Title: RICKY REED V LINDA SUSAN YACKELL

State: michigan

Issuer: Michigan Supreme Court

Document:

_______________________________ 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michigan Supreme Court 
Lansing, Michigan 
Chief Justice:  
Justices: 
Clifford W. Taylor  
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Opinion 
Maura D. Corrigan 
Robert P. Young, Jr. 
Stephen J. Markman 
FILED JULY 28, 2005 
RICKY REED, 
Plaintiff-Counter-Defendant-Appellee, 
v 
No. 126534 
LINDA SUSAN YACKELL, 
Defendant and Cross-Defendant. 
and 
BUDDY LEE HADLEY, GERALD MICHAEL
HERSKOVITZ and MR. FOOD, INC., 
 
Defendants, Counter-Plaintiffs, 
Cross-Plaintiffs-Appellants. 
BEFORE THE ENTIRE BENCH 
TAYLOR, C.J. 
We granted leave in this case to determine whether 
plaintiff, Ricky Reed, who was fired from defendant Mr. 
Food, Inc., but continued to assist with deliveries on a 
periodic basis, was an employee of Mr. Food within the 
meaning of MCL 418.161(1)(l) and (n) of the Worker’s 
 
 
 
                                                 
 
Disability Compensation Act (WDCA)1 and, thus, prohibited 
from maintaining a tort action for employment-related 
personal injury in the circuit court against Mr. Food, its 
owner, and its delivery supervisor. We determine that Reed 
was an employee of Mr. Food under MCL 418.161(1)(l) at the 
time he was injured because he was in the service of Mr. 
Food under a contract for hire. 
We therefore affirm the 
decision of the Court of Appeals in part. 
However, we 
further determine that Reed was an employee of Mr. Food 
under MCL 418.161(1)(n) at the time he was injured because 
he was performing a service as a deliveryman for Mr. Food 
in the course of its business and did not maintain a 
separate business offering that service, hold himself out 
to and render that service to the public, or qualify as an 
employer subject to the WDCA. 
We therefore reverse the 
decision of the Court of Appeals in part and remand this 
case to the circuit court for entry of a directed verdict 
in 
defendants’ 
favor. 
Jurisdiction 
is 
thereafter 
transferred 
Compensation. 
to 
the 
Bureau 
of 
Worker’s 
FACTS AND PROCEDURAL HISTORY 
Disability 
Defendant Gerald Michael Herskovitz is the owner of 
defendant Mr. Food, Inc., which is a retail marketer of 
1 MCL 418.101 et seq. 
2  
 
 
 
meat products. 
Defendant Buddy Lee Hadley is an employee 
of Mr. Food and is in charge of its meat deliveries. 
In 
1997, Hadley suggested that Herskovitz hire Reed, whom 
Hadley 
had 
known 
for 
approximately 
ten 
years, 
and 
Herskovitz did so. 
Herskovitz was not pleased with Reed’s 
performance, however, and fired Reed after a period of only 
five or six months in December 1997. 
After being fired by Herskovitz, Reed primarily 
supported himself by painting his relatives’ homes. 
But, 
Reed’s association with Mr. Food did not end completely 
after he was fired, and he supplemented his income by 
occasionally helping Hadley with deliveries. Specifically, 
Hadley testified that, on approximately three to five 
occasions after Reed was fired near the end of 1997, he 
would hire Reed to help with his deliveries for the day, 
for which Reed would be paid between $35 and $40 in cash. 
Although Herskovitz authorized Hadley to obtain help with 
his deliveries on these days, he testified that he did not 
know that it was Reed that Hadley actually hired. 
On May 7, 1998, during one of these days that 
deliveries were being made, Reed was riding in a cargo van 
owned by Mr. Food that was being driven by Hadley. As the 
van approached an intersection, a car driven by Linda 
Yackell did not stop at a red light because her brakes 
malfunctioned. 
Hadley, who was looking down at paperwork,
3 
 
 
 
                                                 
 
 
 
 
 
 
 
 
did not see Yackell’s car in time and hit her car. 
Reed 
suffered a closed head injury as a result of the accident. 
On December 10, 1998, Reed filed a complaint in the 
circuit court, alleging negligence by the drivers, Hadley 
and Yackell, liability by Herskovitz pursuant to the 
owner’s liability statute, MCL 257.401, and liability by 
Mr. Food under the theory of respondeat superior. 
Hadley, 
Herskovitz, and Mr. Food (defendants)2 as relevant to this 
appeal, defended by asserting that the suit was barred 
because Reed was an employee of Mr. Food under MCL 
418.161(1)(l) and (n)3 and, thus, his exclusive remedy was 
2 Yackell is not a party to the proceedings in this
Court. 
Therefore, we will hereinafter use the term 
“defendants” in reference to Herskovitz, Hadley, and Mr. 
Food collectively. 
3 MCL 418.161 provides: 
(1)  As used in this act, “employee” means: 
* * * 
(l) Every person in the service of another,
under any contract of hire, express or implied,
including aliens . . . . 
* * * 
(n) 
Every person performing service in the
course of the trade, business, profession, or
occupation of an employer at the time of the
injury, if the person in relation to this service
does not maintain a separate business, does not
hold himself or herself out to and render service 
to the public, and is not an employer subject to
this act. 
4  
 
 
 
                                                 
 
under the WDCA.4
 During trial, defendants moved for a 
directed verdict on this basis. Reed countered that he was 
not an employee, but was rather an independent contractor 
of day labor. 
The trial court denied defendants’ motion. 
At the end of trial, the jury returned a unanimous verdict 
in Reed’s favor and awarded him $1,256,320, allocating 
sixty percent of the fault for the accident to Yackell and 
forty 
percent 
to 
Herskovitz, 
Hadley, 
and 
Mr. 
Food 
collectively. 
A judgment in the amount of $502,528 was 
subsequently entered against Hadley, Herskovitz, and Mr. 
Food. 
Defendants thereafter moved for judgment notwith­
standing the verdict (JNOV), again asserting that Reed was 
an employee at the time of the accident. 
The trial court 
again denied defendants’ motion, stating that Reed was not 
an employee of Mr. Food at the time of the accident but was 
instead an independent contractor that held himself out to 
the public to perform general labor. 
4 MCL 418.131(1) provides that “[t]he right to the
recovery of benefits as provided in this act shall be the
employee's exclusive remedy against the employer for a
personal injury or occupational disease . . . .” 
5  
 
 
 
                                                 
 
 
Defendants appealed to the Court of Appeals, which 
affirmed in an unpublished decision.5
 Defendants then 
sought leave to appeal in this Court. 
Pursuant to MCR 
7.302(G)(1), in lieu of granting leave to appeal, we 
vacated the decision of the Court of Appeals and remanded 
this case to the circuit court with instructions that it 
determine, 
either 
on 
the 
existing 
record 
or 
after 
additional evidentiary hearings, whether Reed was an 
employee of Mr. Food at the time of the accident. 
The 
trial court was also to submit findings of fact to this 
Court regarding whether Reed was in the service of Mr. Food 
under either an express or implied contract for hire as set 
forth in MCL 418.161(1)(l) and explained in our then-recent 
decision in Hoste v Shanty Creek Mgt, Inc, 459 Mich 561; 
592 NW2d 360 (1999). 
Further, in order to determine if he 
was outside the definition of employee in MCL 418.161(1) 
(n), the trial court was to determine whether Reed both 
maintained a separate business and held himself out to the 
public as having such a business.6 
On remand, the circuit court issued a written order 
and findings of fact, based on the existing record, stating 
5 Reed v Yackell, unpublished opinion per curiam of the
Court of Appeals, issued February 14, 2003 (Docket No.
236588), vacated 469 Mich 960 (2003). 
6 469 Mich 960 (2003). 
6  
 
 
                                                 
 
that Reed was not an employee of Mr. Food at the time of 
the accident. With respect to MCL 418.161(1)(l) and Hoste, 
the trial court determined that Reed was not performing a 
service for Mr. Food under either an express or implied 
contract for hire. 
In reaching this conclusion, the trial 
court focused on the fact that Herskovitz had fired Reed 
before the accident, that Herskovitz had testified at trial 
that he did not know that Reed was helping Hadley at the 
time of the accident, and that no evidence had been 
introduced that income taxes had been withheld from Reed or 
that he had ever claimed employee status. 
The trial court 
reasoned that these facts negated the possibility that 
either an express or implied contract for hire had been 
formed because both parties were not aware of its existence 
and had not agreed to its terms. 
Finally, the trial court 
determined that Reed was not an employee under a contract 
“for hire,” reasoning that he did not receive a regular 
income from Mr. Food but, instead, received only $35 to $40 
on three to five occasions. 
The court concluded that this 
did 
not 
equate 
to 
“real, 
palpable, 
and 
substantial 
consideration” that was intended as wages7 because, spread 
over the entire period of about five or six months when the 
7 Hoste, supra at 576. 
7  
 
 
 
                                                 
 
