ADAM WERNEKE (minor) by MATTHEW WERNEKE, Employee, v. LAKESIDE LAWN AND LANDSCAPE, INC., and INTEGRITY MUT. INS./COMPCOST, INC., Employer-Insurer/Appellants, and TRUSTMARK LIFE INS. CO., Intervenor.
WORKERS= COMPENSATION COURT OF APPEALS
JULY 21, 2005
EMPLOYMENT RELATIONSHIP - AUTHORITY TO HIRE. Where the employer had in fact made his son foreman of the lawn mowing division of the employer=s landscaping business, where the son=s foreman role was known and evident to the fifteen-year-old injured purported employee, and where the foreman/son=s statements and actions would reasonably lead the injured purported employee and his parents to believe that the foreman/son had intention and authority to hire the purported employee for his mowing crew, the compensation judge=s conclusion that the owner=s conduct was sufficient to clothe his son in apparent authority to hire for his crew was not clearly erroneous and unsupported by substantial evidence.
EMPLOYMENT RELATIONSHIP - DEEMED EMPLOYER. Where acknowledged employees on the employer=s lawn-mowing crew were also, like the claimant, social friends as well as working associates of the crew=s foreman, where the claimant was expressly called and invited to work and directed to report at the employer=s usual 7:30 a.m. starting time on the date of his injury, where the claimant was given by the foreman a time sheet to complete at the end of the pay period, where the claimant was clearly needed by the employer to fill out the crew on which he worked, where the claimant performed the same tasks that other members of the crew performed, and where the claimant=s work was an obvious benefit to the employer, the compensation judge=s conclusion that the claimant was working under an implied contract for hire at the time of his injury was not clearly erroneous and unsupported by substantial evidence.
Determined by: Pederson, J., Johnson, C.J., and Rykken, J.
Compensation Judge: Gary Hall
Attorneys: Michael F. Scully, Sieben, Grose, Von Holtum & Carey, Minneapolis, MN, for the Respondent. Janet Monson, Aafedt, Forde, Gray, Monson & Hager, Minneapolis, MN, for the Appellants.
WILLIAM R. PEDERSON, Judge
Lakeside Lawn and Landscape, Inc., and Integrity Mutual Insurance/CompCost, Inc., appeal from the compensation judge=s finding that Adam Werneke was an employee of Lakeside Lawn and Landscape, Inc., on June 16, 2003. We affirm.
On June 16, 2003, fifteen-year-old Adam Werneke [Adam] drove an all-terrain vehicle [ATV] into a tree and sustained a severe head injury with resulting cognitive deficits. Adam, through his father Matthew Werneke, subsequently filed a claim for workers= compensation benefits, alleging that at the time of his accident he was an employee of Lakeside Lawn and Landscape, Inc. [Lakeside]. Lakeside denied that Adam was its employee, and the dispute was heard by a compensation judge on September 8, 2004. Adam had no memory of the accident or of the facts surrounding it and therefore did not testify or appear at the hearing. Testimony was offered by Adam=s parents, Matt Werneke and Debra Mikesh, and by Lakeside=s owner Bruce Zeman, its office manager Bob Horn, and Mr. Zeman=s son, Tom Zeman. At trial, the parties agreed that the essential issue was whether Adam was an employee of Lakeside on June 16, 2003. The parties agreed also that, if Adam was Lakeside=s employee, Adam=s injuries arose out of and in the course of the employment and Athe disputed rehabilitation consultation, the claim for Temporary Total Disability benefits, the claimed medical expenses, and the intervenor claims, are compensable under the Workers= Compensation Act.@
Lakeside is a seasonal business providing landscape design, installation, and maintenance services in the Pequot Lakes area near Brainerd, Minnesota. Bruce Zeman [Mr. Zeman] has been the sole owner and president of Lakeside since 1982. He employs roughly a dozen seasonal employees, including his son Tom Zeman [Tom], who during the 2002 and 2003 seasons was Lakeside=s lawn maintenance foreman. The lawn maintenance crew operates separately from the landscape design and installation crews. Job duties include mowing, trimming, and general clean-up, as well as raking and tilling beaches. As supervisor of the lawn crew, Tom was given considerable independence and responsibility by his father. He supervised the crew, scheduled and directed the work, and submitted a weekly time sheet to the business office for client billing purposes. Customers are generally long-term clients of the company, but Tom also prepared estimates and bids for new clients subject to his father=s approval.
