WILLIAM A. SCHULTZ, Appellant, v. ANDY & STEVE’S LAWN & LANDSCAPE and AUTO OWNERS INS. CO., Employer-Insurer/Respondents and REGIONS HOSP., Intervenor.

The injured worker appeals the compensation judge’s finding that he was an independent contractor, and not an employee, at the time of his injury on November 1, 2017.  We vacate and remand, in part, and reverse, in part.

For decades, William Schultz (Schultz) worked as a tree trimmer, sometimes for a company and sometimes on his own.  Prior to 2013, Schultz retired.  In April 2013, he re-entered the job market and found a tree trimming job with Andy & Steve’s Lawn and Landscaping.  After trimming trees for Andy & Steve’s for four years, Schultz suffered a catastrophic spinal cord injury while felling a tree for the owner of Andy & Steve’s.  As a result, Schultz became paraplegic with a loss of all sensation below the waist.  He made a claim for workers’ compensation benefits which was denied by Andy & Steve’s and its insurer based on their assertion that Schultz was an independent contractor and not an employee.

The relationship between Schultz and Andy & Steve’s and its owner began in April 2013.  Schultz needed extra income and responded to an ad for a tree trimmer which had been placed by the owner of Andy and Steve’s.  In his response, Schultz offered that he had years of tree-trimming experience as an employee and as a “sub” for small companies.  He wrote that he was skilled, would trim to the customer’s or the employer’s wishes, and followed instruction.  He said that he would work part time or full time and agreed on hourly pay.  The owner replied by email that his landscape company received customer requests for tree trimming and he wanted to offer that service to them.  He added, “it would be a lot of work to add you on as an employee just for a couple jobs a month . . . but I wouldn’t want . . . to just hire you as a cash employee just because of the liability involved since it is a dangerous job.  Would you work as a sub-contractor with your own insurance?  If so, what would your hourly rate be?”  He explained that the “way I picture it is I would bid out the jobs, get them, hire you hourly as a contractor to do the work, have my crew on the ground to support you with the dump trailer and their own chainsaws.  You provide any chainsaws or supplies you need to do the work and you just tell me which types of trees are not doable without a bucket.”  Schultz responded, “Sub-contractor would work for me.”  (Ex. A.)

On May 6, 2013, Schultz and the owner signed an “Independent Contractor Release, Waiver of Liability and Covenant Not to Sue” document, which read:

Schultz testified that he did not obtain insurance, did not know the difference between an independent contractor agreement and an employment agreement, and did not sign another agreement with the owner.  Schultz agreed to accept $25 an hour for pay, which increased to $40 an hour during the several years he trimmed trees for Andy & Steve’s.  The work was seasonal from April to November.  At some point between 2013 and 2017, Schultz did not contact the owner in the spring for work.  During that season, the owner hired another tree trimmer.  When Schultz was interested in working again, he answered another ad for a tree trimmer.  The ad coincidentally turned out to be for work with Andy and Steve’s, and Schultz began accepting work from the owner again.  No new contract was signed.

During his relationship with Andy & Steve’s, no restrictions were placed on Schultz for outside work.  Schultz did not work for the public, did not advertise, and did not have his own crew members.  He carried a card with his name, phone number, and title of “tree trimmer,” but did not pass them out.  He testified that he was not sure how much time he worked side jobs for friends, family or neighbors.  Schultz testified that he exclusively worked for Andy & Steve’s in 2017, the year he was injured.

Andy & Steve’s crew completed the yard cleanup on every job and the crew was available to assist Schultz if needed.  (T. 82.)  Schultz brought his own rope, saddle, harness, and chain saws, which he testified was standard in the tree-trimming industry for safety reasons.  On one occasion, the owner rented a cherry-picking bucket for Schultz.  The owner also supplied trailers, ladders, and ropes for pulling branches.  (T. 145.)

