IN RE BAKER, W.C. No. 4-618-214 (8/26/2005)


IN THE MATTER OF THE CLAIM OF STEPHEN M. BAKER, Claimant, v. BV PROPERTIES, LLC, Employer, and NON-INSURED, Respondent.

W.C. No. 4-618-214.Industrial Claim Appeals Office.
August 26, 2005.

FINAL ORDER
The respondent employer seeks review of a supplemental order of Administrative Law Judge Coughlin (ALJ) which determined that the claimant was an employee rather than an independent contractor, that he sustained a compensable injury, and which awarded medical benefits and temporary disability benefits. The respondent contends that the ALJ erred in concluding that the claimant was an employee rather than an independent contractor, and that she erred in calculating the average weekly wage. We affirm.

The hearing officer found that the claimant was a construction worker who was hired by the employer to frame houses. At the time he was hired, his principal occupation was concrete work in the construction field, and he was not skilled at framing. Approximately two weeks after the date of hire, the owner of the employer’s business instructed the claimant to execute a Declaration and Certification of Independent Contractor Status form, which was also signed by the employer’s president, Aaron Delventhal. On May 27, 2004, the claimant sustained injuries when he fell off the roof on which he was working. He injured his right hip, spine, and ribs, and required medical treatment.

The ALJ entered factual findings resolving the issue of whether the claimant was an independent contractor or employee. She found that the claimant did not submit a bid or other proposal prior to his hiring as a framer, that there was no written contract between the parties setting forth a fixed price for the project, nor was there any deadline for completion of the work. The ALJ also found that the employer operated its business in a way contrary to its legal position that its subcontractors were independent. There were no conditions set forth in any written document governing termination of the contracts, or imposing any liability on any party for termination of the relationship. Moreover, at the time of his injury the claimant had no other jobs and was employed exclusively by the respondent-employer, who could fire the claimant at any time and for any reason without liability. The claimant was paid an hourly rate rather than a flat rate fixed by a contract, and the employer trained the claimant to frame houses, a job in which he had no training, skill or experience. Tools and materials necessary to perform the work were provided by the employer, who also set the times during which the claimant was expected to be on the job. The claimant’s daily work was subject to the oversight and supervision of other individuals working on the project.

Based upon her findings, the ALJ concluded that the claimant was an employee rather than an independent contractor. The ALJ concluded that the claimant’s injuries were compensable and awarded temporary disability benefits, medical benefits, and penalties because of the employer’s failure to insure for workers’ compensation purposes.

I.
On appeal, the employer first contends that the ALJ erred as a matter of law in concluding that the claimant was an employee rather than an independent contractor. The employer argues that the relevant statutory factors compel the conclusion that the claimant was an independent contractor. The employer also disputes particular findings of fact, arguing that they are unsupported by substantial evidence in the record. We are unpersuaded that the ALJ erred.

Pursuant to § 8-40-202(2)(a), C.R.S. 2004, “any individual who performs services for pay for another shall be deemed to be an employee” unless the person is “free from control and direction in the performance of the service, both under the contract for performance of service and in fact and such individual is customarily engaged in an independent trade, occupation, profession, or business related to the service performed.” The putative employer may establish that the claimant was free from direction and control and engaged in an independent business or trade by proving the presence of some or all of the nine criteria set forth in §8-40-202(2)(b)(II), C.R.S. 2004. See also Nelson v. Industrial Claim Appeals Office, 981 P.2d 210 (Colo.App. 1998).

The factors set forth in § 8-40-202(2)(b)(II) indicating that an individual is not an independent contractor include the individual being paid a salary or hourly rate instead of a fixed contract rate, and being paid individually rather than under a trade or business name. Conversely, independence may be shown if the person for whom the services are performed provides no more than minimal training to the claimant, does not dictate the time of performance, does not establish a quality standard for the claimant’s work, does not combine its business with the business of the claimant, does not require the claimant to work exclusively for a single person or company, and is not able to terminate the claimant’s employment without liability.

This statute creates a “balancing test” to overcome the presumption of employment contained in § 8-40-202(2)(a) and establish independent contractor status. Nelson v. Industrial Claim Appeals Office, supra. The question of whether the employer has presented sufficient proof to overcome the presumption is one of fact for the ALJ. Accordingly, we are bound by the ALJ’s determinations if supported by substantial evidence and plausible inferences drawn from the record. Section 8-43-301(8), C.R.S. 2004; F.R. Orr v. Rinta, 717 P.2d 965 (Colo.App. 1985). This standard of review requires that we view the record in the light most favorable to the prevailing party, and accept the ALJ’s resolution of inconsistencies and conflicts in the evidence. Industrial Commission v. Royal Indemnity Co., 124 Colo. 210, 236 P.2d 293 (1951); Metro Moving Storage Co. v. Gussert, 914 P.2d 411 (Colo.App. 1995).