Mr. Zeman and Tom had discussed expanding the lawn service in 2003 to include two two-man crews, and to start the season that year the lawn service included Tom, Nick Diederich, Pat Johnson, and Coddy Stieve. Nick, Pat, and Coddy were all Tom=s friends and had been hired by Mr. Zeman following a referral from Tom. Adam and Tom were also friends, and by the spring of 2003 they had known each other for about five years. Adam and his family resided in Maple Grove, Minnesota, but also owned lake property in Pequot Lakes. Adam had met Tom through Coddy Stieve while spending time at the family lake cabin. On several occasions prior to the 2003 season, Adam had asked Tom about employment with Lakeside, and Tom had evidently told Adam that they could not use him until he turned sixteen and was old enough to operate the power equipment. Tom had also mentioned Adam to his father, who had evidently replied that Adam should stop in and fill out an application when he was sixteen. Adam=s sixteenth birthday was not until July of 2003. Tom would turn twenty-one the following month.
As owner and president of Lakeside, Mr. Zeman generally made all final decisions on questions affecting his business, including all new hires. Lakeside=s general policy was not to hire employees under the age of sixteen. The policy came about because of a prior unsatisfactory experience with a younger employee and because of insurance restrictions on individuals under sixteen using power equipment. Prospective employees were normally asked to complete a written application for employment and were then interviewed personally by Mr. Zeman. Tom=s usual participation in the hiring process consisted of referring friends to his father along with a recommendation. Prior to June 16, 2003, Adam had neither completed an employment application nor been interviewed by Mr. Zeman.
Adam worked for Tom on Lakeside=s lawn maintenance crew on at least two occasions prior to the date of injury. The first of these was Memorial Day weekend of 2003. By that time, Coddy Stieve had evidently left the crew. When he left his house Saturday morning of that weekend, Adam evidently informed his mother that he was going to work for Tom for the day. Later that weekend, Tom evidently told Adam, AI will get you your money for working this weekend next time I see you.@ Adam spent about three hours raking a beach for one of Lakeside=s clients that weekend, for which he was paid $20.00 in cash out of Tom=s own pocket. About a week later, Tom stopped by Matt Werneke=s place of business in Nisswa, Minnesota, where he advised Mr. Werneke that Adam would have a job and asked what Adam=s schedule was going to be like for the summer, wondering if Adam was going to be at the lake enough to be part of the lawn crew. Tom subsequently testified that he anticipated using Adam at least on the three days each week that the crew typically mowed and raked beaches - - Wednesdays through Fridays. Adam=s parents were in the final stages of a divorce at that time, Adam had not yet finished the school year, and Mr. Werneke indicated that Adam=s schedule was still Aup in the air.@
Tom and Mr. Werneke spoke again by phone on Thursday, June 12, 2003, regarding Adam=s availability for work. Mr. Werneke, who was at his home in Maple Grove, told Tom that Adam would be at the cabin the following day and that he would likely be available on Friday through the following Tuesday. On Friday morning, June 13th, Tom again called Mr. Werneke to determine Adam=s availability for work that day. Adam was helping his dad to unpack, but Mr. Werneke agreed to drop Adam at the Lakeside shop by 12:30 p.m. Adam then worked the remainder of Friday afternoon until 5:30 p.m. At the end of the day, Tom gave Adam a company time sheet to fill out, so that he could get paid for his time. Adam completed the sheet, indicating that he worked on lawns for three of Lakeside=s clients from 12:30 to 5:30 p.m. Tom submitted Adam=s time sheet to the office with the week-ending time sheets submitted by other Lakeside employees.
