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Reasons Why Your Independent Contractor May Be Considered An Employee Under The Workers' Compensation Act

May 04, 2010 BY Def Admin

            Under Georgia law, if the relationship of a purported employer and employee is actually that of independent contractor and contractee, there is no coverage under the Workers’ Compensation Act.  Sanders Truck Transp. Co. v. Napier, 117 Ga. App. 561 (1968).  Keeping the above cited law in mind, a signed contract indicating an independent contractor relationship does not necessarily mean the employer is exempt from a workers’ compensation claim.  The contract is just one factor that is taken into consideration by the Georgia courts when determining if an independent contractor relationship exists.

            Georgia courts have consistently stated an employer/employee relationship exists where the employment arrangement gives, or the employer assumes, the right to control the time, manner, and method of employment, as distinguished from the right to simply require certain results.  Miller v. Kimball, 163 Ga. App. 435 (1982). Where there is conflicting evidence as to whether or not a worker is an independent contractor or an employee, the Court of Appeals has repeatedly held that any doubt is to be resolved in favor the worker’s status as an employee.  Travelers Ins. Co. v. Moates, 102 Ga. App. 778 (1960).  The courts have generally determined on a case by case basis as to when an independent contractor relationship exists. 

            Among the various factors courts take into consideration are:  method of payment, length of time contractor is employed, selection of materials and tools, control of hours worked, intent of the contract, and the right to hire and fire.  The Georgia Court of Appeals ruled in Golash v. Cherokee Cab Co. that a cab driver was an employee based on the “right to control” test.  The Court noted the test is not whether the employer did in fact control and direct the employee in work, but whether the employer had that right under the employment contract.  Golash v. Cherokee Cab Co., 226 Ga. 636 (1970); citing Swift & Co. v. Alston, 48 Ga. App. 649.  InGolash, the evidence showed the employer could tell the cab driver when to come to work, how long to work and when to quit work, and that if he refused to obey the employer’s instructions regarding working hours, the employer could then terminate him or refuse to let him drive afterward.  Id. at 638.  That Court went as far to say the evidence showing the power to terminate the employment alone was sufficient evidence to authorize a finding the cab company had the right to control the time, manner and method of doing the work.  Id

            The Court in Simpkins v. Uniguard Mutual Insurance Co., 130 Ga. App. 535 (1974) did not find the right to fire as conclusive as the Golash court.  In Simpkins, a contractor orally agreed with a purported independent contractor to do some cornice work and installation of siding on a building being constructed. Simpkins at 535. The injured worker had been working on the house for two days when he was injured as a result of a fall from a scaffold.  Id. at 536.  The contractor furnished the material and had the right to choose the siding he desired.  Id.  There was no withholding of income tax or social security or any control over the number of men or hours worked.  Id. at 537.  Moreover, the injured worker considered himself to be self-employed.  Id.  The contractor had the right to terminate the contract at any time he became dissatisfied with the quality of work.  Id.

            The Simpkins Court cited the ruling of Employers Mutual Liability etc., Co. v. Johnson, 104 Ga. App. 617, which stated “the right to change the work and the right to dispense with the independent contractor’s services if, during the performance of the job, it appeared that he either was incapable or unwilling to do the job according to the plans and specifications was consistent with the independent contractor relationship.”  TheSimpkins court further noted, “The right to control the manner and method means the right to tell the employee how he shall go about doing the job in every detail, including what he shall use and what procedures he shall follow.”  Simpkins at 538; citing Employer Mutual at 620 (emphasis added). 

            In R.E. Moss v. Central of Georgia Railroad Company, the Georgia Court of Appeals used similar rationale used in Simpkins in determining an electrical worker for a railroad was an independent contractor.  The injured worker was hurt on the job after contracting with a railroad to do some electrical work to replace some defective poles.  R. E. Moss, 135 Ga. App. 904, 907 (Ga. App. 1975).  Prior to beginning the contracting work, he was laid off by the railroad after working for the company for 16 years.  Id.  After the worker was laid off and prior to his contracting work to replace the defective poles, he did some occasional electrical work for the railroad.  Id. The worker tried to argue his employee status by the fact that he would occasionally be asked to do electrical work unrelated to his contracting job to replace the poles.  The Court did not agree with the injured workers’ logic.  Id. at 909.

            While the Court acknowledged there was a conflict of evidence as to whether the railroad had the right to control the worker at times other than when he was injured, the parties understood the worker was to be in total supervision of the pole replacement project.  Id. at 908.  The Court added, “The mere fact that the railroad reserved the right to assure performance in accordance with the specifications of the project did not render plaintiff a railroad employee.”  Id.  The Court also considered the fact the injured worker was to receive a flat sum for completing the project in question, even though he was paid by the hour at times other than when he was injured.  Id.  Additionally, the worker hired his own help, paid them himself, withheld social security and income taxes from their wages, referred to himself as self-employed on his own income tax returns, and supplied his own tools for the most part.  Id.  Taking all of these factors into consideration, the Court ultimately held the injured worker was an independent contractor.  Id. at 909. 

            A majority of the cases involving independent contractor versus employee status remain unpredictable since they are decided on a case by case basis.  Thus, it would be beneficial for employers to pay close attention to as many of the above-referenced factors as possible if they want to avoid paying benefits to an injured worker they thought was an independent contractor.  For instance, one can place provisions in their contract that they intend for the worker to be an independent contractor.  Moreover, they can ask the potential workers to use their own tools and make payments in a lump sum as opposed to an hourly basis.  Although these considerations would not necessarily be the deciding factors, they could be enough to persuade a court to rule in favor of the independent contractor status.

The Journal is a publication for the clients of Drew Eckl & Farnham, LLP. It is written in a general format and is not intended to be legal advice to any specific circumstance. Legal Opinions may vary when based upon subtle factual differences. All rights reserved. 

Editorial Board:

H. Michael Bagley