 
 
occasional employment took place, it amounted to less than 
$1 per day. 
In considering the questions under MCL 418.161(1)(n), 
the trial court held that Reed did have a qualifying 
separate business because he was a house painter performing 
day labor. The court apparently concluded that there was a 
sufficient holding of himself out for this service to meet 
the requirements of MCL 418.161(1)(n). 
But, the court did 
not elaborate on the evidence it found to establish that. 
After receiving the trial court’s findings of fact, we 
remanded 
this 
case 
to 
the 
Court 
of 
Appeals 
for 
reconsideration of whether Reed was an employee within the 
meaning of MCL 418.161(1)(l) and (n) and, if necessary, of 
additional issues the Court of Appeals had addressed in its 
earlier decision.8 
On remand, in an unpublished decision that echoed the 
previously vacated one, the Court of Appeals affirmed the 
trial court’s determination that Reed was not an employee 
of Mr. Food at the time of the accident.9
 Unlike the 
circuit court, the Court of Appeals determined that Reed 
was an employee under MCL 418.161(1)(l) because he was 
8 469 Mich 1051 (2004). 
9 Reed v Yackell, unpublished opinion per curiam of the
Court of Appeals, issued June 8, 2004 (Docket No. 236588). 
8  
 
 
 
 
                                                 
 
 
under a contract for hire. 
Yet, because he had, in the 
view of the Court of Appeals, a separate business in which 
he held himself out for the performance of the same service 
he was performing for Mr. Food, he was removed from the 
definition of employee by virtue of MCL 418.161(1)(n). 
Interestingly, while expressly acknowledging that in Hoste 
we held that the common-law “economic realities test” for 
determining 
whether 
a 
worker 
is 
an 
employee 
or 
an 
independent contractor was superseded to the extent that it 
was inconsistent with MCL 418.161(1)(n),10 the Court then 
expressly focused on those same superseded common-law 
factors (such as how Reed was paid, whether taxes were 
withheld, whether Mr. Food, Herskovitz, and Hadley had 
control of Reed’s duties, and whether the services Reed 
performed were an integral part of Mr. Food’s business) in 
making its holding regarding whether Reed was an employee. 
At no point was an effort undertaken to reconcile this 
approach 
with 
the 
holding 
in 
Hoste 
precluding 
the 
consideration of these no longer recognized common-law 
“economic realities” factors. 
Unsurprisingly, defendants again filed an application 
with this Court for leave to appeal, and we granted 
defendants’ application limited to the issue whether Reed 
10 Hoste, supra at 572. 
9  
 
 
 
 
 
                                                 
was an employee within the meaning of MCL 418.161(1)(l) and 
(n) at the time of the accident.11 
STANDARD OF REVIEW 
Defendants’ 
contention 
is 
that 
the 
trial 
court 
erroneously denied their motions for a directed verdict and 
JNOV. 
We review a trial court’s denial of both motions de 
novo. 
Sniecinski v Blue Cross & Blue Shield of Michigan, 
469 Mich 124, 131; 666 NW2d 186 (2003). 
In doing so, we 
“‘review the evidence and all legitimate inferences in the 
light most favorable to the nonmoving party.’”  Id., 
quoting Wilkinson v Lee, 463 Mich 388, 391; 617 NW2d 305 
(2000). 
Only if the evidence, when viewed in this light, 
fails to establish a claim as a matter of law should a 
motion for a directed verdict or JNOV be granted. Id. 
This 
case 
also 
involves 
the 
interpretation 
of 
statutes, which is a question of law that is also reviewed 
de novo by this Court. 
Hoste, supra at 569. 
Our 
fundamental obligation when interpreting statutes is “to 
ascertain the legislative intent that may reasonably be 
inferred from the words expressed in the statute.” 
Koontz 
v Ameritech Services, Inc, 466 Mich 304, 312; 645 NW2d 34 
(2002). 
If 
the 
statute 
is 
unambiguous, 
judicial 
construction is neither required nor permitted. 
In other 
11 471 Mich 957 (2005). 
10  
 
 
                                                 
 
 
words, “[b]ecause the proper role of the judiciary is to 
interpret and not write the law, courts simply lack 
authority to venture beyond the unambiguous text of a 
statute.” Id. 
DISCUSSION 
A. Principles of the WDCA 
As we have discussed frequently in the past, by 
enacting Michigan’s Worker’s Disability Compensation Act, 
the 
Legislature 
replaced 
common-law 
liability 
for 
negligence in the workplace, and its related defenses, with 
a 
comprehensive, 
statutory 
compensation 
scheme 
that 
requires employers to provide compensation to employees for 
injuries arising out of and in the course of employment 
without regard to fault. MCL 418.301; Hoste, supra at 570; 
Clark v United Technologies Automotive, Inc, 459 Mich 681, 
686-687; 594 NW2d 447 (1999); Farrell v Dearborn Mfg Co, 
416 Mich 267, 274-275; 330 NW2d 397 (1982). 
In exchange 
for this almost automatic entitlement to compensation, the 
WDCA limits the amount of compensation that an employee may 
collect and, moreover, prohibits the employee from bringing 
a tort action against the employer except in limited 
circumstances.12
 This principle is expressed in MCL 
418.131(1), which provides, “The right to the recovery of 
12 Hoste, supra; Clark, supra; Farrell, supra. 
11  
 
 
 
                                                 
benefits as provided in this act shall be the employee's 
exclusive remedy against the employer for a personal injury 
or occupational disease.” As we have explained: 
Th[is] 
language 
expresses 
a 
fundamental 
tenet of workers’ compensation statutes that if
an injury falls within the coverage of the 
compensation law, such compensation shall be the
employee’s only remedy against the employer or
the employer’s insurance carrier. The underlying
rationale is that the employer, by agreeing to
assume automatic responsibility for all such 
injuries, 
protects 
itself 
from 
potentially
excessive damage awards rendered against it and
that the employee is assured of receiving payment
for his injuries. [Farrell, supra at 274.] 
Accordingly, the threshold question in this case is 
whether Reed is an “employee” under any of the definitions 
in MCL 418.161 of the WDCA and, therefore, has traded his 
right to bring a tort action for the assured payment of 
benefits without regard to fault. Hoste, supra at 570-571. 
As in Hoste, several of the definitions set forth in MCL 
418.161 do not apply in this case and, therefore, the 
resolution of this issue requires us to focus only on 
subsections 161(1)(l) and 161(1)(n).13
 As we explained in 
Hoste, these subsections “must be read together as separate 
and 
necessary 
qualifications 
in 
establishing 
employee 
status.” 
Hoste, supra at 573. 
In other words, our first 
13 At the time of the plaintiff’s injuries in Hoste,
the definitions now found in subsections 161(1)(l) and
161(1)(n) were found in former subsections 161(1)(b) and
161(1)(d), respectively. Hoste, supra at 566 n 2. 
12  
 
 
task is to determine whether Reed was an employee under the 
definition set forth in subsection 161(1)(l). 
If he was, 
we must then determine whether he meets the requirements of 
subsection 161(1)(n). Id. 
B. Analysis of MCL 418.161(1)(l) 
Subsection 161(1)(l) requires us to determine whether 
Reed was in the service of Mr. Food under any express or 
implied “contract of hire.” 
Because it is undisputed that 
Reed was in the service of Mr. Food at the time of the 
accident, our determination of this issue requires a two­
pronged analysis focusing first on whether Reed was in that 
service pursuant to an express or implied contractual 
relationship and, second, as explained in Hoste, supra at 
573-577, whether that contractual relationship was one “of 
hire.” 
With regard to the first inquiry, we agree with the 
Court of Appeals conclusion that the facts in this case are 
at least sufficient to establish that Reed was in the 
service of Mr. Food pursuant to an implied in fact 
contractual relationship. 
“‘A contract implied in fact 
arises when services are performed by one who at the time 
expects compensation from another who expects at the time 
to pay therefor.’” 
In re Spenger Estate, 341 Mich 491, 
493; 67 NW2d 730 (1954), quoting In re Pierson’s Estate, 
282 Mich 411, 415; 276 NW 498 (1937). 
As the Court of 
13 
 
 
                                                 
