COURT OF APPEALS OF VIRGINIA
Present: Chief Judge Felton, Judges Elder and Petty Argued at Salem, Virginia

DILLON CONSTRUCTION AND ACCIDENT FUND INSURANCE COMPANY OF AMERICA OPINION BY v. Record No. 2946-08-3 JUDGE LARRY G. ELDER DECEMBER 22, 2009 DARYL LANDON CARTER

FROM THE VIRGINIA WORKERS’ COMPENSATION COMMISSION Ramesh Murthy (Penn, Stuart & Eskridge, on brief), for appellants. Stephen G. Bass (Carter Craig, on brief), for appellee.

Dillon Construction and Acci dent Fund Insurance Company of America (collectively referred to as the company) appeal from a d ecision of the Workers’ Compensation Commission (commission) holding that Daryl Carter (claimant) was entitled to medical and temporary total disability benefits following a work-related accident. On appeal, the company argues the commission erred in finding that an employer/ employee relationship existed between claimant and the company such that claimant was a covere d employee within the meaning of the Workers’ Compensation Act (the Act). Because the eviden ce is sufficient to support the conclusion that Dillon Construction’s owner, Ronnie Dillon, possesse d the power of control over the means and method by which claimant performed his j ob, we affirm the commission’s decision.
I. BACKGROUND We view the evidence in the light most fa vorable to claimant, who prevailed below. See Westmoreland Coal v. Russell , 31 Va. App. 16, 20, 520 S.E.2d 839, 841 (1999). So viewed, the- 2 - evidence shows that in 2005, claimant began worki ng for the company as a skilled carpenter. The company withheld money from claimant’s wages for taxes and social security. In 2006, claimant voluntarily terminated hi s employment relationship with the company and obtained a city license to perform freelance c ontractor work on his own. He kept in contact with the company and performed part-time carpentry work for it as needed. As part of the operation of his private business, claimant used his own truck, cell phon e, and basic carpentry tools, which he treated as business expe nses for purposes of his 2006 tax returns. On November 20, 2006, claimant returned to work for the company because he had difficulty obtaining sufficient work to sustain a separate busine ss. Claimant worked for the company continuously until July 31, 2007, when he fell from the second story of a residence under construction and sustained injuries to his left elbow and pelvis. On August 10, 2007, claimant filed a claim for benefits. The compa ny denied the claim because it did not consider claimant an “employee” as contemplated by the re levant provisions of the Act. Claimant requested a hearing, and the commission ultimately held that claimant was a covered employee and thus entitled to medical a nd disability compensation bene fits. This appeal followed.
II. ANALYSIS The Act provides, in relevant part, that an employee entitled to workers’ compensation coverage pursuant to its terms includes “ev ery person, including a minor, in the service of another under any contract of hire or apprenti ceship, written or implied, except . . . one whose employment is not in the usual course of the tr ade, business, occupation or profession of the employer.” Code § 65.2-101. A claimant seeking benefits under the Act bears the burden of proving he is an employee within the definition of Code § 65.2-101. See Behrenson v. Whitaker , 10 Va. App. 364, 366, 392 S.E.2d 508, 509 (1990).- 3 - “‘What constitutes an employee is a question of law; but, whether the facts bring a person within the law’s designation, is usually a question of fact.’” Intermodal Servs., Inc. v. Smith , 234 Va. 596, 600, 364 S.E.2d 221, 224 (1988) (quoting Baker v. Nussman , 152 Va. 293, 302, 147 S.E. 246, 249 (1929)). Although the commi ssion’s factual findings are binding and conclusive on appeal when they are supported by credible evidence, see James v. Capitol Steel
Constr. Co. , 8 Va. App. 512, 515, 382 S.E.2d 487, 488 (1989), a “determination of the relationship involves a mixed que stion of law and fact which is reviewable on appeal,” City of Spotsylvania v. Walker , 25 Va. App. 224, 230, 487 S.E.2d 274, 276 (1997). The company argues it was not obligated under the Act to provide claimant benefits because he was an independent contractor and not a covered employee. In support of this argument, the company points to evidence that owner Ronnie Dillon lacked control over the manner and means by which claimant performed his work and that claimant chose, upon his return to work for the company, to pay his own ta xes from his wages. We hold credible evidence supports the commission’s finding that Dillon “exercised signific ant control over the detailed manner in which the claimant performed the work ” and, thus, we affirm the commission’s award of benefits. The question as to whether a claimant quali fies as an employee under the Act “must be determined from the facts of the particular cas e in the light of well settled principles.” Brown v.
