Court Opinion

ID: 1038617
Source: CourtListenerOpinion
Date Created: 2013-08-28 22:05:03.877876+00
Date Added: 2024-06-11T12:47:30.024181
License: Public Domain

Cite as 2013 Ark. App. 444

                 ARKANSAS COURT OF APPEALS
                                        DIVISION I
                                      No. CV-12-1070

JOE WATKINS                                        Opinion Delivered August 28, 2013
                                APPELLANT
                                                   APPEAL FROM THE ARKANSAS
V.                                                 WORKERS’ COMPENSATION
                                                   COMMISSION
                                                   [NO. F902904]
USA TRUCKING, INC.
                                  APPELLEE

                                                   AFFIRMED

                                RITA W. GRUBER, Judge

       Joe Watkins appeals the denial of his workers’ compensation claim that, while working

as a long-haul truck driver and unloading tires from a tractor trailer, he suffered a compensable

injury to his back and was entitled to medical and total-temporary disability benefits related

to the injury. USA Trucking, Inc., controverted the claim in its entirety, contending that

Watkins was not a USA employee. The Arkansas Workers’ Compensation Commission,

affirming and adopting a decision of an administrative law judge, found that Watkins failed

to prove the existence of an employee-employer relationship. Watkins contends on appeal

that substantial evidence does not support the Commission’s decision that he was an

independent contractor rather than an employee. We affirm.

       When deciding any issue, administrative law judges and the Commission shall

determine, on the basis of the record as a whole, whether the party having the burden of
                                 Cite as 2013 Ark. App. 444

proof on the issue has established it by a preponderance of evidence. Ark. Code Ann. § 11-9-

705(a)(3) (Supp. 2011). The appellate court views the evidence and all reasonable inferences

deducible therefrom in the light most favorable to the Commission’s findings. Cedar Chem.

Co. v. Knight, 372 Ark. 233, 273 S.W.3d 473 (2008).

       We defer to the Commission on issues involving the weight of the evidence and the

credibility of the witnesses. Woodmancy v. Framco, Inc., 2011 Ark. App. 785, 387 S.W.3d

286. If reasonable minds could have reached the result shown by the Commission’s decision,

we must affirm. Id. When the Commission denies a claim because of the claimant’s failure

to meet his burden of proof, the substantial-evidence standard of review requires that we

affirm the Commission’s decision if its opinion displays a substantial basis for the denial of

relief. Id.

       The following factors are to be considered in determining whether one is an employee

or independent contractor:

       (a) the extent of control which, by the agreement, the master may exercise over the
       details of the work;

       (b) whether or not the one employed is engaged in a distinct occupation or business;

       (c) the kind of occupation, with reference to whether in the locality, the work is
       usually done under the direction of the employer or by a specialist without
       supervision;

       (d) the skill required in the particular occupation;

       (e) whether the employer or the workman supplies the instrumentalities, tools, and the
       place of work for the person doing the work;

       (f) the length of time for which the person is employed;

                                               2
                                 Cite as 2013 Ark. App. 444

       (g) the method of payment, whether by the time or by the job;

       (h) whether or not the work is a part of the regular business of the employer;

       (i) whether or not the parties believe they are creating the relation of master and
       servant; and

       (j) whether the principal is or is not in business.

Cloverleaf Express v. Fouts, 91 Ark. App. 4, 16–17, 207 S.W.3d 576, 583 (2005). Here, the

Commission found that some factors pointed to employee and others pointed to independent

contractor, but that Watkins’s “ownership of an essential piece of equipment, namely the

truck/tractor, in his work activities” tipped the scale in favor of independent contractor.

       The Commission considered a document entitled “Contractor Operating Agreement,”

signed by both parties, as the foundation of their relationship. The document stated that the

agreement and intent of Watkins and USA was to “create an independent contractor

relationship between the parties and not a master-servant, employer-employee or principal-

agent relationship.” The document included the obligations of Watkins as “contractor” and

of USA as carrier:

       The contractor agrees to furnish the equipment together with drivers and all other
       necessary labor to transport, load, and unload on behalf of carrier or on behalf of such
       other certified carriers as carrier may designate through “trip lease” or interchange
       agreements, such commodities as the carrier may from time to time make available to
       the contractor.