Andy & Steve’s employed five or six seasonal employees as crew members.  Their hourly wage was negotiated at the beginning of each season.  Andy & Steve’s also employed an office manager who testified that there were no records kept of cash payments made to Schultz for tree-trimming work.  Employment records, including payroll and W-2 documents, were maintained for the crew members and workers’ compensation insurance was available for them.

Schultz was assigned tree-trimming jobs from the owner through Andy & Steve’s customers.  The owner would text or email Schultz regarding job specifics, which included the addresses and location of the trees, photos of the trees needing work, and an approximate timeframe for the work depending on the customer’s schedule.  Schultz responded whether he could take the job, and the time that worked best for him.  The owner employed the crew to clean up after the tree-trimming work was completed.  In the event a customer needed additional work done or a new customer was interested in tree trimming, Schultz referred them to the owner.  If a tree-trimming job was modified, Schultz contacted the owner to inform him of the change.

The owner told Schultz to wear an Andy & Steve’s t-shirt when trimming trees for Andy & Steve’s customers.  Schultz’s tree-trimming services were also advertised on Andy & Steve’s company website.  Andy & Steve’s carried general liability insurance in the event of damage to a customer’s property due to Schultz’s tree trimming.

Before tree trimming took place, Schultz met with the crew to discuss specifics.  Crew members worked with Schultz cleaning up the grounds 100 percent of the time, but also helped at times with lower limbs of trees or cutting tree limbs on the ground.  (T. 46, 135.)  Once the tree-trimming work was completed, Schultz contacted the owner to tell him how many hours he had worked.  The owner told Schultz where to pick up the cash payment.  The owner testified that he profited from Schultz’s tree-trimming work.  Schultz testified that he worked weekly for Andy & Steve’s during the season and trimmed at least 300 trees for them between 2013 and November 2017.

In 2017, the owner asked Schultz to fell trees on a property owned by Andy & Steve’s and used for business purposes.  In October 2017, Schultz began removal of 40 trees, and planned to remove a large tree from the property.  The diameter of the large tree’s trunk was two to three feet and the tree stood 30 feet tall.  Schultz testified that the job needed the presence of one of Andy & Steve’s crew.

On November 1, 2017, Schultz began cutting a limb from the large tree on the property before Andy & Steve’s crew member had arrived.  The tree limb hit the ground and rolled onto a platform where Schultz stood.  The force propelled Schultz off the platform and onto the ground where he fractured multiple vertebrae.  As a result of the fall,  he suffered a catastrophic spinal cord injury, and became paraplegic.  The owner hired another tree trimmer to finish removing the large tree from the property.  (T. 150.)

A claim petition was filed for permanent total disability benefits and medical benefits.  The matter was tried on April 5, 2019.  At issue was whether Schultz was an employee of Andy & Steve’s on November 1, 2017, and if so, whether the injury arose out of and in the course of his employment.  The parties stipulated that if Schultz was found to be an employee, that he had been permanently and totally disabled from November 1, 2017, to the present and continuing, and that his medical treatment was reasonable and necessary and causally related.  The compensation judge found that Schultz was an independent contractor at the time of the injury and denied all benefits.  Schultz appeals.

On appeal, the Workers’ Compensation Court of Appeals must determine whether “the findings of fact and order [are] clearly erroneous and unsupported by substantial evidence in view of the entire record as submitted.”  Minn. Stat. § 176.421, subd. 1(3).  Substantial evidence supports the findings if, in the context of the entire record, “they are supported by evidence that a reasonable mind might accept as adequate.”  Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 59, 37 W.C.D. 235, 239 (Minn. 1984).  Where evidence conflicts or more than one inference may reasonably be drawn from the evidence, the findings are to be affirmed.  Id. at 60, 37 W.C.D. at 240.  Similarly, findings of fact should not be disturbed, even though the reviewing court might disagree with them, “unless they are clearly erroneous in the sense that they are manifestly contrary to the weight of evidence or not reasonably supported by the evidence as a whole.”  Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975).

A decision which rests upon the application of a statute or rule to essentially undisputed facts generally involves a question of law which the Workers’ Compensation Court of Appeals may consider de novo.  Krovchuk v. Koch Oil Refinery, 48 W.C.D. 607, 608 (W.C.C.A. 1993), summarily aff’d (Minn. June 3, 1993).

