Court of Appeals Sees Through Attempt to Skirt Workers’ Compensation Rules on Employees and Independent Contractors
In Macias v. BSI Associates, Inc. d/b/a Carolina Chimney, No. COA 19-299 (November 5, 2019), a recent unpublished opinion, the Court of Appeals reiterated its adherence to the Hayes doctrine for determining whether an injured worker is an “employee” and therefore entitled to workers’ compensation benefits, or an “independent contractor” and not entitled to any benefits.
The facts of the case are particularly interesting. The Plaintiff initially worked for the Defendant-Employer, Carolina Chimney, until 2013, when he sustained an on-the job accident. As a part of the settlement of that claim, Plaintiff was precluded from returning to work with Carolina Chimney. In 2014, Steve Sterling, owner of Carolina Chimney devised a way to get around the agreement by having Plaintiff start his own company, purchase necessary insurance policies, and continue to work for Carolina Chimney as an “independent contractor.” Sterling assured Plaintiff he would provide the vehicles, tools, and supplies, and that he would arrange for Plaintiff to secure insurance. Thereafter, Plaintiff obtained an insurance policy indicating he had zero employees and excluded himself from coverage. Plaintiff then resumed working for Carolina Chimney before he fell from a scaffold and ruptured his spine and a second workers’ compensation case ensued.
The Defendants argued there was no employee-employer relationship between Macias and Carolina Chimney. The Industrial Commission found, and the Court of Appeals agreed, that Plaintiff was, in fact, an employee of Carolina Chimney after applying the Hayes factors. The most important factor being the right to control the activities of the “independent contractor.” Plaintiff was in the regular employ of Carolina Chimney, who provided all of his tools and branded clothing, set his schedule, and required him to wear Carolina Chimney-branded clothing and to introduce himself by saying, “Hi, my name is Jorge. I’m with Carolina Chimney Crew.” The court was unpersuaded by the various arguments of the Defendants that the Plaintiff was an independent contractor, including that he reaped tax benefits by holding himself out as an independent contractor, that he had specialized skill and knowledge, he was not paid as an hourly employee, was free to work with other businesses, and could choose his own schedule.
Practice Pointer: The North Carolina General Assembly has tasked the Industrial Commission with identifying and prosecuting incidents of employee misclassification, so the Industrial Commission and Courts are particularly sensitive to and skilled at seeing through efforts to avoid workers’ compensation coverage for employees. While this is likely a very rare occurrence, this case is also a good reminder that even the scrupulous employer may find itself in an employer-employee relationship in the eyes of the Industrial Commission with a worker thought of as an independent contractor. The key to this distinction is the amount of control the employer has over the worker, which can be a moving target. Please contact a member of our workers’ compensation team if you have questions about the employer-employee relationship and how to best protect your business.