280_C033

NEWSPAPER DELIVERY PERSONS WERE EMPLOYEES, NOT INDEPENDENT CONTRACTORS

Workers Compensation	Administrative Law Judge (ALJ)
Writ Of Administrative Mandamus	Premium Audit

This case addressed the specific question of whether (for the purposes of workers compensation insurance) persons who delivered newspapers for a specific newspaper publisher were employees or independent contractors. It did not arise from a claim for workers compensation benefits from a carrier. It was due to the premium the insured was charged for its workers compensation coverage.

Antelope Valley Press (AVP) applied for workers compensation insurance through the California State Compensation Insurance Fund (Fund) in 2003. It subsequently requested an administrative hearing because the premium the Fund assessed for that policy year (as a result of its premium audit) was based on persons who delivered the newspapers being employees, not independent contractors. The Insurance Commissioner upheld that decision. AVP appealed the decision to the Department of Insurance’s Administrative Hearing Bureau.

The administrative law judge (ALJ) who heard the case cited numerous details and issued a lengthy proposed decision in which he concluded that carriers were employees for purposes of workers compensation insurance. The Insurance Commissioner adopted that decision.

AVP then petitioned for a writ of administrative mandamus. In California (and in general), this is a request that a court review and reverse an administrative agency’s final decision or order. The trial court reviewed the decision under the substantial evidence test and determined that substantial evidence supported the ALJ’s findings. It concluded that (under California’s workers compensation law) the ALJ’s conclusion that AVP’s carriers were employees should be affirmed. AVP then appealed the trial court’s judgment. Both the Fund and the Commissioner participated in the appeal and opposed AVP.

The Court of Appeal, Second District, Division 3, California determined that there was substantial evidence in the administrative record to support the conclusion that AVP controlled the way that newspaper delivery persons accomplished their tasks. It concluded that they were employees rather than independent contractors for the purposes of the requirement that AVP obtain workers compensation insurance. This was despite the fact that AVP utilized a contract that stated that carriers had the right to control the way they delivered newspapers. The contract itself contained numerous manner and means provisions and detailed negative consequences to carriers who failed to comply with those directives. AVP had the right to discharge at will (without cause), carriers could not hold themselves out as an independent delivery service, and AVP was in the best position to distribute risk and the costs of injury as an expense of doing business.

The appeals court review of the facts of this case and relevant law convinced it that the trial court correctly ruled that the administrative record supported the conclusion that carriers were employees (not independent contractors) for the purposes of workers compensation law. It affirmed the trial court’s decision.

Court of Appeal, Second District, Division 3, California. Antelope Valley Press, Plaintiff and Appellant, v. Steve Poizner, as Insurance Commissioner, etc., et al., Defendants and Respondents: State Compensation Insurance Fund, Real Party in Interest. No. B198139. April 30, 2008. As Modified on Denial of Rehearing May 30, 2008. Review Denied Aug. 13, 2008. 162 Cal.App.4th 839, 75 Cal.Rptr.3d 887