The Minnesota Workers’ Compensation Act covers work injuries suffered by employees and excludes injuries sustained by independent contractors, a designation defined by statute and adopted rules.  Minn. Stat. §§ 176.041, subd. 1(12), 176.83, subd. 11.  Standards used to distinguish between an employee and an independent contractor are set forth in Minn. R. ch. 5224.  The rules include safe harbor criteria for determining employee or independent contractor status for specific occupations.  Minn. R. 5224.0020 to 5224.0312.  If a worker does not meet safe harbor criteria for either an independent contractor or employee status under the applicable rule, a determination is made as described in Minn. R. 5224.0330 and Minn. R. 5224.0340.  See Minn. R. 5224.0010.  The occupation of tree trimmer falls under the rule for laborers, Minn. R. 5224.0110.  Although a contract was signed in 2013 indicating that Schultz was an independent contractor, as a general rule, the “‘nature of the relationship is to be ascertained, not from the label given to it by the parties themselves, but from the consequences which the law attached to their arrangements and to their conduct.’”  Hunter v. Crawford Door Sales, 501 N.W.2d 623, 624, 48 W.C.D 637, 639 (Minn. 1993) (quoting Edelston v. Builders and Remodelers, Inc., 304 Minn. 550, 551, 229 N.W.2d 24, 25 (1975)).

The compensation judge found that Schultz was an independent contractor.  The judge explained that “the relationship as established by Schultz and [the owner] results in much of the safe harbor criteria for both independent contractor and employee being met.”  Instead of specifically analyzing how the facts resulted in both designations being met under the safe harbor rule, the judge moved on to the control factors in Minn. R. 5224.0330 and Minn. R. 5224.0340.  On appeal, Schultz argues that the judge erred in dismissing the safe harbor rules in Minn. R. 5224.0110 as not determinative, but without analysis.  We agree.  We cannot effectively review the judge’s determination that Schultz is an independent contractor without an analysis of each of the criteria in the safe harbor rules of Minn. R. 5224.0110.

A laborer is an independent contractor if all the criteria are substantially met under Minn. R. 5224.0110, subp. 2.  A laborer is an employee if all the criteria are substantially met under Minn. R. 5224.0110, subp. 3.  “If the worker does not meet the criteria for either employee or independent contractor under those rules, a determination of the worker’s status is to be made by applying rules 5224.0330 and 5224.0340.”  Price v. Fox, No. WC10-5230, slip op. at 2 (W.C.C.A. Apr. 4, 2011); see also Minn. R. 5224.0010.

Here, the compensation judge did not specifically apply the evidence to each of the criteria set forth in the rules.  As a result, this court is not able to review this case and determine whether the compensation judge’s decision is supported by the evidence and the rules.  See Price v. Fox, No. WC10-5082 (W.C.C.A. July 21, 2010).  We therefore vacate finding 16 determining Schultz was an independent contractor.  We remand to the compensation judge for application of each of the criteria under Minn. R. 5224.0110 to the facts in this matter in order to determine whether either of the safe harbor rules were met on November 1, 2017, when Schultz was injured, before proceeding to consideration and analysis of specific criteria in rules 5224.0330 and 5224.0340.

Because it is not supported in the record, we also reverse that part of finding 10 in which the judge found that Schultz performed 20 percent of his tree-trimming work for relatives and neighbors.  At the hearing, Schultz was asked to assign a percentage of his income derived from sources outside of Andy & Steve’s, not a percentage of time spent performing tree-trimming work for others.^[1]  Schultz testified that he had a job cutting grass for a golf course.  (T. 76.)  Schultz also testified that in the year he was injured, he worked exclusively for Andy & Steve’s.  (T. 106.)  There was no other evidence to support the finding regarding the amount of tree-trimming work Schultz had done for others.  We reverse that part of finding 10 as not supported by substantial evidence.