 
Appeals noted, Reed was expecting to be compensated for the 
services that he performed that day, just as he had been 
several times before. 
Moreover, Herskovitz, having told 
Hadley to obtain the help he needed to make his deliveries 
that day, expected to compensate whomever Hadley recruited, 
just as he had done in the past. The defendants argue that 
the failure of Herskovitz to know exactly who Hadley would 
hire is relevant to whether there was an implied in fact 
contract with Reed. 
This is not the case. 
All that is 
required to establish a contract with Reed is that Hadley 
had authority to hire.14
 Hadley incontestably had that 
authority. 
Accordingly, having determined that the services Reed 
was performing for Mr. Food were pursuant to an express or 
implied contractual relationship, our next inquiry is 
whether that contractual relationship was “of hire.” As we 
explained 
in 
Hoste, 
supra 
at 
576, 
the 
linchpin 
to 
determining whether a contract is “of hire” is whether the 
14 See Central Wholesale Co v Sefa, 351 Mich 17, 25; 87
NW2d 94 (1957), quoting 2 CJS, Agency, § 96, pp 1210-1211: 
“Whenever the principal, by statements or
conduct, places the agent in a position where he
appears with reasonable certainty to be acting
for 
the 
principal, 
or 
without 
interference 
suffers the agent to assume such a position, and
thereby justifies those dealing with the agent in
believing that he is acting within his mandate,
an apparent authority results . . . .” 
14  
 
 
compensation paid for the service rendered was not merely a 
gratuity but, rather, “intended as wages, i.e., real, 
palpable and substantial consideration as would be expected 
to induce a reasonable person to give up the valuable right 
of a possible claim against the employer in a tort action 
and as would be expected to be understood as such by the 
employer.” 
In the present case, the $35 to $40 that Reed received 
for the approximately eight hours of services he rendered 
satisfies the requirement we set forth in Hoste. 
In 
finding otherwise, the circuit court did not dispute that 
the wages were real, palpable, and substantial on an hourly 
basis but, instead, calculated them by averaging them over 
the entire five- to six-month period of the occasional 
employment to conclude that the wages were less than one 
dollar a day. 
This is a puzzling and even arbitrary 
approach to this issue of calculation that ignores the 
parties’ 
actual 
contracted 
for 
rate 
of 
per 
diem 
compensation and replaces it with an approach not taken by 
the parties. In fact, it seems to be without justification 
other than it effectively serves to reduce the compensation 
rate by a high multiple. 
In contrast, when the neutrally 
derived approach we are adopting is used, examining the 
actual agreement to determine the unit of pay, it is clear 
15  
 
 
 
                                                 
that this compensation was indeed real, palpable, and 
substantial when measured against the services performed. 
Here, Reed provided approximately eight hours of 
unskilled, 
manual 
labor 
helping 
Hadley 
deliver 
meat 
products. 
This was a service that did not require any 
particular level of skill, education, or experience. 
Indeed, the testimony at trial concerning Reed’s duties 
showed only that they consisted of carrying and moving 
boxes,15 while even such minimal tasks as handling the 
paperwork, arranging the delivery schedule, and driving the 
delivery truck were handled by Hadley. 
For these eight 
hours of unskilled, manual labor delivering meat, Reed was 
paid approximately $35 to $40. 
Because this was roughly 
equivalent to the minimum wage rate at the time, it is 
confounding that a court could conclude that this was not a 
“real” or “substantial” wage and that it was, instead, as 
it has to be under the Hoste test, a mere gratuity. 
We 
reject, with some impatience, such a counterintuitive 
conclusion. 
15 
Herskovitz 
testified 
that 
Reed’s 
duties 
were 
“[n]othing major. It’s to get a box or bring it up or take
this out. It’s that kind of work.” Hadley testified that,
in between deliveries, he would have his helpers “go [to
the] back [of the delivery truck] and set more stuff up at
the door, or if it’s up to the front, move it this way or 
whatever at the time.” 
16  
 
 
 
It is also appropriate to point out that the circuit 
court’s ad hoc approach of averaging over the entire period 
of occasional employment, even though there was no such 
agreement between the parties, would, were it the law, 
cause most any occasional worker’s wage to be insubstantial 
under Hoste, thus making worker’s compensation protections 
for, say, all persons working episodically on a part-time 
basis unavailable. The facile answer to this, no doubt, is 
that such workers will have a tort remedy. 
But, they 
probably will not. 
These injured people will be, simply, 
injured without a remedy. History shows no less. In fact, 
the leaders of this state a century ago were painfully 
familiar with the crushing inequity created by this 
illusory solution of leaving workers with only a tort 
remedy. 
As they made clear in passing our original 
worker’s compensation law, this tort remedy was hollow 
because of the fellow servant rule, as well as the 
difficulty of the worker’s burden of demonstrating, among 
other things, employer negligence and an absence of 
contributory negligence on the worker’s part. 
As the 
Worker’s Compensation Commission appointed in 1912 by 
Governor Chase S. Osborn to draft our first “Workmen’s 
Compensation” law concluded, after examining data regarding 
the average compensation paid and the wage loss sustained, 
on average, injured workers did not receive compensation 
17 
 
 
                                                 
 
 
proportionate to their injuries under the common-law, 
negligence based system. 
According to the commission, 
“[t]his low average was, of course, brought about by the 
large number of accidents to which, there being no 
negligence on the part of the employer, there was no legal 
liability to pay damages.”16
 Moreover, the commission 
concluded that, even in cases where injured workers did 
procure recovery in the courts, the compensation received 
was inadequate because of the expense of litigation and 
attorney fees, and because of the “great delay” that 
generally occurred between the time of the injury and the 
final settlement of the action. 
Indeed, the commission’s 
examination of the cases that were actually litigated 
revealed that “the damages for injuries similar in effect 
and extent were widely variant in amount and were on 
average less than the compensation proposed under suggested 
compensation acts.”17  It is the case then that our courts, 
rather than straining to devise some too clever reading of 
the parties’ agreement that has as its end game the 
allowing of tort claims by a particular injured worker 
(which formula invariably will be devastating to yet 
16 Report of the Employer’s Liability and Workmen’s
Compensation Commission of the State of Michigan, p 16
(1911) (Report). 
17 Id., pp 16-23. 
18  
 
 
 
unknown injured workers who, under the new formula, will be 
unable to secure worker’s compensation), should simply look 
to the parties’ actual contract to determine the nature of 
what was actually agreed on and rule accordingly. 
All of 
which is to say that we should recall the venerable axiom 
that hard cases make bad law and not fall into the practice 
of allowing them to do so. 
Therefore, we conclude that Reed was an employee of 
Mr. Food at the time of his injuries within the meaning of 
subsection 161(1)(l) because the service he performed was 
pursuant to an expressed or implied contract of hire and 
the compensation was real and substantial. 
It was a wage. 
Accordingly, our next task is to determine whether Reed 
meets the requirements of subsection 161(1)(n). 
C. Analysis of MCL 418.161(1)(n) 
Subsection 
161(1)(n) 
provides 
that 
every 
person 
performing a service in the course of an employer’s trade, 
business, profession, or occupation is an employee of that 
employer. However, the statute continues by excluding from 
this group any such person who: (1) maintains his or her 
own business in relation to the service he or she provides 
the employer, (2) holds himself or herself out to the 
public to render the same service that he or she performed 
for the employer, and (3) is himself or herself an employer 
subject to the WDCA. 
In other words, subsection 161(1)(n)
19 
 
 
   
                                                 
sets forth three criteria for determining whether a person 
performing services for an employer qualifies as what is 
commonly called an “independent contractor” rather than an 
employee. 
As we explained in Hoste, these three statutory 
criteria 
have 
superseded 
the 
former 
common-law-based 
economic 
realities 
test 
for 
determining 
whether 
an 
individual is an independent contractor to the extent that 
they differ from the test. Hoste, supra at 572.18 
In the present case, it is undisputed that Mr. Food, 
or Herskovitz, is an employer subject to the WDCA and that 
Reed was performing a service in the course of Mr. Food’s 
business. 
We thus turn to the three criteria required for 
the exception in subsection 161(1)(n): whether Reed, in 
relation to the service he provided for Mr. Food, (1) 
maintained a separate business offering the same service, 
18 As we have explained, the Court of Appeals ignored 
our statement in Hoste, supra at 572, that the economic
realities test cannot be used to supersede subsection 
161(1)(n) by adding factors to the statute that the 
Legislature did not see fit to incorporate, and based its
analysis on such factors from older cases discussing the
economic realities test. 
These were things such as how
Reed was paid and whether taxes were withheld, whether
Herskovitz and Hadley had control over Reed’s duties, and
whether Reed’s services were an integral part of Mr. Food’s
business. 
The Legislature did not see fit to include such
factors in subsection 161(1)(n) and, therefore, the Court
of Appeals reliance on them was error. 
This means then 
that the prelegislation cases were superseded by the 
legislation and are thus without authority as law on these
issues. 
20  
 
 
(2) held himself out to and rendered the same service to 
the public, and (3) is an employer subject to the WDCA. 
Reed’s argument, adopted by the Court of Appeals, is 
that he is an independent contractor because he maintained 
a separate business and held himself out to the public as a 
day laborer. 
Even assuming that Reed had a separate 
business and held it out to the public, these facts do not 
establish enough to meet the statutory requirement of 
subsection 161(1)(n). 
The first requirement is that the 
service held out and provided by the separate business be 
“this service,” i.e., the same service that he performed 
for the employer. 
It is not enough under the statute that 
he has any business and holds it out. 
The reason is that 
such a reading fails to give effect to all the words in the 
statute. This we cannot do because we are bound by oath to 
give meaning to every word, phrase, and clause in a 
statute. 
Said conversely, we cannot render parts of the 
statute surplusage and nugatory. 
State Farm Fire & Cas Co 
v Old Republic Ins Co, 466 Mich 142, 146; 644 NW2d 715 
(2002). 
Yet, it is this the plaintiff requests, and this 
we cannot grant. 
Therefore, contrary to the conclusions of the trial 
court and the Court of Appeals, the “service” performed by 
the person cannot be placed in such broad and undefined 
classifications as general labor. 
Rather, it must be 
21 
 