       The Commission discussed Cloverleaf factors that were relevant to the relationship

between Watkins and USA, first reciting the following evidence pertinent to Factor (a)—the

extent of control which, by the agreement, the master may exercise over the details of the

work. USA would instruct Watkins to pick up a loaded trailer with his truck/tractor at point

                                               3
                                  Cite as 2013 Ark. App. 444

A and deliver it to point B by a certain time and date. Other than his ability to refuse to carry

a load and to have the dispatcher remove him from short loads and place him on longer ones,

he had very little part in deciding the type of load or where it was to go. However, the

Commission found that, “due to his ownership of the truck,” Watkins did have the ability

to control the details of taking the load: he had worked as owner/operator for other motor

carriers, and testified that he operated his truck as owner/operator because he could make

more money. He stated, “You just watch your money. You don’t let your truck sit and run

all night. You don’t let it run all day if you’re parked. You’re easier on your tires. You can

make stuff make last longer if you own it and take care of it.” He answered affirmatively that

he had an ownership interest, he operated as his “own business,” and he was, to an extent,

his own boss.

       The Commission recited the following evidence relevant to Factor (b)—whether the

one employed is engaged in a distinct occupation or business—and Factor (d)—the skill

required in the particular occupation. Watkins was in a distinct occupation or business as an

over-the-road truck driver, had a high level of skill involving the ability to move thousands

of pounds of material via highways and interstates in a safe and efficient manner, and through

tests to operate the tractor trailer, had shown the skills necessary for licensing or certification.

       Under Factor (e)—which party supplied the instrumentalities, tools, and place of work

for the person doing the work—the Commission noted the following evidence. First,

Watkins owned his own truck/tractor. He testified that the differences between being a

company driver or owner/operator were “money” and taking care of his own truck in the

                                                 4
                                 Cite as 2013 Ark. App. 444

way he wanted; that he purchased his truck from Mid-Am Truck in Missouri, not from USA,

which told him only that the truck had to be 2001 or newer and had to pass USA’s

inspection; and that USA supplied him with a Qualcomm communications system, a fuel

card, a DOT (Department of Transportation) card, and a card that allowed him to pass

through certain tolls and weight stations. The Commission recited evidence that USA

supplied the trailers and loads Watkins hauled with his truck/tractor; that although USA

provided him a fuel card, it was his responsibility to pay for the fuel from money he earned

by hauling freight for USA; and that he was required to pay USA for use or lease of the

Qualcomm system.

       The Commission found that the written “Contractor Operating Agreement” between

USA and Watkins contained evidence of Factors (f) and (g). Pertinent to (f)—the length of

time for which Watkins was employed—the contract required that either party provide the

other with thirty days’ written notice before terminating the contractual relationship.

Pertinent to (g)—method of payment—were the contract’s provision that Watkins would

receive “$.90 per dispatched loaded and dispatched empty miles plus a fuel surcharge” and

Watkins’s testimony that he had left one motor carrier because its fuel surcharge was not

passed along to him, which he felt he was entitled to.1 Regarding Factor (h)—whether the

work was part of the employer’s regular business—the Commission found that the parties

       1
         Watkins testified that when fuel prices were high, large carriers such as USA could
negotiate an increased price with the shipper. He explained that he had left the former
carrier because, unlike USA, they did not pay the fuel surcharge: “I felt I was entitled to the
surcharge. Well, it is my truck. I was pulling their freight and if I could get my truck to run
seven miles a gallon, I think I should have been compensated for it.”

                                              5
                                 Cite as 2013 Ark. App. 444

were each engaged in the business of using tractor trailers to transport freight across the

country.