On the weekend of June 14 and 15, Adam and Tom spent time together at a wakeboarding tournament on Gull Lake. On Sunday afternoon, Tom asked Adam to report to work the following day at 7:30 a.m. Adam spent Sunday night with his mother and advised her that he would be working the next day.
As requested, on Monday, June 16, 2003, Adam arrived at Lakeside=s shop at 7:30 a.m. Bob Horn, Lakeside=s office manager, having noticed Adam=s time sheet from the previous Friday, handed Adam a W-4 form with instructions to take it home and have his parents help him to fill it out. At that point, Mr. Horn did not know whether Adam had been hired, although Mr. Zeman had made him aware that Tom had a friend who wanted to work that season for Lakeside=s lawn crew. Adam later showed Tom the W-4, and Tom also told him to take it home and fill it out.
On Mondays, the Lakeside lawn crew typically spends part of the day maintaining the mowing equipment. Adam observed and performed some of the work. After the morning coffee break, Tom directed Pat and Adam to travel to a customer=s home to mow and trim. This particular job was apparently a one-time job and not a job for one of Lakeside=s regular customers. Tom had made the decision to accept the job on behalf of Lakeside, and he directed Pat to do the mowing and to have Adam do the trimming. Tom and Nick continued working in the shop. While Pat and Adam were away from the shop, Mr. Zeman evidently stopped by to show Tom a clean-up job that he wanted the crew to perform around a nearby storage building that the company was purchasing. After the lunch hour, upon Pat and Adam=s return, Tom directed Pat, Nick, and Adam to trim and rake around the storage building. Adam worked at this task until about 3:00 p.m., when Tom stopped by on his ATV to pick up Adam for a beach raking job. Tom and Adam drove back to the shop, where they proceeded to load the tractor onto the trailer and to chain it down. Tom evidently discovered that they were missing a rake, and he and Adam decided to drive the ATV to a previous job site to retrieve it. Adam drove the ATV, and Tom rode on the rear fender. On the way to get the rake, Adam lost control of the ATV and struck a tree, sustaining the severe head injury that is the subject of this litigation.
At trial, Mr. Zeman testified that he had never met Adam prior to the accident and that Adam had not completed an application or interview. He testified that he was the only person at Lakeside who was authorized to hire employees for the company and that he never delegated this authority, to his son Tom or to anyone else. Mr. Zeman testified also that he was not aware that Adam had worked with Tom on Memorial Day weekend, on June 13th, or on June 16th until after the accident. Lakeside has not paid Adam for any work performed. Adam=s parents both testified that they did not have any knowledge about Lakeside=s business procedures but were under the clear impression that Tom had hired Adam to work on the lawn crew.
In a Findings and Order issued October 13, 2004, the compensation judge determined that Adam was Lakeside=s employee on the date of his injury, and, based on the parties= stipulation that the injury therefore arose out of and in the course of the employment, awarded the benefits claimed. Lakeside and its insurer appeal.
STANDARD OF REVIEW
In reviewing cases on appeal, the Workers= Compensation Court of Appeals must determine whether Athe 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 (1992). Substantial evidence supports the findings if, in the context of the entire record, Athey 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, A[f]actfindings are clearly erroneous only if the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed.@ Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975). Findings of fact should not be disturbed, even though the reviewing court might disagree with them, Aunless they are clearly erroneous in the sense that they are manifestly contrary to the weight of the evidence or not reasonably supported by the evidence as a whole.@ Id.
AA claim for compensation under the Work[ers=] Compensation Act may be sustained only where an injury arises out of service performed pursuant to a contract for hire, express or implied, and not as a volunteer worker.@ Holm v. H&S Asphalt Co., 283 Minn. 330, 331, 167 N.W.2d. 743, 744 (1969); see also Preese v. Boy Scouts of America, 283 Minn. 284, 167 N.W.2d. 737 (1969). Minnesota Statutes ' 176.011, subdivision 9, defines an Aemployee@ as Aany person who performs services for another for hire.@ Subdivision 10 of that same section defines Aemployer@ as Aany person who employs another to perform a service for hire.@ In the present case, the compensation judge concluded first of all that Tom Zeman had authority to hire Adam on behalf of Lakeside - - that, although he may not have had Aactual@ authority to do so, Tom did have Aapparent@ or Aostensible@ authority to hire on behalf of his employer. The judge then concluded also that Adam had actually been hired by Tom and was working under an implied employment contract and not as a volunteer at the time of his injury.
