Case Study

Owner/Operator Deemed to be Independent Contractor by Appellate Court

In a case defended by Courtney Quilter of our Chicago office, the Appellate Court agreed with her position that the petitioner in this matter in fact drove his truck as an independent owner/operator and not as an employee of the insured transportation company.  As a result, the Appellate Court upheld the decision of the Commission to the effect that the Petitioner was an independent contractor at the time of his accident and therefore not entitled to workers’ compensation benefits.

 

Facts

The Respondent, Romar Transportation Systems, Inc., is engaged in the business of warehousing, yard storage, truck brokering and intermodal transportation. Some of its drivers are employees of the company and some are “owner-operators” that are considered by the company to be independent contractors.  The Petitioner, Salvador Esquinca, owned his own truck and hauled loads for the Respondent. In January of 2007, he incorporated under the name “Esquinca Trucking.” In September of 2007, he signed a “Contractor Service Agreement” with the Respondent, with the stated intention that “the [Petitioner] shall be an independent contractor with respect to the [Respondent].  Neither the [Petitioner], nor any driver, employee or other worker engaged by [Petitioner] shall be deemed an employee or agent of [Respondent] for any purpose whatsoever,” including but not limited to payroll taxes, income tax withholdings, or other tax payments.  The agreement noted that Petitioner owned his own truck and was responsible for the entire cost of operating the truck, including fuel, fuel taxes, tolls, permits, licenses, maintenance costs and plate registration.  The agreement also stated the Petitioner “shall direct operation of the [truck] in all respects and shall determine the method, manner and performance of this Agreement, including, but not limited to, such matters as choice of routes, points of servicing [the truck] and rest stops.”  The agreement also required the Petitioner to obtain insurance, including workers’ compensation insurance in his own name for himself and any employees and “bobtail” insurance, and to pay the premiums of such insurance.  The agreement also required the Petitioner and his employees to abide by various federal and state regulations. By its terms, the agreement expired in 2009, but Esquinca Trucking continued to haul loads for Romar Transportation Systems after expiration of the agreement, continuing to abide by its terms.

 

On April 29, 2010, the Petitioner was driving his truck and a trailer belonging to the Respondent when he involved in an accident with three other vehicles, resulting in an injury to his low back. He sought workers’ compensation benefits from the Respondent, but his claim was denied on the basis that he was an independent contractor and not an employee of the Respondent.

 

Issue Presented

– Was the Petitioner an independent contractor or employee at the time of the accident on April 29, 2010?

 

Outcome

The Arbitrator found the claimant was not entitled to workers’ compensation benefits under the Act because “he failed to prove that an employee-employer relationship existed at the time of the accident.”  After analyzing the relevant factors, the Arbitrator concluded that “the evidence clearly demonstrate[d] [that the claimant’s] employment status was that of an independent contractor and not an employee of [the employer] on the accident date.” For example, the arbitrator found that the employer “had minimal control over the manner in which [the claimant] performed his job duties.”  In support of this finding, the arbitrator noted that:

 

(1) the claimant testified he was not told by the employer what route to take when making deliveries and he decided his own schedule for transporting the delivery, including where and when to make rest stops and to refuel;

 

(2) if the claimant were hired as an employee driver, he would have had to follow a schedule;

 

(3) unlike employee drivers, who were required to do assigned work, the claimant “was able to pick and choose when he wanted to drive” and “did not have to accept every load that was offered to him”;

 

(4) the claimant owned his truck and was responsible for all operational expenses associated with the truck as well as any speeding tickets or driving citations he incurred;

 

(5) according to testimony, if claimant had been hired as an employee, the employer would have been responsible for operating expenses of the truck;

 

(6) the employer did not tell the claimant what maintenance or repairs to perform on the truck;

 

(7) the claimant was responsible for maintaining liability or bobtail insurance on the truck;

 

(8) the employer did not tell the claimant where to park his truck or pay for parking.

 

The Arbitrator also found it relevant that although the Contractor Service Agreement had expired prior to the accident, both parties testified that “there was no change in their actions or behaviors and they continued to conduct their business relationship as if [the Agreement] were still in effect.  Based on all the relevant factors, the Arbitrator found there was no employee/employer relationship between the parties and that the Respondent was therefore not liable for payment of any benefits under the Workers’ Compensation Act.  The Commission affirmed and adopted this decision.  The Circuit Court confirmed the decision as well.

 

The case was appealed by the Petitioner to the Appellate Court.  The Court upheld the decision of the Commission, stating that in “[a]pplying these standards, we find there is sufficient evidence in the record to support the Commission’s finding that the claimant was an independent contractor at the time of the accident.  Regarding the most important factor, the evidence shows that the employer did not have the right to control the claimant’s work performance or work-related activities to any notable degree.”  The Court went on to list the various other factors involved in the employee/employer determination and ultimately found that the decision of the Commission should be upheld as it was not against the manifest weight of the evidence, nor was it erroneous as a matter of law.

Salvador Esquinca v. IWCC, 2016 IL App (1st) 150706WC