       Factor (i) is whether the parties believed that they were creating the relation of master

and servant. The Commission again recited the contract’s description of Watkins as an

independent contractor. From his testimony, the Commission found that Watkins was an

experienced over-the-road truck driver with the ability to operate a truck efficiently and the

skills to save himself money; that previously, under agreements similar to the one with USA,

he had worked with other carriers and once had terminated employment; that he knew and

understood his right to terminate his relationship with USA after thirty days’ notice; and that

he possessed a “sophisticated understanding of the owner operator or independent contractor

versus company driver or employee statuses which seem to exist in the trucking industry as

a whole.”

       Watkins focuses his argument on our observation that “[a]lthough no one factor of the

relationship is determinative, the ‘right of control’ is the principal factor in determining

whether the relationship is one of agency or independent contractor.” Cloverleaf, 91 Ark.

App. at 16, 207 S.W.3d 576, 583 (internal citations omitted). He asserts, as did the dissenting

commissioner below, that his ownership of the truck should not have been determinative in

deciding whether he was an employee or independent contractor. Much of his argument

relies on Steinert v. Arkansas Workers’ Compensation Commission, 2009 Ark. App. 719, 361

S.W.3d 858, which upheld the Commission’s decision that truck drivers were employees

despite a lease-operator contract’s specification that they were independent contractors rather

                                               6
                                Cite as 2013 Ark. App. 444

than employees.

       The present case is distinguishable from Steinert, where the appellants included Kaedon

Steinert and his multiple trucking companies.        Steinert was both president and sole

stockholder of appellants Hurricane Express and Naedok, motor carriers that were authorized

and licensed by DOT and FMCSA (Federal Motor Carrier Safety Administration). He was

also sole stockholder of appellant Hurricane Logistics, a brokerage firm that located truck

drivers and assigned them loads to haul, and of appellant KSI, a company that owned tractors

and leased them to Hurricane Express and the drivers. A rental agreement specifically stated

that the drivers were independent contractors rather than employees.

       Under the facts of Steinert, we found that fair-minded persons could have reached the

Commission’s conclusion that an employer-employee relationship existed:

       The Commission . . . found that, despite the labels given by the parties, the truck
       drivers were employees subject to the control of Hurricane Express and Naedok. The
       Commission found that driving a truck was an integral part of the business of
       Hurricane Express/Naedok and that the drivers hauled loads exclusively for these
       motor carriers. The Commission cited evidence that the trucks the drivers
       used—owned by KSI—had the Hurricane Express logo on them. The Commission
       noted the rental agreement between KSI and the truck drivers that provided that the
       drivers were required to operate the truck under KSI’s direction and under the
       operating authority of Hurricane Express. The agreement further provided that no
       person other than the driver may use the truck without the express written consent of
       KSI, that the driver may not assign the agreement or sublease the truck, and that the
       driver of the truck must be approved by KSI. The driver had the duty to have the
       truck regularly serviced by a “qualified mechanic approved by [KSI].” The
       Commission further noted that a rental agreement provided that the driver did not
       have any property interest in the truck, but had the option to purchase the truck upon
       performance of all obligations under a rental agreement.
               The Commission also found that while there was testimony that the drivers
       could choose their own routes and refuse loads at will, the reality was that drivers
       chose the most direct route for economic reasons and had to accept loads in order to
       pay for the truck. Finally, the Commission pointed out that the truck drivers were

                                              7
                                 Cite as 2013 Ark. App. 444

       required to report to Hurricane Express and Naedok (to comply with DOT
       regulations) and that the failure to do so resulted in termination of the operating
       agreement with Hurricane Express/Naedok and termination of a rental agreement
       with KSI.

2009 Ark. App. 719 at 8–9, 361 S.W.3d 858, 864–65 (footnote omitted). We noted that the

Commission found “a lack of an ‘arms-length’ relationship between Hurricane

Express/Hurricane Logistics/KSI and the truck drivers, due in large part to Steinert’s

ownership of all of the entities involved in this trucking enterprise.” Id. at 9, n.3, 361 S.W.3d

at 864–65, n.3.

