The Court of Appeals of Iowa elaborates on when a worker is considered an “employee” to qualify for workers’ compensation benefits in Stark Construction v Lauterwasser

Recently, the Court of Appeals of Iowa affirmed the decision of the Iowa Workers Compensation Commissioner determining a carpenter was an employee of a construction company-thus entitling the same for benefits when injured. The Claimant had been a carpenter for many years having worked for a different company and also having his own framing company. When work slowed down for these other companies, Claimant began performing services for Stark Construction. While performing services for Stark Construction, Claimant’s hand was cut by a saw. When Claimant was at the hospital he indicated that he worked for a different company and was “self insured”. In another visit, Claimant indicated that he was not covered by workers’ compensation insurance and was the person for responsible for all medical billing.   Claimant also reported in his tax filings for that year that the income from Stark Construction was part of his “subcontractor business.”

Nevertheless, Claimant subsequently filed a claim for workers’ compensation benefits claiming he was an employee of Stark Construction. At the hearing level, the Deputy Commissioner determined that the Claimant was not an employee and was essentially a subcontractor. The Deputy relied upon the “common business practice…in the areas” to make this determination.

The Claimant appealed the matter to the Iowa Workers’ Compensation Commissioner who determined that the Deputy was incorrect and that the Claimant was an employee. Reversing the Deputy, the Commissioner indicated that the Claimant was “the victim of worker misclassification.”

At the district court level, the Civil District Court reversed the decision of the Commissioner and indicated that the “intent of the parties” was the most relevant consideration to determine whether the Claimant qualified as an employee under Chapter 85. Dismissing the Commissioner’s finding that the parties intended to circumvent workers’ compensation laws, the District Court concluded that there was no evidence of the same.

Upon appeal,, the Appellate Court noted that independent contractors were excluded from the coverage of the workers’ compensation act. However, the Appellate Court noted that the courts have indulged a “measure of liberality and doubt as to whether Claimant was an employee or an independent contractor to be resolved in favor of the former status.” The Court also noted that “the name chosen by the parties to describe their relationship is inconclusive.” The Appellate Court also cited the General Accounting Office having performed prior research indicating that “15% of all employers misclassify 3.4 million workers as independent contractors annually.”

In the end, the Appellate Court found that Claimant was an employee. The Court of Appeals noted that the company paid hourly wages, kept track of Claimant’s hours, and paid him at the end of every week. It was also noted that the Claimant was told what job to go to each day and that Claimant could not change the manner in which his work was performed nor the time the work was to be completed. All contracts were controlled by the company pertaining to customers as well as the beginning and end of the work day and what the next project would be. The company also bore all responsibility for the quality of the work and ordering of necessary supplies.

For questions regarding the distinction between employees and independent contractors under Iowa law, please contact Iowa Workers’ Compensation Attorney Paul Barta at pbarta@baylorevnen.com or 402-475-1075.