 
  
                                                 
classified 
according 
to 
the 
most 
relevant 
aspects 
identifiable to the duties performed in the course of the 
employer’s trade, business, profession, or occupation.19 
Thus, for example, if the service that the person performs 
for 
the 
employer 
is 
roofing, 
to 
be 
an 
independent 
contractor 
and, 
thus, 
be 
ineligible 
for 
worker’s 
compensation, the person must maintain a separate roofing 
business, which roofing business he holds himself or 
herself out to the public as performing. 
Accordingly, in 
this case where the most Reed can point to is that he was a 
house painter at times, the tests to take him out of the 
worker’s compensation system are not met. 
We would again caution that the contrary reading of 
this requirement, as engaged in by the Court of Appeals and 
the 
trial 
court, 
would 
inescapably 
mean 
that 
any 
moonlighting worker, say an industrial worker at General 
Motors, Ford, or DaimlerChrysler, who has a janitorial 
service, lawn care business, a Mary Kay distributorship, or 
even serves as a compensated choir director at her church, 
would be without worker’s compensation when injured at her 
day job. 
This is not what the words of the Legislature 
allow, and to twist them into saying it is shortsighted in 
the extreme. 
19 Cf. Michael H v Gerald D, 491 US 110, 127 n 6; 109 S
Ct 2333; 105 L Ed 2d 91 (1989). 
22  
 
 
                                                 
 
 
Accordingly, 
we 
conclude 
that 
Reed 
is 
not 
an 
independent contractor and is subject to the worker’s 
compensation system. 
SUBJECT-MATTER JURISDICTION 
As 
a 
final 
matter, 
we 
note 
that 
the 
Workers’ 
Compensation Section of the State Bar of Michigan has filed 
a provocative amicus brief. 
It argues that this Court’s 
decision in Sewell v Clearing Machine Corp, 419 Mich 56; 
347 NW2d 447 (1984), holding that the circuit court shares 
concurrent jurisdiction with the worker’s compensation 
adjudicatory system to determine, in the first instance, 
whether a person was an employee at the time of the 
person’s injury, is in error. 
Amicus argues that Const 
1963, art 6, § 1320 and MCL 418.841(1),21 in tandem, 
effectively divest the circuit court of subject-matter 
jurisdiction on this issue and, thus, this case is 
improperly before us on appeal. 
Instead, amicus argues, 
20
 Const 1963, art 6, § 13 provides that “[t]he
circuit court shall have original jurisdiction in all 
matters not prohibited by law . . . .” 
21  MCL 418.841(1) provides: 
Any 
dispute 
or 
controversy 
concerning
compensation or other benefits shall be submitted
to the bureau and all questions arising under 
this act shall be determined by the bureau or a
worker's compensation magistrate, as applicable.
[Emphasis added.] 
23  
 
 
 
 
 
                                                 
 
 
 
the worker’s compensation system has exclusive jurisdiction 
to determine this question. 
Neither party raised or 
briefed this jurisdictional issue but were asked at oral 
argument to address it. 
Justice Corrigan has persuasively argued in her 
dissent that Sewell was indeed wrongly decided. 
However, 
we decline to overrule Sewell on this record. Both Justice 
Corrigan and amicus curiae are appropriately critical of 
the unseemly atmospherics surrounding the Sewell decision: 
it was decided peremptorily without plenary consideration, 
briefing, or argument.22  Appreciative of that criticism of 
Sewell, we believe it prudent to not replicate it and 
accordingly 
decline 
to 
overrule 
Sewell 
in 
the 
same 
peremptory fashion that it was adopted. 
As we have made clear in the past, “[w]e do not 
lightly overrule precedent.”23
 Indeed, in Robinson 
Detroit, 462 Mich 439, 464; 613 NW2d 307 (2000), we 
discussed several factors to consider before overruling a 
prior 
decision. 
Rather 
than 
address 
the 
various 
considerations mentioned in Robinson, the amicus only 
argues that Sewell was wrongly decided, and the parties do 
not 
even 
address 
that. 
We 
believe 
this 
is 
an 
22 Sewell, supra at 65 (Levin, J., concurring). 
23 Pohutski v City of Allen Park, 465 Mich 675, 693;
641 NW2d 219 (2002). 
24  
v 
 
 
  
 
                                                 
 
unsatisfactory predicate for overruling Sewell, especially 
when it is debatable whether Sewell was wrongly decided. 
As plaintiff hurriedly pointed out at oral argument in this 
case, the relevant language (“all questions arising under 
this act shall be determined by the bureau or a worker’s 
compensation magistrate”) may mean that, before deciding 
any “questions arising under this act,” it is necessary to 
determine if the cause of action is in tort or worker’s 
compensation. 
It is only after that is determined, and if 
it is determined that it is indeed a worker’s compensation 
matter, that the bureau’s jurisdiction is exclusive. While 
Justice Corrigan makes a compelling case that this rebuttal 
argument to the amicus will be found unconvincing upon full 
consideration, that is not entirely clear at this point. 
Moreover, even if one assumes that Justice Corrigan and 
amicus curiae’s assertion regarding jurisdiction is the 
stronger argument, we have had no briefing concerning 
whether the other stare decisis considerations discussed in 
Robinson are satisfied in the present case. 
Further, while all courts must upon challenge, or even 
sua 
sponte, 
confirm 
that 
subject-matter 
jurisdiction 
exists,24 that does not mean that once having done so, as we 
24 Bowie v Arder, 441 Mich 23; 490 NW2d 568 (1992); Fox 
v Univ of Michigan Bd of Regents, 375 Mich 238, 242-243;
134 NW2d 146 (1965); In re Estate of Fraser, 288 Mich 392,
(continued…)
25 
 
 
 
 
                                                 
did in Sewell, that a court must repeatedly reconsider it 
de novo.
 Subsequent courts can rely on the earlier 
determination that has the force of stare decisis behind 
it. It is that situation that we are in and until a record 
exists that is full and developed and causes us to question 
our earlier holding, pursuant to the Robinson tests, we see 
no justification at present to disturb 
the Sewell dual 
jurisdiction holding. 
Finally, given the interest this issue of jurisdiction 
has generated on the Court, we have no doubt it will be 
presented to us again in the near future. 
On that 
occasion, 
presumably 
all 
parties 
will 
have 
a 
full 
opportunity to brief and argue this issue, and it may at 
that time be appropriate to reconsider Sewell. 
CONCLUSION 
We conclude that Reed was an “employee” of Mr. Food as 
the Legislature has unambiguously defined that term in MCL 
418. 161(1)(l) and (n). 
Accordingly, we reverse in part 
the judgment of the Court of Appeals and remand this case 
to the circuit court for entry of a directed verdict in 
defendants’ 
favor. 
Jurisdiction 
over 
this 
case 
is 
thereafter transferred to the Bureau of Worker’s Disability 
(…continued) 
394; 285 NW 1 (1939); Ward v Hunter Machinery Co, 263 Mich  
445, 449; 248 NW 864 (1933).  
26  
 
 
 
 
 
 
                                                 
 
Compensation. 
Should Reed desire to pursue a claim for 
benefits under the WDCA, he shall present an appropriate 
claim for compensation to the bureau no later than thirty 
days after the date this opinion is issued. 
For the 
purposes of MCL 418.381(1),25 the bureau shall treat Reed’s 
claim for benefits as having been filed on December 10, 
1998, the date he filed his complaint in the circuit court. 
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman 
CAVANAGH and KELLY, JJ. 
We concur in the result only. 
Michael F. Cavanagh
Marilyn Kelly 
25 This statute provides: 
A proceeding for compensation for an injury
under this act shall not be maintained unless a 
claim for compensation for the injury, which 
claim may be either oral or in writing, has been
made to the employer or a written claim has been
made to the bureau on forms prescribed by the
director, within 2 years after the occurrence of
the injury. 
27  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
_______________________________ 
 
 
 
 
v 
S T A T E O F M I C H I G A N  
SUPREME COURT  
RICKY REED, 
Plaintiff-Counter-Defendant-Appellee, 
No. 126534 
LINDA SUSAN YACKELL, 
Defendant and Cross-Defendant. 
and 
BUDDY LEE HADLEY, GERALD MICHAEL
HERSKOVITZ and MR. FOOD, INC., 
Defendants, Counter-Plaintiffs,
Cross-Plaintiffs-Appellants. 
WEAVER, J. (dissenting). 
I dissent from the lead opinion's determination that 
plaintiff is an “employee” within the meaning of the 
Worker’s Disability Compensation Act (WDCA), MCL 418.101 et 
seq.  Instead of resolving this issue, I would first direct 
the parties to brief the jurisdictional issue that was 
raised 
in 
the 
amicus 
brief 
filed 
by 
the 
Workers’ 
Compensation Law Section of the State Bar of Michigan 
concerning whether the circuit court had jurisdiction to 
determine whether plaintiff was an employee within the 
meaning of the WDCA. 
Elizabeth A. Weaver 
 
 
 
 
 
 
 
 
 
 
 
 
_______________________________ 
 
 
 
                                                 
 
v 
S T A T E O F M I C H I G A N  
SUPREME COURT  
RICKY REED, 
Plaintiff-Counter-Defendant-Appellee, 
 
No. 126534 
LINDA SUSAN YACKELL, 
Defendant and Cross-Defendant. 
and 
BUDDY LEE HADLEY, GERALD MICHAEL
HERSKOVITZ and MR. FOOD, INC., 
 
Defendants, Counter-Plaintiffs, 
Cross-Plaintiffs-Appellants. 
CORRIGAN, J. (dissenting). 
I 
respectfully 
dissent 
from 
the 
lead 
opinion’s 
determination that plaintiff is an “employee” within the 
meaning of the Worker’s Disability Compensation Act (WDCA), 
MCL 418.101 et seq. Although I agree with the lead 
opinion’s analysis of this substantive issue, and would 
also conclude that plaintiff was Mr. Food's employee at the 
time of his accident, I believe that we should first 
address the question of our jurisdiction.1  It appears that 
1 MCL 418.161(1)(n) of the WDCA controls this question. 
 