Fox , 189 Va. 509, 516, 54 S.E.2d 109, 113 (1949). Under the common law, the four criteria we must consider are the “‘(1) [s]election and enga gement of the servant; (2) payment of wages; (3) power of dismissal; and (4) the power of control of the servant’s action.’” Crowder v. Haymaker , 164 Va. 77, 79, 178 S.E. 803, 804 (1935) (quoting Baker , 152 Va. at 303, 147 S.E. at 249). “The power of control is the most significant indicium of the employment relationship;- 4 - other factors merely help to elucidat e the manner and degree of control.” Richmond Newspapers, Inc. v. Gill , 224 Va. 92, 98, 294 S.E.2d 840, 843 (1982). [T]he right of control includes not only the power to specify the result to be attained, but also th e power to control “the means and methods by which the result is to be accomplished.” Gill , 224 Va. at 98, 294 S.E.2d at 843. An em ployer/employee relationship exists if the party for whom the work is to be done has the power to direct the means and methods by which the other does the work. “If the latter is free to adopt such means and methods as he chooses to accomplish the result, he is not an employee but an independent contractor.” [ Va. Emp. Comm’n v.] A.I.M. Corp. , 225 Va. [338,] 347, 302 S.E.2d [534,] 540 [(1983)]. The extent of the reserved right of control may be determined by examining the performance of the parties in the activity under scrutiny. Smith , 234 Va. at 601, 364 S.E.2d at 224. Dispositive of the issue in this case is the fact that Dillon retained the power of control over claimant’s job performance such that clai mant was not “free to adopt such means and methods as he [chose] to accomplish the result.” A.I.M. Corp. , 225 Va. at 347, 302 S.E.2d at 540. “The potential power of control, not the ac tual exercise of control, is the important element.” Id. at 347, 302 S.E.2d at 539-40. We must look to the nature of the work to determine on a case-by-case basis whether the employer posse ssed the requisite degree of control for the claimant to qualify as an employee. See Purvis v. Porter Cabs, Inc. , 38 Va. App. 760, 770, 568 S.E.2d 424, 429 (2002). Here, the company’s supervisors managed the individual projects and Dillon monitored their progress on a daily basis by telephone or pe rsonal visits to each jobsite. The hourly employees working for the company were not given specific instructions on how to perform their tasks because they were skilled carpenters who did not need close supervision. However, Dillon reserved the power to “m a[k]e decisions about tearing work out as unsatisfactory[,]” and “with regard to changing work in terms of the owner communica ting such requirements.”- 5 - The record discloses no meaningful distinct ion between Dillon’s power of control over his hourly employees and his power of control over claimant. Dillon acknowledged that he would “tell [claimant] at the begi nning of the day what to do duri ng the day, what [he] wanted to get done,” but did not interfere wi th the manner in which claimant performed those tasks because “he was an experienced carpenter with several years experience and knew what he was doing.” Accordingly, claimant was not “t reated any differently during th e workday with regard to his carpentry work than a skilled carpenter who [Dillon] considered an employee.” Consideration of the remain ing three factors underscores the power of control Dillon possessed over claimant’s work. The uncontradicted evidence demonstrates that Dillon retained the sole ability to hire potential carpenters based on each carpenter’s experience. Moreover, claimant and Dillon did not reduc e their verbal agreement to a written employment contract, placing claimant in the legal status of an at-wil l employee who could be fired at any time for any

reason or no reason. Cf. Gill , 224 Va. at 100, 294 S.E.2d at 844 (interpreting written contracts that contain limitations on terminating the em ployment relationship as “characteristic of contracts negotiated by independent contractors”). Claimant was pa id hourly wages, and he was required to turn in a time card reflecting the time spent on each project. Finally, Dillon provided the power tools, materials, ladders, and scaffold ing for claimant and the other hourly employees to use while working at company jobsites. Even though claimant brought his own small carpentry tools, the evidence proves that this was customary for all of Dillon’s employees. The company relies heavily on claimant’s el ection