Industrial Comm’n, 225 Ill.2d 159, 174 (2007) (noting that an employment relationship is a prerequisite for an award of benefits under the Act). For purposes of the Act, the term “employee” should be broadly construed. Ware v. Industrial Comm’n, 318 Ill.App.3d 1117, 1122 (2000). Nevertheless, the question of whether a claimant is an employee remains one of the most vexatious in the law of workers’ compensation. Roberson, 225 Ill.2d at 174. The difficulty arises from the fact-specific nature of the inquiry. Roberson, 225 Ill.2d at 174. Notably, many jobs contain elements of both an employment and an independent-contractor relationship. Kirkwood v. Industrial Comm’n, 84 Ill.2d 14, 20 (1981). Since there is no clear line of demarcation between the status of an employee and an independent contractor, no rule has been, or could be, adopted to govern all cases in this area. Roberson, 225 Ill.2d at 174–75; Kirkwood, 84 Ill.2d at 20.

¶ 31 To assist in determining whether a person is an employee, the supreme court has identified a number of factors. Among the factors cited by the supreme court are: (1) whether the employer may control the manner in which the person performs the work; (2) whether the employer dictates the person’s schedule; (3) whether the employer compensates the person on an hourly basis; (4) whether the employer withholds income and social security taxes from the person’s compensation; (5) whether the employer may discharge the person at will; and (6) whether the employer supplies the person with materials and equipment. Roberson, 225 Ill.2d at 175. Another relevant factor is the nature of the work performed by the alleged employee in relation to the general business of the employer. Roberson, 225 Ill.2d at 175; Ware, 318 Ill.App.3d at 1122. The label the parties place on their relationship is also a consideration, although it is a factor of “lesser weight.” Ware, 318 Ill.App.3d at 1122. The significance of these factors rests on the totality of the circumstances, and no single factor is determinative. Roberson, 225 Ill.2d at 175. Nevertheless, the right to control the work and the nature of the work are the two most important considerations. Kirkwood, 84 Ill.2d at 21; Ware, 318 Ill.App.3d at 1122.

¶ 33 We begin our analysis by addressing the right to control. Initially, we agree with the Commission that, while claimant owned the tractor-trailer he used to transport loads for respondent, claimant’s ownership was in name only and the control respondent had over the equipment is indicative of an employment relationship. Significantly, the Agreement expressly provided that claimant’s equipment was for respondent’s “exclusive possession, control and use for the duration of [the] Agreement.” While respondent purported to include this language in the Agreement solely to conform to federal regulations, it does not diminish the fact that respondent had the right to control claimant’s activities. See Ware, 318 Ill.App.3d at 1124 (“The fact that [the employer] was acting to ensure compliance with federal regulations * * * does not diminish the fact that it exercised control over [the employee].”). In this regard, we note that the Agreement allowed respondent, at its “sole discretion,” to interchange the equipment respondent leased from claimant to other authorized carriers. Further, while respondent’s witnesses testified that claimant was free to transport goods for other companies, it is undisputed that, between his date of hire and the date of the accident, claimant never actually hauled goods for any carrier other than respondent. More important, the evidence shows that claimant’s ability to haul for another carrier was subject to a number of conditions imposed by respondent. According to Schaffer, to seek approval to transport goods for another company, the driver had to first notify respondent. Upon notification, respondent would contact the other carrier, ensure that there was “an agreement” between it and respondent, and conduct a credit check of the other carrier. The driver would then have to be “release[d]” by respondent to haul for the other carrier. That the other motor carrier had to have an “agreement” with respondent, the fact that a driver had to obtain a “release” from respondent to haul for another carrier, and respondent’s right to interchange are strong indications that respondent had the right control claimant’s activities.

¶ 34 Other indicia of control evincing an employment relationship include the following. Prior to hire, respondent subjected prospective drivers to a “pre-qualification” process, which involved completing an application, undergoing a medical examination, and submitting to a drug test. Once hired, respondent required claimant to attend an orientation program. Further, respondent required claimant to display its name on his tractor while working for respondent, maintain the equipment in clean appearance, and inspect the equipment prior to each trip. The Agreement required claimant to notify respondent if an accident occurred, and respondent restricted the number of hours claimant could drive. While some of these requirements were mandated by federal regulations, as noted earlier, this does not diminish the fact that respondent had control over claimant’s activities. See Ware, 318 Ill.App.3d at 1124.