 
     
 
                                                 
 
 
   
 
the Worker’s Compensation Bureau (WCB)2 has exclusive 
jurisdiction over consideration of plaintiff’s employment 
status. 
I would specifically direct the parties to brief 
the important jurisdictional question presented in the 
amicus brief of the Workers’ Compensation Law Section of 
the State Bar of Michigan.3 
I am persuaded that Sewell v Clearing Machine Corp, 
419 Mich 56; 347 NW2d 447 (1984), was wrongly decided. 
It 
held that the WCB and the circuit court share jurisdiction 
to determine a worker’s employment status. 
Sewell’s 
assumption of jurisdiction shared with the WCB violated the 
plain language of MCL 418.161 without even so much as an 
analytic 
nod 
to 
the 
statutory 
scheme 
conferring 
jurisdiction in the WDCA. 
Sewell overruled longstanding 
authority that had correctly implemented the statute, 
including Szydlowski v Gen Motors Corp, 397 Mich 356; 245 
2 The Worker’s Compensation Bureau was created by MCL
418.201. 
Pursuant to Executive Order No. 2003-18, MCL
445.2011, effective December 7, 2003, that agency is now
the Workers’ Compensation Agency. 
3 Contrary to the lead opinion’s assertion, I do not
advocate overruling Sewell in a “peremptory fashion.” Ante 
at 24. 
I would direct briefing on the jurisdictional
issue. 
2  
 
 
 
 
 
 
 
 
                                                 
 
 
NW2d 26 (1976).4  Moreover, it contradicted the legislative 
scheme established to determine disputes involving the 
award of worker’s compensation benefits. 
We should review the fundamental question of our 
jurisdiction as it affects not only the proper exercise of 
judicial authority in this case, but in the myriad cases 
involving the exclusive remedy provision. I believe that 
the parallel universe that Sewell created is illegitimate. 
It offends the separation of powers and should be ended. 
Because of the major jurisprudential significance of 
the jurisdictional issue, I would follow the same approach 
that we employed in Lapeer Co Clerk v Lapeer Circuit Court, 
469 Mich 146; 665 NW2d 452 (2003), and Lapeer Co Clerk v 
Lapeer Circuit Judges, 465 Mich 559; 640 NW2d 567 (2002). 
I would sever and resolve the jurisdictional problem before 
tackling any remaining issues. 
4 See Jesionowski v Allied Products Corp, 329 Mich 209; 45
NW 2d 39 (1950); Dershowitz v Ford Motor Co, 327 Mich 386;
41 NW2d 900 (1950); Morris v Ford Motor Co, 320 Mich 372;
31 NW2d 89 (1948); 
Munson v Christie, 270 Mich 94; 258 NW
415 (1935); Houghtaling v Chapman, 119 Mich App 828; 327
NW2d 375 (1982); Buschbacher v Great Lakes Steel Corp, 114 
Mich App 833; 319 NW2d 691 (1982); Dixon v Sype, 92 Mich 
App 144; 284 NW2d 514 (1979); Herman v Theis, 10 Mich App
684; 160 NW2d 365 (1968). 
3  
 
 
 
 
 
 
                                                 
 
 
 
I. FACTS AND PROCEDURAL HISTORY  
In summer 1997, plaintiff was hired as a full-time 
delivery person by defendant Mr. Food, Inc. 
Unsatisfied 
with 
plaintiff’s 
performance, 
Mr. 
Food 
terminated 
plaintiff’s employment in December 1997. 
Between December 
1997 and May 7, 1998, defendant Hadley, an employee of Mr. 
Food, hired plaintiff to assist him in deliveries on an as­
needed basis. Defendant Herskovitz, the owner of Mr. Food, 
paid plaintiff about $35 to $40 a day in cash on five to 
seven occasions. 
Plaintiff also worked at various jobs, 
including house painting and general labor, during this 
four-month period. 
On May 7, 1998, plaintiff was a passenger in defendant 
Mr. Food’s delivery truck, assisting defendant Hadley as he 
had on earlier occasions. 
Plaintiff expected to be paid 
for his services in cash that day. The truck was struck by 
defendant Yackell’s vehicle when it did not stop at a red 
light.5  Plaintiff was seriously injured as a consequence of 
the accident. 
Plaintiff filed suit, alleging that Yackell was 
negligent in failing to stop at the red light, and that Mr. 
Food 
was 
vicariously 
liable 
for 
defendant 
Hadley’s 
5 Defendant Yackell is not a party to this appeal. 
4  
 
 
 
 
 
 
 
 
 
negligence in failing to avoid the collision. 
Defendants 
properly raised and preserved their claim that the worker’s 
compensation exclusive remedy provision barred plaintiff’s 
cause of action, as the Sewell regime provided. 
For 
example, the joint pretrial order reflects that whether the 
exclusive remedy provision precluded plaintiff’s claim was 
an issue of law to be litigated. 
Even plaintiff’s opening 
statement 
raised 
the 
applicability 
of 
the 
WDCA’s 
exclusivity provision: 
On that day, Ricky Reed received a telephone
call from Buddy Hadley, and asked him to work­
under-the-table for $40, as he had done several
times since being let go from Mr. Food. 
And Mr. 
Herskovitz would pay him $40 to help Mr. Hadley
deliver meat on his route in a big freezer truck. 
The evidence is going to show that not only
had Mr. Herskovitz paid him in the past, but he
[was] going to pay him to assist Mr. Hadley on
this case. 
At the close of plaintiff’s proofs, Mr. Food moved for 
a directed verdict, arguing again that plaintiff was an 
employee of Mr. Food at the time of the accident, so that 
the WDCA was plaintiff’s exclusive remedy. MCL 418.131(1). 
The circuit court denied the 
motion. 
Following a jury 
verdict in plaintiff’s favor, Mr. Food moved for judgment 
notwithstanding the verdict (JNOV) under MCR 2.610(1), 
reiterating its argument that plaintiff’s exclusive remedy 
5  
 
 
 
  
 
 
                                                 
 
 
 
 
 
 
under worker’s compensation precluded plaintiff’s claim.6 
The circuit court again denied that motion. 
The Court of Appeals affirmed the trial court’s denial 
of Mr. Food’s motions for a directed verdict and JNOV.7 It 
held that, although plaintiff was under an implied contract 
of hire with Mr. Food, he was an independent contractor at 
the 
time 
of 
the 
accident 
and, 
therefore, 
worker’s 
compensation 
benefits 
were 
not 
plaintiff’s 
exclusive 
remedy. 
Mr. Food sought leave to appeal in this Court. 
In 
lieu of granting leave, this Court vacated the Court of 
Appeals opinion and remanded the case to the circuit court 
to determine whether plaintiff was an employee within the 
6 The motion for JNOV stated: 
1. 
. 
. 
. 
Plaintiff’s 
own 
testimony
established that he was an employee of Mr. Food,
and the exclusive remedy provision of the Workers
Disability Compensation Act (WDCA) deprives the
court of subject matter jurisdiction . . . . 
2. Plaintiff meets the statutory definition
of “employee” in the WDCA because part-time
workers are employees, and Plaintiff Reed was
“performing service in the course of the . . .
business . . . of an employer at the time of the 
injury.[”] 
7 Unpublished opinion per curiam of the Court of
Appeals, issued February 14, 2003 (Docket No. 236588). 
6  
 
 
 
 
  
 
 
                                                 
 
 
 
 
 
meaning of MCL 418.161(l)(l) and (n).8
 On remand, the 
circuit court held that plaintiff was not an employee, but 
an independent contractor, because he maintained a separate 
business as a day laborer and held himself out to the 
public as a day laborer. This Court then remanded the case 
to the Court of Appeals to reconsider whether plaintiff was 
an employee within the meaning of MCL 418.161(1)(l) and (n) 
in light of the circuit court’s findings of fact.9
 The 
Court of Appeals affirmed.10 
This Court granted the application of defendants Mr. 
Food and Hadley for leave to appeal on the issue of 
plaintiff’s employment status on the date of the accident.11 
On April 12, 2005, the Workers’ Compensation Law Section 
filed 
an 
amicus 
brief 
squarely 
raising 
the 
Sewell 
jurisdictional issue for the first time. Neither plaintiff 
nor defendants answered the amicus brief. 
II. STANDARD OF REVIEW 
The issue of subject-matter jurisdiction turns on 
questions of statutory and court rule interpretation and 
8 469 Mich 960 (2003).  
9 469 Mich 1051 (2004).  
10 Unpublished opinion per curiam of the Court of 
Appeals, issued June 8, 2004 (Docket No. 236588). 
11 471 Mich 957 (2005). 
7  
 