not to have D illon withhold taxes and fees from his earnings and on claimant’s dedu ction of business expenses on his 2006 and 2007 tax forms. Upon claimant’s return to work for the company on November 20, 2006, Dillon asked claimant if he “want[ed Dillon] to take out taxes,” to which claimant requested to “pay [his] own taxes.” Claimant continued to file these taxes under the tax ID number he had- 6 - obtained when he started his own contracti ng business in 2006. In 2007, claimant submitted receipts relating to his tool, tr uck, gas, and insurance expenses to his accountant for the purpose of computing his business deduction s and resulting tax liability on his federal tax return. While relevant, see Hamilton Trucking Corp. v. Springer , 10 Va. App. 710, 716-17, 396 S.E.2d 379, 382 (1990), in this case, claimant’s decision regarding his taxes mere ly demonstrates an exercise of his business judgment in an attempt to save money. The company has cited to no authority, and we have found none, that makes tax considera tions dispositive of whether claimant is an independent contractor. The company next argues that Dillon’s inte nt regarding claimant’s employment status compels us to reverse the commission’s award of benefits. However, it is well settled that “employers cannot simply designate persons as employees or indepe ndent contractors[,]” Springer , 10 Va. App. at 711, 396 S.E.2d at 379, though the pa rties’ intent can be considered as a factor in the ultimate determination, see Gill , 224 Va. at 98, 294 S.E.2d at 843; Walker , 25 Va. App. at 231, 487 S.E.2d at 277. The company ac knowledges that claimant was an hourly employee when he first started in 2005, but it argu es Dillon considered cl aimant a subcontractor when he returned in 2006 because claimant re quested that Dillon not withhold taxes from his wages. Further, Dillon felt that because clai mant was a subcontractor, he could not be reprimanded or punished for leaving one of the company’s projects to work on a job for one of claimant’s own clients. The record does not indicate, however, whether Dillon communicated this understanding to claimant when he return ed in November 2006. To the contrary, Dillon admitted that he did not specifically ask claimant whether he wanted to return as an hourly employee or an independent contractor. Instea d, he simply asked if claimant wanted taxes withheld from his earnings. Indeed, aside from not withholding taxes, claimant was treated in the same manner as the other company employees for all practical purposes. Claimant worked- 7 - eight hours a day, turned in his time cards, r eceived his earnings based on hours worked, and performed the same duties as when he was an hourly employee in 2005. Significantly, Dillon testified that he hired subcontra ctors only for specialized tasks, such as plumbing or electrical work. By contrast, carpentry, claimant’s sp ecialty, remained within the province of the company’s five hourly employees. Under these circumstances, the commission did not err in disregarding Dillon’s unspoken intent to change cl aimant’s status from an hourly employee to an independent contractor when claima nt returned on November 20, 2006. Finally, we reject the company’ s argument that claimant’s po tential ability to work for other clients at the expense of not working for the company belies his status as a covered employee. The commission found, and the evidence demonstrates, that claimant only performed a few minor jobs for his own clients. In fact , claimant worked close to eight hours per day on jobsites for the company. The General Assembly did not intend to render an employee ineligible to receive disability benefits simply because the employee accepts additional work to supplement his or her present income. See A.I.M. Corp. , 225 Va. at 346, 302 S.E.2d at 539 (“The Act is to be liberally construed to eff ect its beneficent purpose and in borderline cases ‘employment’ should be found to exist.” (quoting Unemp. Comp. Comm’n v. Collins , 182 Va. 426, 438, 29 S.E.2d 388, 393 (1944))).
III. Notwithstanding claimant’s election to make his own withholding tax payments from his wages, the evidence is sufficient to support a findi ng that Dillon retained th e right to control, and did control, the method and means of the work claimant performed. A ccordingly, we hold the commission did not err in findi ng claimant to be a covered employee under the Act, and we affirm its award of benefits. Affirmed.