17. Employee Status

Roadway Package Systems v Storey – 17.25

Roadway Package Systems v Storey
Digest No. 17.25

Section 421.42(1) and (5), and 421.44(1)

Cite as: Roadway Package Systems, Inc v Storey, unpublished opinion of the Wayne County Circuit Court, issued July 27, 2006 (Docket No. 05-535515-AE).

Appeal pending: No
Claimant: Craig Storey
Employer: Roadway Package Systems, Inc.
Date of decision: July 27, 2006

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HOLDING: A claimant who owns his own truck and delivers packages for an employer is still considered an employee when the employer exercises a significant level of control over the claimant’s actions.

FACTS:  Claimant worked as a truck driver delivering packages for the employer. The contract between the parties required Claimant to provide daily delivery service for a period of three years, to pick up and deliver packages on dates and times compatible with the schedules and requirements of the employer’s customers, to provide proof of timely maintenance and inspection of his truck, to use his truck exclusively for delivering RPS packages, to identify his truck with RPS logos to identify the truck as part of the RPS system, to wear the RPS approved uniform, and to permit RPS personnel to ride along.

DECISION: The Circuit Court affirmed the Board of Review decision that Claimant was an employee. Claimant is not disqualified from receiving benefits.

RATIONALE:  The Board of Review applied the “economic reality” test and found that due to the nature of the relationship between the parties and the level of control exerted by the employer, Claimant was an employee. The Board of Review distinguished this from other cases where claimants who own their own vehicles were considered independent contractors by stating that in those cases the determinative factor was that the claimants also drove for other employers. In the current case, Claimant was precluded from driving for anyone else and was required to wear a uniform and outfit his truck as an RPS truck.

The Circuit Court affirmed the Board of Review decision. The Circuit Court disagreed with the argument put forth by RPS that the Board of Review has misapplied the legal precedent. In addition, the Circuit Court held that the fact that Claimant owned the truck is not determinative since he had to outfit the truck to very specific specifications put forth by RPS.

Digest author: Andrea M. Frailey, Michigan Law, Class of 2017
Digest updated: November 4, 2017

17. Employee Status

Coppens v Hayes – 17.22

Larry Coppens, d/b/a Strawberry Tree & Landscaping v. Matthew L. Hayes
Digest No. 17.22

Section 421.41; Section 421.42

Cite as: Coppens v Hayes, unpublished opinion of the Oakland County Circuit Court, issued October 12, 2005, (Docket No. 05-064176-AE).

Appeal pending: No
Claimant: Matthew L. Hayes
Employer: Larry Coppens, d/b/a Strawberry Tree & Landscaping
Date of decision: October 12, 2005

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HOLDING: The Board of Review’s decision is affirmed. The claimant is eligible for benefits.

FACTS: The claimant did yard work for employer until he was laid off when the employer’s machinery broke down. The UIA found the claimant was a covered employee under the Act. The ALJ agreed and the Board of Review affirmed.

DECISION: Employment relationship was reasonably found because the economic reality test and the definition of employer under MCL 421.41(1)(ii) were both satisfied.

RATIONALE: The Board’s decision was properly supported by evidence and was justified in setting the burden of proof on the claimant. Under the economic reality test’s eight factors, the Board was supported in its finding of an employment relationship because: (1) the employer didn’t incur contractual liability for terminating the claimant; (2) the claimant’s work formed an integral part of the employer’s business; (3) whether the claimant dependent of the job as a means of support was not in evidence and therefore did not factor into the analysis; (4) the employer supplied all the claimant’s work ; (5) there was no evidence the claimant held himself out to the public as ready to perform the relevant job duties; (6) there was not evidence whether the work was customarily performed by an independent contractor so this factor did not factor into the analysis; (7) the employer controlled the claimant’s work by telling him how he would be paid, when to report to work, and what to do; and (8) the purpose of the Act and deference to the agency supported the finding of the employment relationship.

The court also found an employment relationship was present under the definition of “employer” under MCL 421.41(1)(ii)  since the employer paid a total remuneration of $1000 or more per year.

Digest author: Austin L. Webbert, Michigan Law, Class of 2017
Digest updated: October 25, 2017

17. Employee Status

Capital Carpet v MESC – 17.02

Capital Carpet v MESC
Digest no. 17.02

Section 42

Cite as: Capital Carpet v MESC, 143 Mich App 287 (1985).