       Watkins argues that even though much of USA’s control over him was mandated by

DOT regulations, like in Steinert, extensive control brought the relationship within the realm

of an employer-employee relationship and workers’ compensation coverage. He asserts that

the determinative factor in his relationship with USA was not his ownership of the truck, but

USA’s right to control him as a driver. He points to the dissenting commissioner’s summary

of evidence regarding his lack of freedom to control his own driving: he had to pull USA’s

trailers and was not free to pull for other carriers; he was dispatched and his truck was loaded

by USA; his driving was monitored by the Qualcomm system USA placed in his truck; USA

provided him a fuel card, driving card, DOT card, and pass for some state scales; and—most

important—had to affix USA’s logo to his truck, as required by DOT.

       We agree with USA’s argument that this case is unlike Steinert, where there was no

arms-length relationship between three trucking entities and truck drivers. The present case

involved instead a legitimate business deal between two competent parties, with each

benefiting from the nature of the independent-contractor relationship. See Woodmancy v.

                                               8
                                Cite as 2013 Ark. App. 444

Framco, Inc., 2011 Ark. App. 785, at 8, 387 S.W.3d 286, 291 (reciting the Commission’s

conclusion that “[t]his is not a case of a respondent taking advantage of an employee, the

claimant in this matter is quite seasoned in the construction field and has owned construction

companies.”) USA notes that Watkins was legal owner of his truck, did not buy it from USA

or make truck payments to USA, and had previously purchased other trucks while working

as an independent contractor for different motor carriers. USA asserts that owning his truck

enabled Watkins to care for it in such a manner as to maximize profit, that he knew what he

was doing, that he did not want to be a company driver, and that he was successful.

       The Commission determines the weight to be given various factors in determining

whether an injured person is an employee or an independent contractor for purposes of

workers’ compensation coverage. Grady v. Estate of Smith, 2011 Ark. App. 568, 385 S.W.3d

854. The principal factor in determining whether the relationship is one of agency or

independent contractor is the right of control. D.B. Griffin Warehouse, Inc. v. Sanders, 336

Ark. 456, 986 S.W.2d 836 (1999). On the issue of control, our supreme court has stated:

       The governing distinction is that if control of the work reserved by the employer is
       control not only of the result, but also of the means and manner of the performance,
       then the relation of master and servant necessarily follows. But if control of the means
       be lacking, and the employer does not undertake to direct the manner in which the
       employee shall work in the discharge of his duties, then the relation of independent
       contractor exists. [Citations omitted.]

Ark. Transit Homes, Inc. v. Aetna Life & Cas., 341 Ark. 317, 321, 16 S.W.3d 545, 547 (2000).

       It was up to the Commission to interpret the evidence before it and to weigh the

various factors in the relationship between USA and Watkins.              It was within the

Commission’s power to conclude that, under the facts and circumstances of this case, the most

                                              9
                                 Cite as 2013 Ark. App. 444

important factor was Watkins’s owning his truck. The Commission reasoned that Watkins’s

relationship with USA enabled him to “take advantage of his experience and his ownership

of the truck and efficiently control his gas usage, maintenance and time to create more money

earning opportunities for himself.” The Commission noted that he had terminated a

relationship with a previous employer due to a disagreement and that his contract with USA

allowed him—had he chosen to quit carrying loads for USA—to give thirty days’ notice, take

his truck, and find another carrier in the marketplace to engage in the same type of over-the-

road truck-driving activities.

       We hold that the decision of the Commission displays a substantial basis for the denial

of Watkins’s claim that he was an employee rather than an independent contractor.

Accordingly, his claim for related benefits is moot.

       Affirmed.

       PITTMAN and WYNNE, JJ., agree.

       The McNeely Law Firm, PLLC, by: Steven R. McNeely, for appellant.

       Cross, Gunter, Witherspoon & Galchus, P.C., by: R. Scott Zuerker, for appellee.

                                             10