The respondent contends Finding of Fact No. 10, that the claimant worked exclusively for BV Properties, is erroneous. The employer argues that the claimant testified he always performed “little side jobs” regardless of the principal source of his income. It is true that the claimant testified that he performed some minor work in addition to that for the respondent employer; however, he stated that he only “tagged along” on two of the jobs and on one of them he merely “goofed off” and was not even paid. Tr. 34-35. Further, there is no evidence in the record suggesting that any of the “side jobs” were framing. Rather, they consisted of the claimant’s usual work pouring concrete. Finally, the factual finding complained of by the respondents states that “[o]n the date of the injury” the claimant was working exclusively for the respondent employer. That is a plausible inference from the claimant’s testimony that he performed only occasional “little side jobs.”

The respondent also disputes Finding of Fact No. 17, which states that the employer set the claimant’s hours of work and that he was required to submit daily progress reports. The finding that the claimant was required to work specific hours set by the employer is supported by the claimant’s testimony that he “was required to be there Monday through Friday, 7:00 to 4:00 . . . eight hours a day.” Tr. 40. Similarly, in response to the question whether he was required “to submit reports of your work that you completed each day,” the claimant responded, “Yeah.” Tr. 22. Hence, Finding of Fact No. 17 is supported by testimony in the record, and the existence of contrary evidence is immaterial to our review.

The respondent also disputes Finding of Fact No. 20, which states that the claimant performed work on other of the employer’s projects, occasionally filling in for absent workers. This finding is directly supported by the claimant’s testimony that he worked on another of BV Properties’ houses while his co-workers vacationed. Tr. 35. The ALJ could further infer that the claimant was working under the direction of the employer from the claimant’s testimony that he was told when to arrive at work for that particular job. Tr. 38. This finding is therefore supported by substantial evidence in the form of the claimant’s testimony.

The employer also contends that the proper balancing of the criteria set forth in § 8-40-202(2)(b)(II) compels the conclusion that the claimant was an independent contractor. In support of its argument, the employer sets forth the evidence that might have supported a conclusion contrary to that reached by the ALJ. However, the ALJ considered the relevant factors and entered factual findings supporting her conclusion that, on balance, the claimant was an employee. Thus, she found that no written contract between the parties existed, that the claimant’s employment could be terminated as that of an “at will” employee, that the employer oversaw that claimant’s work and established quality standards, that the claimant was paid an hourly rate, that the claimant did not provide his own tools or control his own hours, that he had no independent business, that he was required to submit daily progress reports, and that he was closely supervised. These findings are supported by substantial evidence in the form of testimony from the claimant, and we are not at liberty to disturb them. These findings also support the ALJ’s conclusion that under the totality of the circumstances, there was an employment relationship rather than independent contractor status. That the ALJ might have reached a contrary conclusion is immaterial on review Mountain Meadows Nursing Center v. Industrial Claim Appeals Office, 990 P.2d 1090 (Colo.App. 1999).

The respondent also contends that the ALJ erred in concluding that the written Declaration of Independent Contractor Status was insufficient to trigger the rebuttable presumption of independence in § 8-40-202(2)(b)(IV). The form specifies that the parties shall initial next to each of the nine statutory criteria that is applicable, in order to certify that the business meets each designated criteria. Because the employer had failed to initial any of the criteria, the ALJ inferred that the form was not effective and that the presumption did not apply.

It is unnecessary for us to address this argument, because even if the ALJ erred in concluding that the declaration was ineffective the error was harmless. The ALJ concluded that, even if the declaration was legally sufficient to trigger the rebuttable presumption, “the presumption of independent contractor status has been overcome.” Conclusions of Law No. 3. As noted above, there is ample evidence in the record supporting the ALJ’s determination that the claimant proved that he was an employee rather than an independent contractor. And, contrary to the employer’s argument, the burden was not on the claimant to prove by clear and convincing evidence that he was an employee. The authority cited by the employer for that proposition is not applicable to this case. Frank C. Klein Company, Inc. v. Colorado Compensation Insurance Authority, 859 P.2d 323 (Colo.App. 1993), dealt with § 40-11.5-102(4), C.R.S. 2004, which imposes a presumption of independence regarding parties to leases between a motor carrier and its drivers. In such cases, the presumption must be overcome by clear and convincing evidence; however, that statute does not apply to this case.