Lakeside and its insurer=s appeal challenges primarily the judge=s determination that Tom had apparent authority to hire Adam on behalf of Lakeside. AWhether an agent was clothed with apparent authority to act as he did is a question for the trier of fact.@ Hagedorn v. Aid Ass'n for Lutherans, 211 N.W.2d. 154, 157 (Minn. 1973), citing Gulbrandson v. Empire Mut. Ins. Co., 251 Minn. 387, 87 N.W.2d 850 (1958). Therefore, the issue for this court is whether the judge=s finding of apparent authority in this case is supported by substantial evidence in view of the entire record as submitted. Minn. Stat.' 176.421, subd. 1.
Apparent authority, as distinguished from actual authority, is Aauthority which the principal holds the agent out as possessing or knowingly permits the agent to assume.@ Tullis v. Federated Mut. Ins. Co., 570 N.W.2d. 309, 313 (Minn. 1997). In Hagedorn v. Aid Ass'n for Lutherans, 211 N.W.2d 154 (Minn. 1973), the Minnesota supreme court, citing an earlier decision of that court, quoted with approval Restatement, Agency 2d, ' 27, as providing in part as follows:
[A]pparent authority to do an act is created as to a third person by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him.
Hagedorn, 211 N.W.2d. at 158. Later in that decision, the court, this time quoting from Restatement, Agency ' 49, Comment c, noted the following:
Acts are interpreted in the light of ordinary human experience. If a principal puts an agent into, or knowingly permits him to occupy, a position in which according to the ordinary habits of persons in the locality, trade or profession, it is usual for such an agent to have a particular kind of authority, anyone dealing with him is justified in inferring that he had such authority in the absence of reason to know otherwise.
In Pfeil v. Worthington Lady Elks Lodge #2287, 260 N.W.2d. 576, 30 W.C.D. 169 (Minn. 1977), the supreme court found that the Lady Elks were so closely identified with the Elks that the activities undertaken by the Lady Elks, including the hiring of the claimant to clean the Elk=s kitchen, was done for and on behalf of the Elks. Pfeil v. Worthington Lady Elks Lodge #2287, 260 N.W.2d. 576, 578, 30 W.C.D. 169, 172 (Minn. 1977). The court concluded that the Elks had in effect clothed the Lady Elks with the apparent authority to hire the claimant. Id. The court explained, ADespite the fact that both the Elks and the Lady Elks understood that the two organizations were formally distinct and separate, claimant did not so understand, and it is unlikely that the public in general did either.@ Id.
In the instant case, the judge found that Tom, as the owner=s son and foreman of the lawn crew, had apparent authority to act on behalf of the company with regard to pre-employment activities and hiring. Lakeside and its insurer contend that the judge=s finding of apparent authority based on the mere presence of a family relationship and a supervisory position is overly simplistic and falls far short of satisfying the essential elements necessary for apparent authority. Citing as authority the supreme court=s decision in Hockemeyer v. Pooler, 268 Minn. 551, 130 N.W.2d. 367 (1964), they argue that apparent authority requires the presence of the following three specific key elements:
The principal must have held the agent out as having authority, or must have knowingly permitted the agent to act on his behalf; furthermore, the party dealing with the agent must have actual knowledge that the agent was held out by the principal as having such authority or had been permitted by the principal to act on its behalf; and the proof of the agent=s apparent authority must be found in the conduct of the principal, not the agent.