Appeal pending: No
Claimant: N/A
Employer: Capital Carpet Cleaning and Dye Company, Inc.
Docket no.: L80-03459-R01-1683
Date of decision: May 2, 1985

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COURT OF APPEALS HOLDING: Whether a business is an employer of a worker for purposes of the MES Act depends upon the economic reality of their relationship; under the economic reality test, among the factors to be used are (1) control of the worker’s duties, (2) the payment of wages, (3) the right to hire and fire and the right to discipline, and (4) the performance of the duties as an integral part of the employer’s business towards the accomplishment of a common goal.

FACTS: Carpet cleaners worked under a contractual agreement with Capital Carpet [CC]. They reported to CC every morning and received work assignments for the day. The cleaners used CC’s office to make appointments.

The cleaners received a commission which ranged from 50-60%. All income was turned over to CC and the cleaners were given a paycheck. Income and social security taxes were not withheld. The cleaners rented equipment and purchased chemicals from CC. The costs were deducted from their paychecks. They could purchase their own equipment but chemicals had to be purchased from CC.

The cleaners were in control of the jobs themselves, were not supervised by CC and were responsible for hiring and paying their own help. The cleaners were encouraged to wear CC T-shirts. The cleaners represented themselves as associated with CC’s business and promoted that business. None of the cleaners cleaned on their own or for any other company.

DECISION: The cleaners were employees for MESA purposes.

RATIONALE: CC controlled the overall direction of the cleaners’ employment situation. Moreover, CC paid their wages, and the work done was so integral to CC’s business, neither could exist without the other. In light of the principals of the “economic reality” test, it was clear they were employees.

Digest Author: Board of Review (original digest here)
Digest Updated:

17. Employee Status

City of Sturgis v Messner – 17.07

City of Sturgis v Messner
Digest no. 17.07

Section 42

Cite as: City of Sturgis v Messner, unpublished opinion of the St. Joseph Circuit Court, issued February 27, 1979 (No. 78-590).

Appeal pending: No
Claimant: Ann Messner
Employer: City of Sturgis
Docket no.: L77 7267 1531
Date of decision: February 27, 1979

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CIRCUIT COURT HOLDING: Where a nurse-anesthetist declines employee status, signs a contract to provide services at a hospital as an independent contractor, and retains the right to perform services elsewhere, the doctrine of “economic reality” does not apply, and the claimant is an independent contractor.

FACTS: Ann Messner was a full-time nurse-anesthetist at Sturgis Hospital. A written contract specified her status as “independent contractor”. She declined status as an employee. The hospital purchased her supplies and scheduled her hours on duty. She received 25 percent of patient billings. Ms. Messner was required to remain on call and to maintain malpractice insurance.

DECISION: The claimant was an independent contractor, and not an employee.

RATIONALE: “[T]his Court finds that it is clear from all of the testimony and evidence that claimant Messner was at all times an independent contractor; that she was not an employee; that she had a free choice of whether she would be an employee or an independent contractor and she, after consulting with independent legal counsel, opted to be an independent contractor instead of choosing to be an employee; that over and aside from her acknowledging that she was and her choosing to be an independent contractor above her written signature, all of the evidence establishes that is exactly what she was, along with another nurse anesthetist named Thaddeus Juszckak; that she had the right to perform her services at other hospitals and was not restricted to the Sturgis hospital; that in the opinion of this Court this case is not at all close on the facts as to whether she was an independent contractor or an employee.”

“In the opinion of this Court, the ‘economic reality’ doctrine has no application to personnel of this type, or to the facts in this case.”

Digest Author: Board of Review (original digest here)
Digest Updated:

20. Miscellaneous

Askew v Macomber – 20.05

Askew v Macomber
Digest no. 20.05

Section 42

Cite as: Askew v Macomber, 398 Mich 212 (1976).

Appeal pending: No
Claimant: Carrie Askew
Employer: Alicia Macomber
Docket no.: N/A (This case arose under the Workers’ Compensation Act)
Date of decision: December 7, 1976

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SUPREME COURT HOLDING: The test of whether a person or business is liable for workers’ compensation benefits as the employer of a claimant is not a matter of terminology, oral or written, but of the realities of the work performed; control of the claimant is a factor, as is payment of wages, hiring and firing, and the responsibility for the maintenance of discipline, but the test of economic reality views these elements as a whole, assigning primacy to no single one.

FACTS: Carrie Askew claimed worker’s compensation benefits against defendants M. Alicia Macomber, the Second National Bank of Saginaw, and Michigan Mutual Liability Company. Mrs. Macomber, because of her advanced age, had entered into an agency agreement with the bank for the management of her property which authorized the bank to pay for Mrs. Macomber’s care. The bank hired the plaintiff as a practical nurse for Mrs. Macomber and the plaintiff was injured in the course of that employment.

DECISION: Alicia Macomber, not the bank, was the employer of Carrie Askew.