Insofar as the respondent makes other arguments that the ALJ “ignored” evidence or testimony, we have considered those arguments and reject them. The ALJ is not required to cite and discuss every piece of evidence prior to crediting contrary or other evidence. Crandall v. Watson-Wilson Transportation System, 171 Colo. 329, 467 P.2d 48 (1970). Rather, evidence not specifically discussed is implicitly rejected. Magnetic Engineering, Inc. v. Industrial Claim Appeals Office, 5 P.3d 385 (Colo.App. 2000).

II.
The employer also contends that the ALJ erred in finding that the claimant’s average weekly wage was $800. The employer argues that, although the claimant was paid an hourly wage of $20, he did not always work a 40-hour week, and the ALJ had actual pay records from which she could have calculated a more accurate average weekly wage. We are unpersuaded that the ALJ abused her discretion.

Section 8-40-102(2)(d), C.R.S. 2004, sets forth the method for calculating the average weekly wage where the claimant received an hourly wage:

Where the employee is being paid by the hour, the weekly wage shall be determined by multiplying the hourly rate by the number of hours in a day during which the employee was working at the time of the injury . . . then the weekly wage shall be determined from said daily wage in the manner set forth in paragraph (c) of this subsection (2).

Since the overall purpose of the statutory scheme is to calculate “a fair approximation of the claimant’s wage loss and diminished earning capacity,” Campbell v. IBM Corp., 867 P.2d 77 (Colo.App. 1993), the ALJ is afforded discretionary authority to use an alternative method for calculating the wage where “manifest injustice” would result from using the methods set forth in § 8-40-102(2)(d). See § 8-40-102(3), C.R.S. 2004. We may not interfere with the ALJ’s calculation of the average weekly wage unless an abuse of discretion is shown. Coates, Reid Waldron v. Vigil, 856 P.2d 850 (Colo. 1993). An ALJ only abuses her discretion where the order “exceeds the bounds of reason,” such as where it is unsupported by the record or is contrary to law. Rosenberg v. Board of Education of School District #1, 710 P.2d 1095 (Colo. 1985).

Here, the claimant testified that he earned hourly pay of $20 and that he was hired to work 40 hours per week. Tr. pp. 17-18. He also testified that his regular work hours were set by the employer at “7:00 to 4:00.” Tr. p. 23. The ALJ could reasonably infer from this testimony that the “number of hours in a day during which the [claimant] was working” for purposes of § 8-40-102(2)(d) was eight. Indeed, the timesheets relied upon by the respondent disclose that the claimant worked eight or nine hours on many of the days for which there are entries. Moreover, there is no explanation, either on the timesheets themselves or in the record of the hearing, for the partial days worked, nor is there any testimony concerning the accuracy or the completeness of the timesheets. Under these circumstances, we cannot conclude that the ALJ abused her discretion by deciding to base the average weekly wage on the hours and hourly wage set in the contract of hire.

III.
The claimant also requests an award of attorney fees and costs “in connection to defending the Petition to Review.” Although the claimant has not set forth any argument in support of the request, we presume that the claimant contends the respondent’s appeal is frivolous. We deny the request for attorney fees.

Although § 8-43-301(14), C.R.S. 2004 authorizes an award of attorney fees and costs under certain circumstances, such an award is not appropriate if there is a reasonable basis for the appeal. BCW Enterprises Ltd. v. Industrial Claim Appeals Office, 964 P.2d 533 (Colo.App. 1997). Although we disagree with the respondent’s arguments on appeal, we do not view them to be frivolous.

IT IS THEREFORE ORDERED that the ALJ’s supplemental order dated May 11, 2005, is affirmed.

INDUSTRIAL CLAIM APPEALS PANEL

___________________
Dona Halsey

___________________
Curt Kriksciun

Stephen M. Baker, Buena Vista, CO, BV Properties, LLC, Buena Vista, CO, Employer Compliance Unit, Division of Workers’ Compensation — Interagency Mail, Subsequent Injury Fund, Division of Workers’ Compensation — Interagency Mail, M. Stuart Anderson, Esq., Salida, CO, (For Claimant).

Joan A. Goldsmith, Esq., Colorado Springs, CO, (For Respondent).