Hockemeyer v. Pooler, 268 Minn. 551, 562, 130 N.W.2d. 367, 375 (1964). Lakeside and its insurer contend that Mr. Zeman did not hold Tom out as having authority to hire, that he never knowingly permitted Tom to hire on behalf of the company, that he was a hands-on owner who did not delegate and did nothing to clothe Tom with such authority. It would not be reasonable, they argue, to infer that the twenty-year-old son of the owner, who merely supervised two people on a lawn crew, had apparent authority to hire. We are not persuaded.
As we have often noted, it is not this court=s function to assess whether substantial evidence might support a factual conclusion contrary to that reached by the compensation judge; the court=s function on factual review is only to assess whether substantial evidence exists to support the conclusion actually reached by the judge. Land v. Washington County Sheriff=s Dep=t, slip op. (W.C.C.A. Dec. 23, 2003). See also Ludford v. Honeywell, Inc., slip op. (W.C.C.A. Mar. 17, 2004); Moe v. Dr. Matthew A. Gahn, slip op. (W.C.C.A. Dec. 31, 2003); Redgate v. Sroga=s Standard Serv., 421 N.W.2d. 729, 734, 40 W.C.D. 948, 957 (Minn. 1988) (Awhether [the appellant court] might have viewed the evidence differently is not the point, but whether the findings of the compensation judge are supported by evidence that a reasonable mind might accept as adequate@). In this case, we conclude that there is substantial evidence in the record to support the judge=s finding of apparent authority.
What is critical for a finding of apparent authority, and is consistent with Hockemeyer, is that the principal must hold the agent out as having authority - - not necessarily authority to perform a specific act, but general authority to act on behalf of the principal. We would note at the outset of our analysis here that the employer, being an small seasonal business, did not have any formal written policies for hiring. It is undisputed that Mr. Zeman placed his son Tom in the position of foreman of the lawn maintenance portion of Lakeside=s business, and this may reasonably be considered to be a visible position of authority within such a small company. The principal factual determination for the judge here was whether a third person would be justified in inferring that Tom=s position clothed him with authority to hire new members of his crew. While there is no evidence that Tom ever told Adam that he had authority to hire him, there is no evidence that he ever told Adam that he didn=t have such authority. Once Tom had been placed by his father in his position of authority, Tom=s actions, in the absence of reason to infer otherwise, would reasonably lead Adam, and for that matter his parents, to believe that Tom had authority to hire his crew. At the time when Adam began working for Tom, in particular on June 13 and 16, it is only reasonable to infer that Adam, through his friendship with Tom, knew that Tom was in charge of the lawn crew. Further, in that lawnwork crewmembers Nick, Pat, and Coddy were all also friends of Tom, it would also be only reasonable for Adam to infer that Tom had been instrumental in those crew members= hiring. Moreover, Tom even advised Adam=s father that Adam had a job on the crew, and he specifically called Adam to work on June 13, and he directed him to show up for work at 7:30 a.m. on June 16. At that point, Bob Horn even gave Adam a W-4 form to fill out. Under the facts presented here, we cannot imagine that a fifteen-year-old boy would even consider questioning Tom=s authority to hire him. We acknowledge that there is no evidence that Mr. Zeman granted Tom actual or implied authority to act on behalf of Lakeside, but actual or implied authority is not the claim of the employee. That claim is apparent authority. We believe that the judge could reasonably conclude that Mr. Zeman=s conduct was sufficient to clothe Tom in apparent authority to hire an employee for the crews that he supervised. Accordingly, we affirm the judge=s determination on this issue.
