Division of Workers Compensation 800 SW Jackson Street, Suite 600, Topeka, KS 66612-1227 Phone 785.296.3441 · Fax 785.296.0025 · www.dol.ks.gov
Independent Contractor or Employee?
Special Problems Presented by Truck Drivers, Ministers and Others
he Kansas Department of Labor is frequently contacted when someone questions whether an individual is an independent contractor or an employee. This can be a very important question when determining whether an employer must cover a worker as an employee or whether a worker is indeed an independent contractor, and therefore, not subject to the employer's insurance coverage. Under the Kansas Workers Compensation Law, if a worker is an employee, he cannot be required to contribute towards purchasing workers compensation insurance. If the worker is an employee, then the employer must purchase the insurance and the employer cannot withhold funds from the employee's pay or commission to purchase the insurance. n workers compensation the determination of whether a worker is an employee or an independent contractor is through the so-called "common law test" as applied by the Kansas Supreme Court and the Kansas Court of Appeals. In other words, there is no statute in Kansas Workers Compensation Law that defines the legal requirements as to whether a certain individual is an employee or an independent contractor. An administrative law judge, or the Workers Compensation Board, or other appeal courts will arrive at this determination by examining the prior decisions of the Kansas Supreme Court and how they have defined an employee. In the case of Snyder v. Lamb, 191 Kan. 446, our court said, "The question whether, in a given situation, an injured workman occupied the status of an independent contractor as distinguished from an employee has been before this court many times. Generally speaking, an independent contractor is one who, exercising an independent employment, contracts to do a piece of work according to his own methods and without being subject to control of his employer except as to the result of his work." The court further noted in the case that the right of control test is not an exclusive test to determine the relationship, but other relevant factors are also to be considered. The court in the case of Evans v. Board of Education of Hays, 178 Kan. 275,
K-WC 126 (Rev. 2-06)
noted "an independent contractor represents the will of his employer only in the result of his work and not as to the means by which it is accomplished." The court further noted in that decision, "It is not the exercise of direction, supervision or control over a workman which determines whether he is a servant or an independent contractor, but the right to exercise such direction, supervision or control." t is not always easy for an administrative law judge or an appeal judge to determine whether the purported employer did have the right of control over the worker's activities. As the court noted above, it is not whether the right of control is actually exercised, but rather if it was reserved. The right to hire or discharge the worker also can be an important element in this test. Generally if an independent contractor does not perform a job he was contracted to do in a satisfactory manner, the legal recourse is not to discharge that person but to sue the person for breach of contract due to faulty workmanship or incomplete services. Usually an independent contractor cannot be discharged at the whim of the person contracting the work. An employee, however, can be subject to this type of termination. Generally where an independent contractor is involved, the person engaging the independent contractor usually enters into a written agreement where a certain end result is contracted for and a certain set amount of money will be paid once that end result is completed. For instance, if a homeowner contracted with a plumbing service to build a bathroom for a certain amount of money and did not engage in the supervision of the person while he performed the job, then that person performing the job would most probably be an independent contractor. However, if a person was a contractor who built homes and contracted with a certain individual that he would be paid a certain amount per hour while he did the plumbing work, generally gave directions how the plumbing work should be completed and had the right to discharge that person at any time during the progress of the work, that person doing the work would most probably be an employee. The problems
that exist are in the "gray" areas where there is an extremely close question of whether that person is an employee or an independent contractor. In these situations a person may be taking a financial risk if they do not cover the worker, because if it is determined that the worker is an employee, the employer would be required to pay the benefits even though he is uninsured. Sometimes general contractors and others require certificates of insurance from all persons doing work for them, and therefore, avoid the contractor vs. employee question and protect themselves from workers compensation claims. The only problem with this is that some workers might complain that they are being required to carry workers compensation insurance on themselves even though they believe themselves to be employees. Therefore, the problem can arise even before an accident may occur. Several areas of special interest are noted below in regard to whether the relationship of employer-employee may exist. hen the law was revised in 1974, there were many inquiries whether church ministers would be considered employees or independent contractors. This question arose chiefly due to the fact that the Internal Revenue Service apparently considers most ministers self-employed and not employees. However, applying the "common law test" to most situations involving ministers indicated that these people most probably were employees rather than independent contractors. In most cases, the minister is subject to discharge by a church board and the board has a certain right of control over ministerial activities in regard to directing duties and how they should generally be performed. There may be certain special circumstances where a minister would not be considered an employee, but in most cases reviewed, it was determined that a church should provide workers compensation coverage for a minister. nother area of prime interest is in the trucking industry. There is a better guideline in this area due to the Supreme Court case, Knoble v. National Carriers, 212 Kan. 331. This case can also be applicable to other situations involving the question of employees vs. independent contractor. In the Knoble case, the truck driver owned the tractor and leased it to the trucking firm. The employee, with his tractor, towed the trailer of the trucking firm. The truck driver and the trucking firm had a written contract which specifically stated the parties did not intend to create an employer-employee relationship. Truck drivers were not prescribed as to the number of days
they had to work or times they had to work; however, they had to conform to the I.C.C. regulations as to the amount of time they could work in a given day. The truck drivers were given advances for expense money which was deducted from their payment on completion of delivery of a load. Some of the evidence brought out in the case was that the drivers received instructions from the dispatcher as to what commodities were to be hauled and where they were to be delivered. The drivers were required to check with the employer on a call-in basis at least once a day. The employee was paid on the basis of 70 percent of the gross revenue taken in by the truck with no social security or withholding tax withheld or paid by the trucking firm. The Supreme Court in that case concluded that the lower court was correct in finding an employer-employee relationship to exist. The court in making this finding, noted, "that Respondent (trucking company) exercised or had the right to exercise as much control over the drivers of leased vehicles as it desired or was required to exercise in order to operate efficiently." The court further noted that there was no exact formula which may be used in determining if one is an employee or an independent contractor and concluded, "The determination of the relation in each instance depends upon the individual circumstances of the particular case." t might also be noted that where one person is exclusively associated with another in order to conduct his business efficiently, the principal in the relationship, as a practical matter, must exercise or reserve some control over the worker's activities. Also, it might be observed that a person who is willing to be considered an independent contractor may have a change of feeling as to this status once he is injured on the job. enerally in a contact by an employer, insurance agent or employee, it is difficult for the Department of Labor at times to give a definite opinion whether a person is an independent contractor or an employee. Staff in the Division of Workers Compensation can only point out the case law as noted above. The final determination of this question is up to an administrative law judge or appeal judge. Where an employer-employee relationship is found to exist, the employer would be required to pay the benefits even if he did not carry workers compensation insurance. The liability can be very high because of unlimited medical and present overall dollar maximums, along with the employer's attorney's fees.