Carrier’s Lack of Control Shows that Driver was Independent Contractor

From WorkersCompensation.com, Frank Ferreri reports on an Arizona workers compensation case in which the driver of a semi-trailer truck was injured and was not able to receive workers compensation benefits because he was an independent contractor, not an employee. The court said that there wasn’t any evidence that the carrier had a right to control the driver’s work and therefore he was not an employee. 

Source: Carrier’s Lack of Control Shows that Driver was Independent Contractor – WorkersCompensation.com

The court said:

P13 “An independent contractor is not an employee [under] workers’ compensation law.” Danial v. Indus. Comm’n, 246 Ariz. 81 , 83 , 434 P.3d 592 ¶ 12 (App. 2019). Arizona’s workers’ compensation law defines an employee as a worker whose work “is a part or process in the trade or business of the employer” and over whose work the hirer retains supervision or control. Ariz. Rev. Stat. (A.R.S.) § 23-902(B)(2024) .2 An independent contractor, by contrast, is a worker who is “not subject to the rule or control” of the hirer and is “engaged only in the performance of a definite job or piece of work.” A.R.S. § 23-902(C) . “The distinction between an employee and independent contractor . . . rests on the extent of control the employer may exercise over the details of the work.” Cent. Mgmt. Co., 162 Ariz. at 189 . This requires [*4] consideration of the “totality of the facts and circumstances of each case, examining various indicia of control.” Anton v. Indus. Comm’n, 141 Ariz. 566 , 571 , 688 P.2d 192 (App. 1984) (quoting Home Ins. Co. v. Industrial Comm’n, 123 Ariz. 348 , 350 , 599 P.2d 801 (1979)).

P14 When an independent contractor relationship is desired, the parties may enter into a written agreement that complies with A.R.S. § 23-902(D) . Among other things, A.R.S. § 23-902(D) requires that both parties sign the independent contractor written agreement. The Agreement here is signed by Ibrahim but not MKTS. Thus, it does not comply with subsection (D) . Nor does the statute allow for “substantial” compliance; to fully benefit from the statutory presumption, subsection (D) requires “a fully completed written agreement that satisfies the requirements” of that statute. A.R.S. § 23-902(D) . The ALJ, therefore, erred by applying the statutory presumption.

P15 Because this court makes a de novo decision on the legal question of the parties’ relationship, that error is not dispositive here. This court will analyze the relationship under A.R.S. § 23-902(B) and (C) , which focuses on the right to control the worker. Thus, we consider the evidence without applying the subsection (D) presumption.

P16 In Home Insurance, the Arizona Supreme Court identified factors indicating the right to control, noting that none are conclusive:

duration of employment; the method of payment; who furnishes necessary equipment; the right to hire and fire; who bears responsibility for workmen’s compensation insurance; the extent to which the employer may exercise control over the details of the work; and whether the work was performed in the usual and regular course of the employer’s business.

123 Ariz. at 350 . In addition,

any supervision or control exercised by an employing unit to comply with any statute, rule or code adopted by the federal government, this state or a political subdivision of this state or any requirement of licensing, professional or ethical standards may not be considered for the purposes of determining the independent contractor or employment status of any relationship or individual for the purposes of this title.

A.R.S. § 23-1602 . Therefore, compliance with federal law (including federal motor carrier requirements) is not an indication of control by MKTS.

P17 The most significant factor favoring an employer-employee relationship here is the nature of Ibrahim’s work. Ibrahim’s work as a driver for MKTS was in the usual and regular course of MKTS’ long-haul trucking business, not incidental or ancillary to it. That said, very little indicia of control are present here. Ibrahim was responsible for supplying a vehicle and all tools necessary to complete the work. The fact that he leased a truck and other equipment from MKTS, and borrowed funds from MKTS for fuel purchases, does not favor an employee relationship, as Ibrahim remained legally responsible for those necessities. Neither do the delivery time and place requirements indicate MKTS control, as those details are dictated by the nature of the work. MKTS did not mandate specific routes or driving hours. Any requirements by MKTS were those mandated by motor carrier regulations.[*5]

P18 Ibrahim argues that the misapplication of the presumption affected the ALJ’s credibility findings. The record, however, does not support that argument. The record also fails to support Ibrahim’s argument that MKTS exercised any more control than was necessary to comply with motor carrier regulations. Furthermore, several facts that Ibrahim contends are evidence of an employer-employee relationship are not, such as MKTS’ transportation of Ibrahim from Las Vegas to Phoenix to fill out employment paperwork, assisting Ibrahim with English translation of documents, procuring his preferred route to provide full-time work, or Ibrahim’s move from Las Vegas to Arizona to start work for MKTS.

P19 Citing Anton and Central Management, Ibrahim contends that because he was hired to provide services that are the “very heart” of MKTS’ business—long haul trucking—that single factor by itself outweighs the other factors tending to show an independent contractor relationship. The law, however, is to the contrary. The nature of the work is one of several factors to weigh and balance, even if it might weigh heavily at times. The fundamental test is the right to control how the work is performed: “The right to control or supervise the method of reaching a specific result determines whether an individual is an employee or an independent contractor.” Home Ins., 123 Ariz. at 350 . “In deciding whether a worker is an employee we look to the totality of the circumstances and the indicia of control.” Santiago, 164 Ariz. at 510 .

P20 In Anton , a woodcutting business hired a woodcutter and, after the woodcutter was injured, the woodcutting business claimed the woodcutter was an independent contractor. See 141 Ariz. at 568 . The court recognized the woodcutter was hired to perform an integral part of the hirer’s regular business. Id. at 573 . In that circumstance, the court noted “the relative nature of the [woodcutter]’s work bears heavily on the question of whether the [woodcutter] is an employee or an independent contractor.” Id. at 572 . The court noted the substantial control the business exercised over the woodcutter, even requiring the woodcutter to use a saw and not an axe. Id. at 570-71 . The court concluded the woodcutter’s job was “an ongoing basic employment activity of the business owner as opposed to an incidental part of the owner’s normal operation,” id. at 573 , to find the woodcutter was an employee and not an independent contractor, id. at 574 .

P21 In Central Management, a taxi service operated, maintained, controlled and presented to the public vehicles that were leased as the usual and regular course of its business. 162 Ariz. at 190-91 . Drivers who leased vehicles from the taxi service were thus engaged in the regular course of the taxi service’s business and not simply leasing the vehicles. Id. That factor, along with “additional indicia of control,” justified affirming the ALJ’s determination that the drivers were employees rather than independent contractors. Id. at 191-92 .

P22 Outside the core function of Ibrahim’s work, there are no significant indicia of control by MKTS. Setting aside federal regulation [*6] mandates, as Arizona law requires, and the requirements integral to the task itself (such as specific times for pickup and delivery and destinations), MKTS had minimal rights to control Ibrahim and how he accomplished his work. He was not limited to a particular route or specific times to drive. He was free to deliver the cargo in any way that ended in a timely, undamaged arrival at the destination. He was not required to lease a truck from MKTS and was free to use some other vehicle, either borrowed, bought or leased. And while MKTS allowed him to use its fuel card, Ibrahim was responsible for reimbursing that cost. MKTS did not supply any of Ibrahim’s costs of doing business.

P23 Under Arizona worker’s compensation law, the evidence here does not show that MKTS had a right to control Ibrahim’s work to the extent that an employer-employee relationship was created rather than the independent contractor relationship urged by MKTS.