After concluding that Tom had the authority to hire Adam, the judge concluded that A[Tom=s] actions prior to the date of injury were consistent with, and constituted, an implied employment contract between Lakeside and Adam.@ He found that Adam=s work activities as part of the lawn crew benefited Lakeside, noting that Adam was being paid cash by the owner=s son. On that basis, he concluded that Adam was an employee of Lakeside at the time of his injury. Lakeside and its insurer argue that an injury, to be compensable, must arise out of service performed pursuant to a contract for hire and that the relationship between Tom and Adam was only a friendship, not an employer-employee relationship. They contend that Adam was simply Ahelping out Tom@ and that, while Tom may have benefited by Adam=s help, there was no obvious benefit to Lakeside. Having Adam=s help, they argue, simply meant that Adam and Tom could take off earlier on the boat. After Adam=s work on Memorial Day weekend, Tom gave Adam $20.00 out of his own pocket, and, after his work on June 13, the two of them spent the weekend on the boat. This arrangement, Lakeside and its insurer contend, was simply a transaction between two friends, not an employment relationship between Adam and Lakeside. They argue further, based on the testimony of Tom and Mr. Zeman, that Adam was not actually needed on any of the days he worked. Moreover, they assert, if Adam truly thought that Tom had hired him, he would have spent many more hours working before June 16 and received much more than $20.00 in cash and a free ride on a motorboat. They argue that, considering the foregoing, as well as the facts that Adam did not complete an application, that Lakeside has no payroll record for him, that Mr. Zeman was unaware of any cash payment to him, and that Mr. Zeman was unaware that Adam had ever worked on any of the three days, there is no substantial evidence to conclude that Adam was working under any contract of hire with Lakeside, either express or implied. We are not persuaded.
We acknowledge that an injury is compensable under Minnesota law only if it arises out of a contract for hire, but such a contract for hire may be either express or implied. See Phillips v. Murphy Finance Co., 291 Minn. 182, 184, 189 N.W.2d 710, 712, 26 W.C.D. 29, 31 (1971), citing Holm v. H & S Asphalt Co., 283 Minn. 330, 167 N.W.2d 743 (other citations omitted). While Adam was indeed a friend of Tom, so too were Pat and Nick friends of Tom. Adam performed the same tasks that other members of the crew performed, and there is no basis to suppose that Adam was merely tagging along with the lawn crew out of his friendship with Tom while the others were employed. Adam did not simply appear on the scene on June 13 and 16; he was called to work on the 13th and directed to report at the company=s usual 7:30 a.m. starting time on Monday the 16th. According to Adam=s time sheet, given to him by Tom, the crew did not take off earlier on the 13th. They worked until 5:30 p.m. Although there is testimony that Adam was not needed by Lakeside, we note that it was Tom who called Mr. Werneke on the 12th and 13th to check on Adam=s availability, that the lawn crew was short one person at the time Adam was invited to work, and that the lawn crew was working substantial overtime about that time. Nor is there any basis for supposing that Adam, if he was actually employed at the time of his injury, should somehow have been working prior to June 13, 2003, given the fact that Adam had just recently finished his high school year a few days earlier. Finally, Tom=s giving Adam the time sheet is evidence that there was an expectation of payment by both sides, and Adam=s work for at least five of Lakeside=s customers, together with his work around the storage facility, was an obvious benefit to Lakeside.
Judicial definition of an employment relationship has been shaped by reference to such familiar factors as hiring and discharge, payment of compensation, furnishing of materials or tools, control of premises where the work is done, and right to control the means and manner of performance. See Phillips, 291 Minn. at 184, 189 N.W.2d at 712, 26 W.C.D. at 31. Viewing the record in its entirety, we find in this case ample evidence of an employment relationship in light of these factors, including evidence of an implied contract for hire. Because there exists substantial evidence in the record to support the judge=s findings of apparent authority to hire and of an implied contract for hire, we affirm the judge=s determination that Adam was an employee of Lakeside on June 16, 2003. See Hengemuhle, 358 N.W.2d at 59, 37 W.C.D. at 239. The award of benefits is affirmed.
 At the time of trial, Adam=s medical expenses totaled $526,720.71.
 Duluth Herald & News Tribune v. Plymouth Optical Co., 286 Minn. 495, 176 N.W.2d. 552 (1970).
 See Phillips v. Murphy Finance Co., 291 Minn. 182, 184, 189 N.W.2d 710, 712, 26 W.C.D. 29, 31 (1971).
 According to Respondent=s Exhibit 4, Lakeside=s payroll register, Tom, Pat, and Nick all averaged more than sixteen hours per week in overtime between May 19 and June 27, 2003.