THE STATE OF SOUTH CAROLINA In The Supreme Court

LeAndra Lewis, Petitioner,

v.

L.B. Dynasty, d/b/a Boom Boom Room Studio 54 and

S.C. Uninsured Employers ' Fund, Defendants,

Of Whom S.C. Uninsured Employers' Fund is, Respondent.

Appellate Case No. 2012-213376

ON WRIT OF CERTIORARI TO THE COURT OF APPEALS

Appeal from The Workers' Compensation Commission

Opinion No. 27509 Heard January 14, 2015 – Filed March 18, 2015

REVERSED AND REMANDED

Charles B. Burnette, III, of Burnette & Payne, PA, of Rock Hill; John S. Nichols and Blake A. Hewitt, both of Bluestein, Nichols, Thompson & Delgado, LLC, of Columbia, for Petitioner.

Lisa C. Glover, of Columbia, for Respondent.

JUSTICE HEARN: LeAndra Lewis was injured by an errant bullet at

Studio 54 Boom Boom Room (the Club) while she was working as an exotic dancer. The question before the Court is whether she is an employee of the Club and thus eligible for workers' compensati on. Considering the relationship in toto,

we find the Club exercised control over th e manner in which she performed her work and therefore conclude she was an employee.FACTUAL/PROCEDUR AL BACKGROUND

Lewis worked as an exotic dancer, pe rforming five to seven days a week. Lewis traveled throughout North and So uth Carolina to dance at different establishments, and performed at the Club on three separate occasions. Upon arrival at the Club, Lewis presented id entification demonstrating she was old enough to perform, reviewed the Club's rule sheet, and paid a tip-out fee. The tipout fee, which was determ ined based on when her sh ift started, was $70.

The types of dances Lewis performed at the Club included V.I.P. dances, table dances, and dances on the stage. Lewis was required to perform V.I.P. dances whenever a patron requested one. The Club set the minimum price of these dances, which were to be performed in a specific area, and Lewis had to give a portion of that payment to the Club. Lewi s's rotation on stage was determined by

the Club and it chose the music for those performances.

The Club required the performers to follow specific guidelines or risk being fined or immediately discharged. Becaus e this Club was topless only, the dancers were subject to fines for removing their panties. Although the Club did not set times when the dancers were required to work, it did devise a dancing schedule once the women arrived and they were not a llowed to leave prior to the end of their shift without paying a fine. Furthermor e, if a dancer did not perform on stage during the assigned time, she had to pay a fine. Failure to pay any fine or repeated

violations of the rules could result in te rmination. Additionally, the dancers could be dismissed for fighting or having sex in the Club.

During Lewis's shift at the Club, a fi ght broke out and Le wis was struck in the abdomen by a stray bullet, which caused severe damage to her internal organs and resulted in the loss of a kidney. She also sustained substantial scarring. Lewis filed a claim for workers' compensation requesting temporary total disability

benefits and medical treatment from th e date of the accident. The putative employer was not represented at the hearing, but the South Carolina Uninsured Employer's Fund appeared to dispute Lewis's claim, arguing Lewis was an independent contractor and not an employee.

At the hearing, Lewis argued the Club exercised control over the manner in which her work was performed, and she was therefore an employee of the Club. She testified she earned $357 the night she wa s shot, and made a total of $1,357 atthe Club over the course of her shifts. Le wis did not state what her income was at

the other establishments wh ere she danced, but stated she made approximately $250 to $350 a night. She had never f iled a tax return and produced no documentation indicating where she worked or what her total income was.

The single commissioner found that Le wis was an independent contractor and denied compensation. Additionally, the commissioner stated that had Lewis established she was an employee, her co mpensation rate woul d be $75 per week based on Lewis's failure to produce eviden ce of the income she earned at other establishments. The appe llate panel of the Worker s' Compensation Commission affirmed, adopting the single commissioner's order.

On appeal, the court of appeals affirmed in a split decision. Lewis v. L.B. Dynasty, Inc. , 400 S.C. 129, 732 S.E.2d 662 (Ct. App. 2012). The majority found that Lewis was an independent contractor, and thus the court di d not have to reach the question of whether the commissioner e rred in setting her compensation rate at $75 per week. Id. at 137, 732 S.E.2d at 666. J udge Short dissented, concluding that examining the relationship as a whole, the Club exercised sufficient control to evince an employment relationship. Id. at 139, 732 S.E.2d at 667 (Short, J., dissenting). We granted certiorari.

ISSUE PRESENTED

Did the court of appeals err in findi ng Lewis was an independent contractor, not an employee of the Club?

LAW/ANALYSIS

Lewis argues the details of her prof essional relationshi p preponderate in favor of finding she was an employee of th e Club and the court of appeals erred in concluding otherwise. We agree.

We construe workers' compensation la w liberally in favor of coverage to further the beneficent purpose of the Wo rkers' Compensation Act; accordingly, only exceptions and restrictions to c overage are strictly construed. James v. Anne's

Inc. , 390 S.C. 188, 198, 701 S.E.2d 730, 735 (2 010). The burden of proving the relationship of employer and employee is upon the claimant, and this proof must be made by the greater we ight of the evidence. Marlow v. E. L. Jones & Son, Inc.