 
 
 
 
thus presents a question of law. 
Lapeer Circuit Judges, 
supra at 566. This Court reviews questions of law de novo. 
Id.; Cain v Waste Mgt, Inc (After Remand), 472 Mich 236; 
697 NW2d 130 (2005). 
This case also has 
constitutional 
implications regarding the legitimate scope of judicial 
power, which is also subject to review de novo. 
Warda v 
Flushing City Council, 472 Mich 326; 696 NW2d 671 (2005). 
III. DISCUSSION & ANALYSIS 
A. Subject-Matter Jurisdiction 
Subject-matter jurisdiction may be raised at any time 
by the parties, or sua sponte by a court. Nat'l Wildlife 
Federation v Cleveland Cliffs Iron Co, 471 Mich 608, 630; 
684 NW2d 800 (2004); MCR 2.116(D)(3). 
Subject-matter 
jurisdiction involves the power of a court to hear and 
determine a cause or matter. 
Langdon v Wayne Circuit 
Judges, 76 Mich 358, 367; 43 NW 310 (1889). Since subject­
matter jurisdiction is the foundation for a court to hear 
and decide a claim, it may be considered by the court on 
its own at any time. In re Estate of Fraser, 288 Mich 392, 
394; 285 NW 1 (1939). 
In Joy v Two-Bit Corp, 287 Mich 244, 253-254; 283 NW 
45 (1938), this Court defined subject-matter jurisdiction 
as 
8  
 
 
 
 
 
 
“the right of the court to exercise judicial
power 
over 
that 
class 
of 
cases; 
not 
the 
particular 
case 
before 
it, 
but 
rather 
the 
abstract power to try a case of the kind or
character of the one pending; and not whether the
particular case is one that presents a cause of
action, or under the particular facts is triable
before the court in which it is pending, because
of some inherent facts which exist and may be
developed during the trial.” [Citation omitted.] 
Subject-matter jurisdiction is conferred on the court 
by the authority that created the court. Detroit v Rabaut, 
389 Mich 329, 331; 206 NW2d 625 (1973). Const 1963, art 6, 
§ 1 created the current judicial system in Michigan; it 
provides for one Supreme Court, the Court of Appeals, one 
circuit court of general jurisdiction, one probate court, 
and “courts of limited jurisdiction that the legislature 
may establish . . . .” 
Const 1963, art 6, § 4 provides that this Court has 
“general superintending control over all courts; power to 
issue, hear and determine prerogative and remedial writs; 
and appellate jurisdiction as provided by rules of the 
supreme court.” 
This Court’s appellate jurisdiction to 
review 
and 
pass 
on 
decisions 
of 
the 
lower 
courts 
necessarily 
assumes 
that 
the 
lower 
courts 
properly 
exercised subject-matter jurisdiction over the case. 
If a 
lower court improperly exercised jurisdiction over a matter 
delegated to another governmental branch, this Court is 
9  
 
 
 
 
 
 
 
 
devoid of appellate jurisdiction over the subject matter of 
the case because the Constitution provides no basis for 
this Court to exercise a power delegated to another 
department of government. On the contrary, Const 1963, art 
3, § 2 specifically provides that “[n]o person exercising 
powers of one branch shall exercise powers properly 
belonging to another branch except as expressly provided in 
this constitution.” 
As this Court explained in Bowie v Arder, 441 Mich 23, 
56; 490 NW2d 568 (1992): 
When 
a 
court 
lacks 
subject 
matter 
jurisdiction to hear and determine a claim, any
action it takes, other than to dismiss the 
action, is void. Further, a court must take 
notice of the limits of its authority, and should
on 
its 
own 
motion 
recognize 
its 
lack 
of 
jurisdiction and dismiss the action at any stage
in the proceedings. [Citation omitted.] 
The specific threshold jurisdictional issue here is 
whether the Legislature has exclusively delegated to the 
WCB the power to decide the application of the WDCA to the 
class of cases that includes plaintiff’s case. 
If that is 
so, then this Court and the lower courts are divested of 
subject-matter jurisdiction to determine a plaintiff’s 
employment status for WDCA purposes, and this Court has no 
choice but to dismiss this case. Proper resolution of this 
jurisdictional question is critical because it determines 
10  
 
 
 
 
 
 
                                                 
whether a jury or a specialized agency will hear and decide 
the claim. 
The WDCA actually prohibits a circuit court 
from exercising subject-matter jurisdiction to decide any 
questions arising under the WDCA by assigning jurisdiction 
to the WCB or a worker’s compensation magistrate. 
MCL 
418.841(1). 
B. Worker’s Disability Compensation Act 
The predecessor to the WDCA, known as the “Workmen’s 
Compensation Act,” was enacted in 1912 during a special 
legislative session. 
Cain, supra at 247-248.12
 The 
worker’s compensation system assures employees that they 
will receive compensation for employment-related injuries, 
without regard to fault, through worker’s compensation 
benefits. 
In 
exchange 
for 
“this 
almost 
automatic 
liability, 
employees 
are 
limited 
in 
the 
amount 
of 
compensation they may collect from their employer, and, 
except in limited circumstances, may not bring a tort 
action against the employer.” Clark v United Technologies 
Automotive, Inc, 459 Mich 681, 687; 594 NW2d 447 (1999); 
MCL 418.131(1). 
Worker’s compensation is thus an injured 
12 1975 PA 279 changed the title of the act from the
“Workmen's Compensation Act of 1969” to the “Worker's 
Disability Compensation Act of 1969” to reflect its 
applicability to workers of either sex. 
11  
 
 
   
 
 
 
 
   
 
 
                                                 
 
worker’s “exclusive remedy” for a qualifying work-related 
injury. Id. 
MCL 418.301(1) of the WDCA provides, in relevant part: 
An employee, who receives a personal injury
arising out of and in the course of employment by
an employer who is subject to this act at the
time of the injury, shall be paid compensation as
provided in this act. 
Thus, worker’s compensation benefits are available 
under the WDCA when (1) an employment relationship exists, 
and (2) a personal injury arose out of, and in the course 
of, that employment. 
The term “employee” for WDCA purposes is defined in 
MCL 418.161(1). 
That section controls employment status 
determinations regarding government workers (§ 161[1][a]), 
foreign nationals (§ 161[1][b]), public safety personnel 
(§§ 161[1][c] and [f]), volunteer fire fighters (§§ 
161[1][d] and [e]), volunteer civil defense workers (§ 
161[1][g]), public health volunteers (§§ 161[1][h] and 
[i]), emergency rescue workers (§ 161[1][j], peace officers 
(§ 161[1][k]), workers under contract (§ 161[1][l]), 
trainee program participants (§ 161[1][m]), and even 
independent contractors (§ 161[1][n[).13 
13 The question the majority addresses is thus first
assigned to the WCB. 
12  
 
 
 
 
 
 
 
 
 
 
 
 
The only apparent exception that confers jurisdiction 
on the circuit court is found in MCL 418.131(1): 
The right to the recovery of benefits as
provided in this act shall be the employee’s
exclusive remedy against the employer for a 
personal injury or occupational disease. The only
exception 
to 
this 
exclusive 
remedy 
is 
an 
intentional tort. 
An intentional tort shall 
exist only when an employee is injured as a
result of a deliberate act of the employer and
the employer specifically intended an injury. 
Here, plaintiff has not presented an intentional tort 
claim. 
The fundamental question presented here is whether 
the circuit court has jurisdiction over a case after a 
party has raised the question whether the claim sounds in 
worker’s compensation rather than tort. 
C. The WDCA and the Circuit Court Subject-Matter
Jurisdiction 
MCL 418.841(1) of the WDCA provides: 
Any 
dispute 
or 
controversy 
concerning
compensation or other benefits shall be submitted
to the bureau and all questions arising under 
this act shall be determined by the bureau or a
worker's compensation magistrate, as applicable.
[Emphasis supplied.] 
The 
WDCA 
sets 
up 
comprehensive 
procedures 
for 
resolving disputes “arising under” the act. 
For example, 
MCL 418.847(1) provides that a “party in interest” may 
apply 
for 
a 
hearing 
before 
a 
worker’s 
compensation 
magistrate. MCL 418.847(2) provides that a magistrate must 
file a written order and “a concise written opinion stating 
13  
 
 
 
 
 
 
 
