The Nebraska Court of Appeals upheld a trial court ruling against a trucker that held he was an independent contractor rather than an employee, thus ineligible to receive workers compensation benefits for an on-the-job injury.
The decision, Cajio v. Agra Transport, turned on what the court found to be the employers lack of control over the details of how the injured worker did its job on a day-to-day basis. If the decision remains controlling law, it could mean that more workers in Nebraska get classified as contractors and lose the protections of the Nebraska Workers’ Compensation Act.
A tough decision on worker classification
From an employee-advocate point of view, this decision is tough for a lot of reasons. The court held that decisions about employment status are mixed questions of law and fact, however the court did not cite to decisions that hold legal questions should be interpreted in favor of the injured worker under the beneficent purpose of the act. The absence of a beneficent purpose analysis may have reflected in the court citing to a tort case rather than a workers compensation decision for guidance as to why the workers was a contractor rather than an employee. Finally the court cited to Omaha World-Herald v. Dernier to support their conclusion without noting Dernier was largely overturned by the Legislature in 1999.
In his blog post about the decision, Thomas Robinson implied the case could have been decided differently under an ABC Test rather than Nebraska’s ten factor common law test. Robinson, who thought the case was correctly decided, stated approvingly that “states are free to allow greater contract flexibility between purported employers and those who perform the work.”
I respectfully disagree with Robinson’s paean to the alleged intelligent design of federalism in workers compensation. Nebraska applies an ABC Test to unemployment benefits under Neb. Rev. Stat. 48-604(5). The decision about legal standards to apply are policy-driven in the courts and political in the legislative branch
In a blog about worker misclassification in general, Professor Michael Duff made the point I made above in more detail. He pointed out that the common law test was originally developed in tort law without any reference to workers’ compensation or guidance from the legislative branch.
Statutory employer laws to remedy misclassification?
While the so-called beneficent purpose doctrine isn’t per se guidance from the legislature, the Nebraska legislature has expressly provided guidance on the use of contracting to avoid workers’ compensation liability. Neb. Rev. Stat. §48-116 can make employers “statutory employers” if they engage in a “scheme, artifice or device” to avoid workers compensation. Judges seem to willing to find statutory employer liability in schemes involving multiple layers of contractors.
The Nebraska Supreme Court appeared to weaken statutory employer protections through the Aboytes case. My problem with the Aboytes case is that it applies the ten factor test at the bottom of the scheme where it may be more difficult to prove employment status. But I have read trial court decision, post-Aboytes that hold that “at-will” contract status can create the control necessary to prove control. I think this is sound logic, because the at-will doctrine does give employers vast control over their workers.