Court Opinion

ID: 9788831
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:19:36.04588+00
Date Added: 2024-06-11T15:43:01.482606
License: Public Domain

JUSTICE RICE
specially concurring.
¶48 I concur with the Court’s essential holding: that the Certificate of Independent Contractor Exemption issued by the Department of Labor and Industry to Kelly Wild was insufficient to exempt Wild from workers’ compensation benefits. However, my reasons for this conclusion are much different than those relied upon by the Court, and I dissent from the Court’s statutory interpretation. I conclude that the Department’s certification process did not provide to Fregein Roofing the conclusive determination of Wild’s status that the legislation intended.
¶49 Section 39-71-401, MCA, provides that a person “who represents to the public that the person is an independent contractor” may apply to the Department for “an exemption from the Workers’ Compensation Act.” Section 39-71-401(3)(a), MCA. If, “in accordance with the rules adopted” by the Department, the Department approves the application, the approval is to be “conclusive as to the status of an independent contractor.” Section 39-71-401(3)(c), MCA. That status precludes the applicant from obtaining workers’ compensation benefits, because the Department’s certification exempts the applicant from the Act.
¶50 The purpose of this determination is to eliminate the need for a hiring agent to make the complex inquiry about an exemption-holder’s status as an independent contractor. No second guessing is necessary-the holder possesses a written certificate from the Department which conclusively establishes his status. That “settles” the issue. However, in this case, the Department’s approach to the exemption statute, by its regulations and the issuance of the independent contractor certificate, has not implemented the underlying purpose of the statute.
¶51 The Certificate of Independent Contractor Exemption issued to Kelly Wild by the Department did not conclusively determine that Wild was an independent contractor who was exempt from coverage *439under the Act. It merely certified that Wild swore that he was independently engaged in an established trade, and then placed the duty of determining whether Wild was actually an independent contractor-the Department’s duty under the exemption application process-squarely on the employer. Wild’s Certificate states, in part:

This certificate does not relieve the hiring agent of its responsibility for establishing that a person is an independent contractor.

The law defines an independent contractor as one who renders services in the course of an occupation and:
a. has been and will continue to be free from control or direction over the performance of the services, both under the contract and in fact; and
b. is engaged in an independently established trade, occupation, profession, or business.
If an individual does not pass both tests, the employer must ensure workers’ compensation coverage exists prior to hiring. If a hiring agent questions a workers’ status, they may contact the Department of Labor and Industry, Independent Contractor Central Unit at (406) 444-1446.
NOTICE: Montana law prohibits an employee from waiving his/her rights under the workers’ compensation and unemployment insurance law. An employer who purposely avoids his/her responsibility to provide workers’ compensation insurance and unemployment insurance for employees may be committing employer misconduct, a felony, punishable by up to 10 years in prison and/or a $50,000 fine.
(Emphasis added.) Thus, the burden placed upon the Department by the Legislature was entirely passed on to the employer. The employer gained nothing by the Department’s issuance of the exemption certificate-Fregein Construction was under the same duty to determine whether Wild was an independent contractor as it was without a certificate. Absolutely nothing about Wild’s status had been determined by the Department. The only thing the Department’s certificate accomplished was to advise a potential hiring agent that the exemption-holder claimed to be an independent contractor, something Wild himself could have represented to Fregein-without paying an application fee. The conclusive determination of Wild’s status, upon which an employer could rely, was to occur when the Department approved an “exemption from the Workers’ Compensation Act.” Section 39-71-401(3)(a), MCA. However, although the Department issued a *440“certificate,” it failed to affirmatively approve an exemption.
¶52 This is not a conflict between a statute and an administrative regulation which can be remedied by holding that the statute must prevail. Because the Department possesses the expertise to make independent contractor determinations, the Legislature sought to employ that expertise to define the working relationship in advance of its commencement. However, this was not done. The Department, whether by reason of budgetary limitation or interpretational error, did not implement the conclusive determination which the statute intended. In fact, the Department’s certificate warned Fregein Roofing to make its own decision about the issue, and advised that Fregein could face penalties if the decision was wrong.
¶53 In my view, the Court’s analysis of whether the statutes either conclusively preclude an employer from engaging, or require an employer to engage, in a factual inquiry about a holder’s status is erroneous. The Court’s interpretation of § 39-71-401(3), MCA, renders it meaningless. There is no conflict between § 39-71-401(3), MCA, and § 39-71-120, MCA. For purposes of the exemption at issue here, the latter statute’s definition of independent contractor is to be applied by the Department when determining whether an applicant qualifies for an exemption. After the Department issues a certificate, the employer does not commence the inquiry all over again but, rather, is entitled to rely on the Department’s determination. Otherwise, the certificate, and the statute, accomplish nothing. Neither does § 39-71-401(3), MCA, conflict with the policy objectives set forth in § 39-71-105, MCA. An independent contractor can legitimately opt out of workers’ compensation coverage and waive available benefits because he is not an employee.
¶54 For these reasons, I dissent from the Court’s rationale, but concur in Court’s holding.
CHIEF JUSTICE GRAY joins in the concurring opinion of JUSTICE RICE.