 
 
his or her reasoning for the order including any findings 
of fact and conclusions of law.” 
MCL 418.859a and 418.861a establish the procedures a 
party must follow in order to appeal a magistrate’s 
decision within the WCB. 
MCL 418.859a provides that “a 
claim for review of a case for which an application under 
section 847 is filed . . . shall be filed with the 
appellate commission.” 
MCL 418.861a(1) provides that any 
claim for review filed pursuant to § 859a “shall be heard 
and decided by the appellate commission [WCAC].” 
During 
that process, the WCAC may “remand [the] matter to a 
worker’s compensation magistrate for purposes of supplying 
a complete record if it is determined that the record is 
insufficient for purposes of review.” MCL 418.861a(12) 
Judicial review of magistrate and WCAC decisions is 
circumscribed under the WDCA. MCL 418.861 provides: 
The findings of fact made by the board 
acting within its powers, in the absence of 
fraud, shall be conclusive. The court of appeals
and the supreme court shall have power to review
questions of law involved in any final order of
the 
board, 
if 
application 
is 
made 
by 
the 
aggrieved party within 30 days after such order
by any method permissible under the rules of the
courts of the laws of this state. 
MCL 418.861a(14) similarly provides: 
The findings of fact made by the commission
acting within its powers, in the absence of 
fraud, shall be conclusive. The court of appeals 
14  
 
 
 
 
 
and the supreme court shall have the power to
review questions of law involved with any final
order of the commission, if application is made
by the aggrieved party within 30 days after the
order 
by 
any 
method 
permissible 
under 
the 
Michigan court rules. 
Significantly, the WDCA sets up no substantive right 
to or procedural mechanism for circuit court resolution or 
review of legal or factual questions regarding application 
of the WDCA. 
On the contrary, as noted earlier, in MCL 
418.841, the Legislature directed that “[a]ny dispute or 
controversy concerning compensation or other benefits shall 
be submitted to the bureau and all questions arising under 
this act shall be determined by the bureau or a worker’s 
compensation magistrate . . . .” (Emphasis supplied.) 
Where, as here, the employment status of an injured 
plaintiff is in dispute, the issue is whether that dispute 
is one “arising under” the WDCA. 
If the dispute over 
employment status is not one “arising under” the WDCA, then 
MCL 418.841 does not preclude a circuit court from 
exercising 
jurisdiction 
over 
that 
determination. 
Conversely, if the dispute over employment status is a 
question “arising under” the WDCA, then a circuit court 
lacks 
subject-matter 
jurisdiction 
over 
those 
initial 
determinations by virtue of the Legislature’s direction in 
MCL 
418.841(1) 
that 
“all” 
such 
questions 
“shall 
be 
15  
 
 
 
 
 
 
 
determined by the bureau or a worker’s compensation 
magistrate 
. 
. 
. 
.” 
(Emphasis 
supplied.) 
The 
Legislature’s use of the word “shall” in a statute 
“indicates a mandatory and imperative directive” 
Burton v 
Reed City Hosp Corp, 471 Mich 745, 752; 691 NW2d 424 
(2005). 
As already discussed, the criteria for determining 
employment status are comprehensively set forth in, and 
controlled by, MCL 418.161(1) of the WDCA. The question of 
employee status falls within the category of “all questions 
arising under” the act. 
Because the Legislature directed 
that all questions concerning the meaning and application 
of every provision in the WDCA are to be decided by the WCB 
or a magistrate, and any dispute regarding whether an 
injured party is an “employee” is necessarily one “arising 
under” the WDCA, 
the WCB is the designated forum to 
determine that question. 
Const 1963, art 6, § 13 provides that “[t]he circuit 
court shall have original jurisdiction in all matters not 
prohibited by law . . . .” (Emphasis supplied.) By virtue 
of 
MCL 
418.841(1), 
it 
appears 
that 
the 
Legislature 
“prohibited by law” the exercise of original jurisdiction 
in the circuit court. 
Therefore, jurisdiction regarding a 
party’s employment status rests in the first instance 
16  
 
 
 
 
 
 
 
 
 
 
 
exclusively with the WCB or a magistrate. 
As noted 
earlier, because the circuit court lacked jurisdiction over 
the subject matter, the Court of Appeals and this Court 
lack subject-matter jurisdiction to review that circuit 
court decision. 
D. Sewell v Clearing Machine Corp, 419 Mich 56; 347 NW2d
447 (1984) 
Despite the clear and unambiguous directive set forth 
in MCL 418.841, Sewell, supra, overrode the statute and 
declared that the courts and the WCB shared jurisdiction. 
The Sewell Court held that 
the bureau has exclusive jurisdiction to decide
whether injuries suffered by an employee were in
the course of employment. The courts, however, 
retain the power to decide the more fundamental
issue whether the plaintiff is an employee (or
fellow employee) of the defendant. 
[Sewell, 
supra at 62  (emphasis supplied).] 
There is no authority cited for this assertion of 
power. 
Indeed, the judiciary is powerless to modify 
unambiguous statutory language in order to inject its own 
policy preferences. Rory v Continental Ins Co, 473 Mich 
____; ___ NW2d ___ (2005). 
Nonetheless, Sewell dictated 
that courts and the WCB would effectively share the power 
to decide whether an injured party is an “employee” within 
the meaning of the WDCA. 
The WCB, however, would retain 
17  
 
 
 
 
 
exclusive jurisdiction over determining whether an injury 
occurred in the course of employment. 
Although Sewell cited MCL 418.841, it provided no 
analysis of that section’s sweeping directive that “all 
questions arising under [the] act shall be determined by 
the” WCB. Indeed, the opinion is devoid of any analysis of 
any WDCA provisions whatsoever. 
Moreover, the perfunctory decision in Sewell swept 
away almost fifty years of precedent in which this Court 
and the Court of Appeals had consistently held that courts 
lack 
jurisdiction 
to 
determine 
employment 
status. 
Szydlowski, supra; Jesionowski v Allied Products Corp, 329 
Mich 209; 45 NW2d 39 (1950); Dershowitz v Ford Motor Co, 
327 Mich 386; 41 NW2d 900 (1950); Morris v Ford Motor Co, 
320 Mich 372; 31 NW2d 89 (1948); 
Munson v Christie, 270 
Mich 94; 258 NW 415 (1935); Houghtaling v Chapman, 119 Mich 
App 828; 327 NW2d 375 (1982); Buschbacher v Great Lakes 
Steel Corp, 114 Mich App 833; 319 NW2d 691 (1982); Dixon v 
Sype, 92 Mich App 144; 284 NW2d 514 (1979); Herman v Theis, 
10 Mich App 684; 160 NW2d 365 (1968). 
Sewell wholly disregarded this extensive body of case 
law, stating: 
Taken 
alone, 
those 
general 
statements 
suggest that the bureau’s jurisdiction takes 
precedence 
over 
that 
of 
the 
circuit 
court 
18  
 
 
 
 
 
  
 
 
whenever 
there 
is 
an 
issue 
concerning 
the 
applicability 
of 
the 
Worker’s 
Disability
Compensation Act. The rule is not so broad, 
however. [Sewell, supra at 62.] 
Again, the Court cited no authority for that proposition. 
It is hard to imagine a broader rule than the one 
established by the Legislature in the WDCA, i.e., one 
covering “all questions.” 
This Court’s usurpation of 
legislative 
power 
in 
Sewell 
is 
nothing 
short 
of 
breathtaking. 
This Court has stood firm against just such 
usurpations 
of 
legislative 
power 
by 
this 
branch 
of 
government. 
Warda, supra; Halloran v Bhan, 470 Mich 572, 
576; 683 NW2d 129 (2004); Lapeer Circuit Judges, supra; 
Roberts v Mecosta Co Gen Hosp, 466 Mich 57, 63; 642 NW2d 
663 (2000); Massey v Mandell, 462 Mich 375, 379-380; 614 
NW2d 70 (2000); DiBenedetto v West Shore Hosp, 461 Mich 
394, 402; 605 NW2d 300 (2000); Omne Financial, Inc v 
Shacks, Inc, 460 Mich 305, 311; 596 NW2d 591 (1999). 
I fully agree with Justice Levin’s statement in 
Sewell. 
He 
pointed 
out 
that 
the 
majority’s 
“more 
fundamental” 
test 
was 
“proffered 
without 
analysis, 
explanation, or justification” and that it “offers no 
guidance for the resolution of future cases and does not 
satisfactorily explain the result reached . . . .” 
Id. at 
65. 
He argued that “[t]he issue whether [defendant] was 
19  
 
 
 
 
 
 
 