, 248 S.C. 568, 570, 151 S.E.2d 747, 748 (1966). Whether a claimant is an employee or independent contractor is a jurisdictional question and therefore theCourt may take its own view of th e preponderance of the evidence. Wilkinson ex rel. Wilkinson v. Palmetto State Transp. Co. , 382 S.C. 295, 299, 676 S.E.2d 700, 702 (2009). The crux of this determinati on is the purported employer's right to

control the claimant in the performance of his work. Id. In analyzing the nature of a work relationship the Court examines four factors: (1) direct evidence of the right or exercise of control; (2) furnishing of equipment; (3) method of payment; (4) right to fire. Shatto v. McLeod Reg'l Med. Ctr. , 406 S.C. 470, 475–76, 753 S.E.2d 416, 419 (2013). Each factor is considered with equal force and the mere presence of one factor indicating an employment relationship is not dispositive of the inquiry. Id.

At the outset, we agree with Lewis that the majority of the court of appeals allowed its analysis to be influenced by the initial conclusion that Lewis was an "itinerant artistic performer." Lewis , 400 S.C. at 134, 732 S.E.2d at 664. While we recognize the unique details of the arrangement between the Club and Lewis, we emphasize our inquiry is a balance of factors based on the totality of the circumstances. Attempting to broadly ch aracterize the nature of her profession prior to engagement in the analysis fore tells a single result. The question before the Court is a simple, fact-based consid eration—did the Club exercise sufficient control over Lewis to create an employe e relationship—further commentary on the nature of her profession is unnecessary. We therefore now proceed to the right to

control test.

I. RIGHT TO OR EXERCISE OF CONTROL

Turning to the first prong of the test, we find the facts pre ponderate in favor of an employment relationship. In consid ering this question, the court of appeals

focused on whether the Club dictated how she danced and concluded that because Lewis could choreograph her own routine, the Club did not control her work. We find this a myopic view in light of the fact s presented. Certainly, the Club did not specify all the details of her movements, but it is unfaithful to the record to claim it did not control her performance in her capacity as an entertainer. Prior to working her shift, Lewis was required to pay a tip- out fee, undergo a search, and review the

Club's rule sheet. The Club could dec line her entry if her appearance was

undesirable. Once Lewis be gan her shift, the Club chose the music for all her performances. It also dictated when in th e rotation of dancers she must appear on stage. The Club set the minimum for a V.I.P. dance—which she was required to perform if asked—and specified an area for those to take place. Although Lewis technically performed routines of her own direction, the Club specified her degreeof nudity—she was required to be topless, but would be fined for removing more. Additionally, she was not permitted to leave her shift early without paying a fine.

We recognize that Lewis had no set schedule, and came when she chose with no other repercussion than the lo ss of income. Nevertheless, once the Club engaged her for the evening, it exercised significant control over the performance of her work. Accordingly, we find this f actor weighs in favo r of a finding of an employment relationship.

II. FURNISHING OF EQUIPMENT

We further agree with Lewis that the Club furnished equipment so as to preponderate this factor in favor of her having an employee relationship.

When considering this prong, the c ourt of appeals concluded the Club did "nothing more than allow [Lewis] on the premises" because th ere was no practical way she could have supplied the poles, stag e, furniture, or bar items. Instead, it stated, "From the standpoint of both the [C lub] and its customers, Lewis brought her own 'equipment' for her work." Lewis , 400 S.C. at 135, 732 S.E.2d at 665

.

Initially, we disagree with the court of appeals that an individual's body can be considered equipment for the purpose of this analysis. See Matter of Hanson

, 754 P.2d 444, 447 (Idaho 1988) ("The wo rker's body is not a major item of equipment within the meaning of the third el ement of the 'right to control' test. Major items of equipment include such things as tools, machinery, special clothing, parts, and other similar items ne cessary for the worker to accomplish the task to be performed. For example, a pl umber, hired to perform plumbing repairs on a building, usually brings the tools, the parts, and often speci al equipment in the form of augers, pipe cutters and threaders, etc., in order to perform the service.

Those are the sorts of items which constit ute the 'major items of equipment' under the third element of the right to control test. The fact that the plumber also supplies the body doing the work is true whether he is acting as an employee or as an independent contractor.").

Furthermore, assuming her body is equi pment is inconsistent with the rationale underlying the Court' s consideration of this fact or. As Professor Larson

has written:

When it is the employer who furnishe s the equipment, the inference ofthe right to control is a matter of common se nse and business. The owner of a $100,000 truck who entrus ts it to a driver is naturally going to dictate details such as speed, maintenance, and the like in order to protect his or her investment . . . .

This being the rationale, the rule should not be applied to items of equipment whose size and value are not so large as to provide this

incentive for control and for effi cient employment of capital.