¶ 35 With respect to other indicia of control, we note claimant’s testimony that Spiro called him every two hours to check on his location, that Spiro provided him specific instructions to the address he was delivering on the night of the accident, and that respondent imposed delivery deadlines. Claimant also indicated that he would not “dare” refuse a load or he would face consequences such as termination or not being allowed to haul for respondent for a period of time. Respondent’s witnesses disputed claimant’s testimony that respondent regularly monitored the location of its drivers, required its drivers to take a particular route when making a delivery, dictated delivery times, and punished drivers for rejecting a job. We also note that there was conflicting evidence regarding whether claimant was responsible for all costs and expenses associated with operating the tractor-trailer. In this regard, we noted that the Agreement provided that claimant was responsible for the operating expenses. However, claimant testified that respondent reimbursed him for the cost of fuel, which is undoubtedly one of the most expensive operating expenses. In any event, this dueling evidence merely created a conflict for the Commission to resolve. See Hosteny, 397 Ill.App.3d at 674 (noting that it is the function of the Commission to decide questions of fact, judge the credibility of witnesses, and resolve conflicts in the evidence). The arbitrator concluded that although claimant was occasionally argumentative at the arbitration hearing and changed his testimony when confronted with the Agreement, he was “credible overall.” The arbitrator also found that all three of respondent’s witnesses exhibited some degree of bias. For instance, the arbitrator noted that Ramos was a long-time employee of respondent and testified in “a somewhat robotic and ‘coached’ manner as to the driver application and termination process.” The arbitrator also pointed out that, although Schaffer has extensive experience in the trucking industry, he did not work for respondent during claimant’s tenure. Finally, the arbitrator noted that Spiro “admitted to a fairly lengthy and ongoing relationship” with respondent. Ultimately, a majority of the Commission affirmed and adopted the decision of the arbitrator, including her credibility assessment. Thus, to the extent that claimant’s testimony conflicted with that of respondent’s three witnesses, it was within the prerogative of the Commission to credit claimant’s testimony over that of Ramos, Schaffer, and Spiro. See Labuz v. Illinois Workers’ Compensation Comm’n, 2012 IL App (1st) 113007WC, ¶ 33.

¶ 36 Of course, there was also control-related evidence suggesting independent contractor status. For example, respondent did not impose a dress code and it did not require claimant to shave or wear his hair in a particular manner. In addition, respondent exercised no control over the type of fuel claimant purchased or where he parked, and respondent did not instruct drivers to clean their equipment on a specified schedule. However, where, as here, there is conflicting evidence regarding a particular factor, we defer to the Commission’s findings. Roberson, 225 Ill.2d at 187; Kirkwood, 84 Ill.2d at 20. Accordingly, we agree with the Commission that the indicia of control point to an employment relationship.

¶ 37 Next, we examine the nature of the work performed by claimant in relation to the general business of respondent. “Regarding this factor, our supreme court noted ‘because the theory of workmen’s compensation legislation is that the cost of industrial accidents should be borne by the consumer as part of the cost of the product, this court has held that a worker whose services form a regular part of the cost of the product, and whose work does not constitute a separate business which allows a distinct channel through which the cost of an accident may flow, is presumptively within the area of intended protection of the compensation act.’ “ Ware, 318 Ill.App.3d at 1124 (quoting Ragler Motor Sales v. Industrial Comm’n, 93 Ill.2d 66, 71 (1982)). Respondent’s business was transporting machinery and metal products between sellers and buyers. Claimant’s job was transporting goods for respondent’s customers. Although Schaffer testified that claimant could carry freight for others, his ability to do was subject to various conditions, and the evidence clearly demonstrates that claimant hauled exclusively for respondent between his date of hire and the date of the accident. Accordingly, we find that this factor points to an employment relationship.

¶ 38 With respect to the remaining factors, there are aspects of both an employment relationship and independent contractor status. Pointing to an independent contractor relationship is the fact that claimant was paid a per-job commission rather than on an hourly basis, neither income nor social security taxes were withheld from claimant’s payments, respondent did not provide any equipment or tools, and the Agreement referred to claimant as an independent contractor. Pointing to an employment relationship is the right to discharge. As noted above, here two clauses of the Agreement related to termination. One of those provisions provided that either party could terminate the Agreement for any reason at any time after 30 days after its effective date. This is indicative of an employment arrangement. Ware, 318 Ill.App.3d at 1125–26 (noting that an at-will employment arrangement, which generally permits termination for any reason, is suggestive of an employment relationship).

¶ 39 In short, the foregoing evidence establishes that there are factors that weigh both in favor of and against a finding that claimant was an employee of respondent. However, it was the Commission’s province to determine claimant’s employment status. See Roberson, 225 Ill.2d at 186–87; Kirkwood, 84 Ill.2d at 20; Earley, 197 Ill.App.3d at 318. Ultimately, the Commission concluded that an employment relationship existed between claimant and respondent. Based on an analysis of the relevant factors, and in light of the totality of the circumstances, we find that a conclusion opposite that of the Commission is not clearly apparent. Thus, we reject respondent’s argument that the Commission’s determination that an employment relationship existed between respondent and claimant at the time of the latter’s injury is against the manifest weight of the evidence….”

Read the full case at Steel Machinery Transportation Inc v. Illinois Workers Compensation Commission

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