 
[plaintiff’s] employer is no more ‘fundamental’ than the 
issue whether [plaintiff’s] injuries were suffered in the 
course of employment.” Id. at 70. 
In announcing a shared jurisdiction paradigm when 
determining whether the WDCA applies to a claim, Sewell 
overruled Szydlowski, supra. In Szydlowski, we held that 
“a plaintiff’s remedy against an employer based
on 
an 
injury 
allegedly 
arising 
out 
of 
an 
employment relationship properly belongs within
the workmen's compensation department for initial
determination as to jurisdiction and liability.” 
[Szydlowski, supra at 359, quoting Herman, supra
at 691 (emphasis supplied).] 
This 
Court 
explained 
in 
Szydlowski 
that 
“the 
procedures for workmen’s compensation cases have been 
statutorily established. 
[Herman] properly cautions us 
against a shortcut or circumvention of those procedures.” 
Szydlowski, supra at 359.
 The WDCA scheme is a complete 
departure from the common law and equity jurisprudence, as 
this Court recognized in Andrejwski v Wolverine Coal Co, 
182 Mich 298, 302-303; 148 NW 684 (1914): 
The act in question, like all similar acts,
provides for compensation, and not for damages,
and in its consideration and construction all of 
the rules of law and procedure, which apply to
recover damages for 
negligently causing injury
or 
death, 
are 
in 
these 
cases 
no 
longer
applicable, and there is substituted a new code 
of procedure fixed and determined by the act in
question. [Emphasis supplied.] 
20  
 
 
 
 
 
 
  
                                                 
 
    
The shared jurisdiction paradigm established in Sewell 
not only contradicts the plain language of the WDCA, but it 
also does violence to the legislative scheme. 
E. Prudential Problems with Sewell 
As 
discussed 
in 
the 
previous 
section, 
Sewell 
contradicted the clear legislative directive that “all 
questions arising under” the WDCA are to be addressed 
within the worker’s compensation system. 
That is a 
sufficient basis to overturn the decision.14
 But Sewell’s 
shared jurisdiction paradigm implicates other prudential 
concerns, 
quite 
apart 
from 
the 
absence 
of 
judicial 
authority to negate the legislative scheme. 
Specifically, 
it 
fails 
to 
accord 
the 
proper 
deference 
to 
agency 
expertise, and thwarts the goal of consistent and uniform 
decisions by the WCB. 
1. Agency Expertise 
This Court has acknowledged that administrative 
agencies possess “superior knowledge and expertise in 
addressing recurring issues within the scope of their 
authority.” Travelers Ins Co v Detroit Edison Co, 465 Mich 
185, 200; 631 NW2d 733 (2001). 
In Mudel v Great Atlantic 
& Pacific Tea Co, 462 Mich 691, 702 n 5; 614 NW2d 607 
14 See Robinson v Detroit, 462 Mich 439, 473; 613 NW2d
307 (2000) (Corrigan, J., concurring). 
21  
 
 
 
 
 
 
 
(2000), this Court explained that the Legislature created a 
“two-tier reviewing process, which delegates to the WCAC 
the role of ultimate factfinder, while limiting the 
judiciary to the role of guardian of procedural fairness.” 
Mudel correctly recognized that 
administrative 
agencies 
possess 
expertise 
in 
particular areas of specialization. Because the
judiciary has neither the expertise nor the 
resources to engage in a fact-intensive review of
the entire administrative record, that type of
detailed review is generally delegated to the
administrative body. In the particular context of
worker’s compensation cases, a highly technical
area of law, the judiciary lacks the expertise
necessary 
to 
reach 
well-grounded 
factual 
conclusions . . . . 
The judiciary is not more
qualified 
to 
reach 
well-grounded 
factual 
conclusions in this arena than the administrative 
specialists. 
Therefore, 
the 
Legislature 
has 
decided that factual determinations are properly
made at the administrative level, as opposed to
the judicial level. [Id.] 
The rationale underlying this Court’s decision in 
Sewell is that resolving the legal question regarding a 
plaintiff’s employment status is not an issue that requires 
agency expertise. 
The instant case, however, belies that 
understanding. 
Here, three courts have interpreted the 
same facts three different ways in deciding plaintiff’s 
employment status. The trial court held that plaintiff was 
not under a “contract of hire” at the time of the accident. 
The Court of Appeals held that plaintiff was under a 
contract 
of 
hire, 
but 
that 
he 
was 
an 
independent 
22  
 
 
 
 
 
 
 
  
 
contractor. 
Here, 
the 
lead 
opinion 
concludes 
that 
plaintiff was under a contract of hire and was not acting 
as an independent contractor. 
This case itself reflects that the legal question 
regarding the employment status of an injured party for 
WDCA purposes can be a complicated and highly fact-driven 
question. 
For that reason, employment status is best 
determined first by the administrative agency legislatively 
charged with applying the WDCA. 
Even if the Legislature had not clearly directed that 
all questions regarding application of the WDCA be answered 
within the worker’s compensation system, the pre-Sewell 
approach simply works best. 
Allowing the agency to decide 
first which tribunal has jurisdiction over a claim in which 
the WDCA is implicated maximizes the strengths of both 
tribunals. 
The WCB may apply its expertise to resolve 
issues of fact in the employment context, while courts, of 
course, retain appellate review of WCB decisions and 
resolve questions of law. 
2. Uniformity and Consistency 
The goal of consistent and uniform administrative 
decision-making is similarly thwarted where multiple forums 
may decide the same factual question. 
As we stated in 
Travelers, supra at 199: 
23  
 
 
 
 
 
 
 
 
“[U]niformity 
and 
consistency 
in 
the 
regulation of business entrusted to a particular
agency are secured, and the limited functions of
review by the judiciary are more rationally
exercised, by preliminary resort for ascertaining
and 
interpreting 
the 
circumstances 
underlying
legal issues to agencies that are better equipped
than courts by specialization, by insight gained
through 
experience, 
and 
by 
more 
flexible 
procedure.” [Citation omitted.] 
Resort to the WCB in the first instance ensures that 
employment status issues will be resolved in a consistent 
manner. 
Moreover, the shared jurisdiction approach established 
by Sewell suffers from an unconvincing rationale and lack 
of clarity in application. 
As Justice Levin aptly opined, 
there is little reason to assume that employment status 
determinations are any “more fundamental” than other 
questions involved in determining whether a plaintiff’s 
claim sounds in worker’s compensation or tort. 
Sewell, 
supra at 70 (Levin, J., concurring). 
Thus, Sewell’s “more 
fundamental” rationale for concurrent jurisdiction appears 
both unprincipled and groundless. 
F. Szydlowski’s Approach 
This Court’s opinion in Szydlowski provides the more 
textually faithful approach to determining jurisdiction 
when the WDCA is implicated. 
Contrary to Sewell, the 
jurisdictional inquiry in the first instance should be 
24  
 
 
 
 
 
                                                 
 
 
referred to the WCB upon petition by either party in a 
court action. 
In addition to being more textually faithful to the 
WDCA, this approach would avoid lengthy, duplicative 
litigation by providing a definite jurisdictional starting 
point. 
Consider this case: 
for seven years, the circuit 
court, the Court of Appeals, and now this Court have 
grappled with defining and applying the WDCA’s terms of art 
to the facts of this case. The forum legislatively charged 
with determining all questions arising under the WDCA is 
the WCB, not the courts. That forum is where this class of 
cases belongs. 
I agree that this Court should not lightly overrule 
precedent.15  As this Court discussed recently in People v 
Davis, 472 Mich 156, 168 n 19; 695 NW2d 45 (2005), 
the doctrine of stare decisis is not applied
mechanically to prevent the Court from overruling
previous decisions that are erroneous. We may
overrule a prior decision when we are certain
that it was wrongly decided and “‘less injury
will result from overruling than from following
it.’” People v Moore, 470 Mich 56, 69 n 17; 679
NW2d 41 (2004), quoting McEvoy v Sault Ste Marie,
136 Mich 172, 178; 98 NW 1006 (1904). 
Sewell’s shared jurisdiction approach is not at all 
faithful to the plain text of the WDCA. 
The doctrine of 
15 Ante at 24. 
25  
 
 
 
 
 
 
 
stare decisis should not prevail over a legislative 
directive. As I noted in Robinson v Detroit, 462 Mich 439, 
472-473; 613 NW2d 307 (2000): 
I agree that too rapid change in the law
threatens judicial legitimacy, as it threatens
the stability of any institution. But the act of
correcting past rulings that usurp power properly
belonging to the legislative branch does not 
threaten 
legitimacy. 
Rather, 
it 
restores 
legitimacy. Simply put, our duty to act within 
our 
constitutional 
grant 
of 
authority 
is 
paramount. If a prior decision of this Court
reflects an abuse of judicial power at the 
expense of legislative authority, a failure to
recognize and correct that excess, even if done
in the name of stare decisis, would perpetuate an
unacceptable abuse of judicial power. [Corrigan,
J., concurring.] 
IV. Conclusion 
In 
sum, 
Sewell’s 
assumption 
of 
circuit 
court 
jurisdiction over determining employment status contradicts 
the plain language of the WDCA. 
Determining employment 
status 
is 
a 
fact-driven 
undertaking 
requiring 
interpretation and application of the WDCA. Such questions 
should be determined first by the forum legislatively 
charged with interpreting and applying the act. 
For the 
foregoing reasons, I conclude that the circuit court and 
the Court of Appeals lack subject-matter jurisdiction over 
this matter. 
Although I agree that the jurisdictional 
issue was posed at a very late stage, I would nonetheless 
direct 
the 
parties 
to 
brief 
this 
jurisprudentially 
26  
 
 
 
 
 
significant problem of jurisdiction and submit the case on 
this narrow question. 
Maura D. Corrigan 
27