3 Arthur Larson & Lex K. Larson, Larson's Workers' Compensation Law § 61.01 (2013). The genesis of this consideration is that whom ever bears the risk of the capital in any investment would logically exert the most control over how that

investment is used.

We observe that other than her cost ume, Lewis brought no other equipment to the Club. The Club, however, supplied her necessary performance space— including an area for V.I.P. da nces, a stage with a pole, tables, and a sound system. It therefore had a more significant intere st in ensuring the dancers effectively utilized the equipment provided to ensure the advertised experience was available to the patrons. See Terry v. Sapphire Gentlemen's Club , 336 P.3d 951, 959 (Nev. 2014) ("With regard to the relative investme nt of the parties, we note that Sapphire provides all the risk capital, funds advertising, and c overs facility expenses. The performers' financial contributions are limi ted to . . . their costume and appearancerelated expenses and house fees. Thus, th e performers are far more closely akin to wage earners toiling for a living, than to independent entrepreneurs seeking a return on their risky capital investments. " (internal quotation omitted)). Because the Club, and not Lewis, bore the risk of the capital investment in the equipment used by Lewis to perform her work, we find this factor weighs in favor of an employee relationship.

III. METHOD OF PAYMENT

Lewis argues this prong of the analysis provides little assistance in analyzing the nature of her professiona l relationship. We recognize at the outset the facts of

this case are distinct in that the Club did not directly pay her any of her earnings; instead, it facilitated the payment she recei ved from the customers. Nevertheless, we do not agree this factor is irrelevant to our inquiry.

When considering this prong, typically a court looks to whether the claimantwas paid by the job or by the hour and how the claimant filed her taxes. Here,

Lewis never filed her taxes and does not appear to have ever been given a Form 1099 or a W-2. We therefore again find it helpful to turn to Professor Larson's

discussion of the rationale unde rlying this consideration:

A moment's reflection will show the realistic connection between payment and control. If an employe r in a regular business or industry purchases personal labor by the hour, da y, or week, it is almost certain to insist on the right to see that th e time is well and efficiently spent. It if pays by the hour, the employer wants to see that it gets a full hours work, and that the hour is applied where it is most n eeded. . . .

By contrast, if the employer ma kes an agreement to pay a man

one hundred dollars to clean out a well, it has no reason to care whether the worker is slow or fast, clumsy or efficient.

3 Larson's , § 61.06. Accordingly, the pa yment prong reflects the putative employer's interest in a worker's productiv ity and efficiency and whether it would

indicate the retention of control over the ma nner in which the job is performed.

We note the Club exerted some contro l over her payment; it set the price of the tip-out fee and the minimum for V.I.P . dances, providing Lewis no discretion to alter these amounts. Additionally, it required Lewis to perform these V.I.P. dances upon request from a customer. Neve rtheless, on the balance we agree with the court of appeals' conclusion that th is factor does not does not suggest the exercise of control of the Club; therefore, we find this factor preponderates in favor of an independent contractor relationship.

IV. RIGHT TO FIRE

In considering the right to fire, we ar e aware that in any relationship there exists some right to terminate the arra ngement. However, as this Court has previously noted, "[t]he power to fire, it is often said, is the power to control. The absolute right to terminate the relationshi p without liability is not consistent with the concept of independent contract, under which the contractor should have the legal right to complete the project." Shatto , 406 S.C. at 481, 753 S.E.2d at 422 (quoting 3 Larson's § 61.08[1]). In essence, exam ining this factor requires the Court to look to whether liability exists if the work is prematurely interrupted. We find the Club ultimately had the right to terminate Lewis without risk of repercussions. Accordingly, we find this f actor weighs in favor of an employmentrelationship.

The testimony at the hearing indicates Lewis would be fined for a failure to comply with the rules—including not staying for her rotation in stage performances, leaving before her shift was over, and declining to perform a V.I.P. dance. Failure to pay any fine would result in her termination. She could also be fired for continuously breaking the rules, fighting, or improper hygiene. The Club

could even decline to let her in for not having the desired appearance. We acknowledge she had the right not to s how up at all because she had no set schedule, but once she was hired for the ni ght, the Club could end that relationship prior to her shift ending and leave Lewis with no recourse for that firing.

On balance, we find this prong indi cates an employee relationship. Lewis

could be terminated for violations of the company rules and could be prevented from working at the Club's discretion. A dditionally, there is no indication Lewis would possess any right to relie f if she was terminated.

CONCLUSION

We emphasize our analysis is necessar ily driven by the particular facts of this case. Examining the totality of the circumstances, we hold the weight of the evidence weighs in favor of finding Lewis was an employee of the Club and is entitled to workers' compensation benefits . We therefore reverse the court of appeals' opinion holding the contrary. A dditionally, because it declined to address the question of Lewis's compensation rate, we remand that issue to the court of appeals for consideration.

TOAL, C.J., BEATTY and KITTREDG E JJ., concur. PLEICONES, J., dissenting in a separate opinion.JUSTICE PLEICONES: I respectfully dissent as I agree with the analysis and holding of the Court of Appeals and thus, would dismiss the writ of certiorari as improvidently granted.