280_C030

CONTRACTOR WAS AN EMPLOYEE RATHER THAN AN EMPLOYER

Workers Compensation	Administrative Law Judge (ALJ)
Sole Proprietorship	Independent Contractor

In December 2000, Charles J. Healy entered into an agreement with Lloyd Frank to cut trees. The job required that Healy purchase a workers compensation insurance policy. He proceeded to do so but later cancelled it after Lloyd told him it was not necessary. However, Healy maintained a policy for his sole proprietorship (Charles Healy Four Seasons). Why Healy had this policy was unclear because he never hired any individual at Four Seasons (other than himself). Healy was injured on March 9, 2001 while cutting trees for Lloyd Frank.

Frank initiated an administrative proceeding to determine whether Healy was entitled to workers compensation benefits. The administrative law judge (ALJ) determined that, while Healy was an independent contractor, he was still an employee and subject to the Workers Compensation Act. Frank petitioned the Commission for a review. He argued that, because Healey had purchased a workers compensation policy for his own business, he was an employer. As a result, as an employer, Healy could not also be an employee. The Commission affirmed the ALJ’s decision and further determined that Healey was not an employer because he never had any employees.

Frank then sought a review from the circuit court. The court upheld the Commission’s determination that Healy was not an employer (because he had never employed anyone) and affirmed its decision. Frank again appealed.

Editor’s note: The court also affirmed the portion of the decision that related to Healy’s status as an independent contractor but that part of the decision was not part of the subsequent appeal.

As a result, the Court of Appeals of Wisconsin reviewed the Commission’s decision, not the circuit court’s decision. The sole question on appeal was whether the Commission correctly interpreted portions of the Workers Compensation Act when it concluded that Healy was not an employer. The court thoroughly reviewed the applicable sections of the Wisconsin Workers Compensation Act. It concluded that Frank was “bootstrapping.” It stated that, because Healy bought a workers compensation policy, he was considered an employer under the Act, even though to elect to come under the act by purchasing a policy, Healy had to be an employer in the first place.

The Court of Appeals of Wisconsin concluded that the Commission properly began its analysis by asking whether Healy was an employer. Because he never had individuals in his service as employees (and he did not otherwise fulfill the statutory definition of an employer), he was not an employer (the workers compensation policy notwithstanding). It affirmed that the Commission correctly concluded that because Healy was not excluded from the definition of employee, he was entitled to benefits from Lloyd Frank.

Court of Appeals of Wisconsin. Lloyd Frank Logging and Liberty Mutual Insurance Company, Petitioners-Appellants, v. Charles J. Healy and Labor and Industry Review Commission, Respondents-Respondents. No 2007 AP692. Submitted on Briefs Oct. 2, 2007. Opinion Filed Oct. 30, 2007. 742 N.W.2d 337