RATIONALE: The bank was operating pursuant to an express agency agreement. The employment of nurses was not an integral part of the bank’s business. The bank was not operating as a labor broker. Although the bank drafted the check for Carrie Askew’s wages, the funds came from the Macomber estate, a separate account. Although the bank discussed wages and hours with Carrie Askew and arranged the hiring of her for Mrs. Macomber, it took no part in the day-to-day control or supervision of Ms. Askew’s duties. There was no evidence of any intent by the bank to supervise or discipline Ms. Askew. The bank’s actions on behalf of Ms. Macomber were those of an agent on behalf of a principal.

Digest Author:  Board of Review (original digest here)
Digest Updated: 7/99

20. Miscellaneous

McKissic v Bodine – 20.04

McKissic v Bodine
Digest no. 20.04

Section 42

Cite as: McKissic v Bodine, 42 Mich App 203 (1972); lv den 388 Mich 780 (1972).

Appeal pending: No
Claimant: John S. McKissic
Employer: Harold Bodine
Docket no.: N/A (This case arose under the Worker’s Comp Act.)
Date of decision: July 26, 1972

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COURT OF APPEALS HOLDING: The test to determine whether an employee-employer relationship exists for purposes of the Worker’s Compensation Act is the “economic reality test”, and the factors used to apply the test are whether: (1) the employer will incur liability if the relationship terminates at will; (2) the work performed is an integral part of the employer’s business; (3) the employee primarily depends upon the wages for living expenses; (4) the employee furnishes equipment and material; (5) the employee holds himself out to the public as able to perform certain tasks; (6) the work involved is customarily performed by an independent contractor. Along with (7) the factors of control, payment of wages, maintenance of discipline, and the right to engage or discharge employees; and (8) weighing those factors which will most favorably effectuate the purposes of the Act.

FACTS: Claimant worked full-time at a Fisher Body plant. During the period in issue he was off work recovering from an injury. He advertised as a handy man and painted a sign “McKissic Contracting” on his truck. He furnished his own materials, engaged his own workers and worked on his own schedule. He did repairs and general maintenance and while doing such work for Bodine claimant fell and injured himself.

DECISION: Claimant was primarily employed by Fisher Body, and his relationship to Bodine was one of an independent contractor.

RATIONALE: “The plaintiff was primarily employed by another. The doing of odd jobs was a method of securing extra cash for his own enjoyment. He furnished his own tools. He worked for Bodine only when he was available. He contracted each job for a given price, and held himself out to the public as a handyman…. If he desired protection while acting as an independent contractor, he could have made arrangements for accident insurance….”

Digest Author: Board of Review (original digest here)
Digest Updated: 12/91

17. Employee Status

Industro-Motive Corp v Wilke – 17.11

Industro-Motive Corp v Wilke
Digest no. 17.11

Section 42

Cite as: Industro-Motive Corp v Wilke, 6 Mich App 708 (1967).

Appeal pending: No
Claimant: Carroll F. Wilke
Employer: Industro-Motive Corporation
Docket no.: B64 4965 R0 33382
Date of decision: May 23, 1967

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COURT OF APPEALS HOLDING: The economic reality test is to be used in unemployment compensation cases dealing with whether a person is an employee or independent contractor.

FACTS: Claimant was a designer of model automobiles. Claimant and the employer entered into a written agreement. Under the agreement each project was to be completed within 60 days of commencement. Claimant was to be paid a salary of $150 weekly plus a royalty of 1 cent for each model sold. Claimant worked in his basement, used his own tools but was reimbursed by the employer for materials. The contract could be terminated with 90 days written notice from either party. When claimant did not complete a project on schedule the employer stopped paying him and the claimant applied for unemployment benefits.

DECISION: Claimant was an employee and the remuneration he received was wages under the Employment Security Act.

RATIONALE: “By adoption of Justice Talbot Smith’s dissent in Powell v Employment Security Commission, 345 Mich 455, 462 (1956) (see Tata v Muskovitz, 354 Mich 695 (1959), and Goodchild v Erickson, 375 Mich 289 (1965), our Supreme Court has abrogated the use of the common law definition of “control” in interpreting social legislation, which we hold includes employment security legislation as well as workmen’s compensation legislation. Control in the sense of right to control (see majority opinion in Powell, supra) is only one of many factors to be considered. Now ‘The test employed is one of economic reality. It looks at the task performed, whether or not it is part of a larger common task, ‘a contribution to the accomplishment of a common objective’. (citing authority) The test is far from the common-law test of control, since ‘the act concerns itself with the correction of economic evils through remedies which were unknown at the common law.'”

Digest Author: Board of Review (original digest here)
Digest Updated: