RICHARD J. ROCHEFORD, Employee/Appellant, v. VELOCITY EXPRESS and ST. PAUL TRAVELERS, Employer-Insurer, and UNIVERSITY OF MINN. PHYSICIANS, FAIRVIEW HEALTH SERVS., MN DEP=T OF LABOR & INDUS./VRU, and MEDICA HEALTH PLANS/INGENIX, Intervenors.
WORKERS= COMPENSATION COURT OF APPEALS
SEPTEMBER 12, 2006
File No. WC06-160
EMPLOYMENT RELATIONSHIP - INDEPENDENT CONTRACTOR. The compensation judge erred in failing to analyze the facts of this case in light of the applicable independent contractor rules and erred in concluding that the employee=s past status as an independent contractor meant that the employee was an independent contractor on the date of his injury.
Vacated and remanded.
Determined by Wilson, J., Johnson, C.J., and Rykken, J.
Compensation Judge: Danny P. Kelly
Attorneys: James A. Reichert, Minneapolis, MN., for the Appellant. Barbara L. Heck, St. Paul, MN., for the Respondents.
DEBRA A. WILSON, Judge
Richard Rocheford appeals from the compensation judge=s finding that he was an independent contractor at the time of his September 16, 2003, injury. We vacate and remand for further proceedings.
On June 16, 2003, Richard Rocheford [Rocheford] entered into an Independent Contractor Agreement with Velocity Express [Velocity], wherein he agreed to perform delivery services as an independent contractor. In a separate vehicle lease agreement with Velocity, Rocheford agreed to lease his Plymouth Acclaim to Velocity for use in deliveries. The Independent Contractor Agreement provided that Rocheford was responsible for all operating costs and maintenance of any vehicle used in performance of his services, including fuel, repairs, supplies, and insurance. The agreement also provided that, in the event that Rocheford could not or did not furnish his own vehicle, Velocity could provide an appropriate vehicle for Rocheford to use on a temporary basis. In such circumstances, a vehicle lease agreement was to be signed and there would be a Asettlement deduction for rental.@ The agreement further provided that Rocheford would remain liable for the expenses of operation, including fuel.
Rocheford received a 61% commission from the charge Velocity billed to the customer. Velocity made no withholding for income tax or social security from the commission paid. Rocheford was free to set his hours of availability for delivery services.
During the first three months of his work for Velocity, until September 16, 2003, Rocheford always drove his own vehicle. He was free to accept or decline work, to determine the details and means of performing the deliveries he accepted, to set his hours of availability, and to determine the actual routes he would drive. He also assumed the risk for profit or loss in his delivery business. Rocheford has stipulated that he was an independent contractor from June 16, 2003, up to September 16, 2003.
On September 16, 2003, Velocity had a pending delivery request for a pick up at Marshall Fields in Minneapolis with a delivery to a Target warehouse. Velocity had been unable to find a driver to make this delivery, and the delivery was running two hours late. Rocheford was called and offered the use of one of Velocity=s large vehicles to make this pick up and delivery. He accepted. He did not sign a vehicle lease agreement for the use of Velocity=s vehicle. Velocity provided him with a Velocity fuel card, which he used to purchase gas for the vehicle.
Rocheford fell during the loading process at the Marshall Fields store, sustaining multiple injuries, but he was able to complete the delivery to the Target warehouse. He returned the truck to the Velocity location and simply left the keys, credit card, and receipt for the fuel inside, as no one was there. He reported his injury in a timely fashion. Rocheford was eventually paid his regular 61% commission for that delivery, without deduction for fuel or vehicle rental.
Rocheford filed a claim petition on December 14, 2004, alleging that he was an employee of Velocity at the time of his September 16, 2003, injury and seeking temporary total and temporary partial disability benefits, payment of medical expenses, and assignment of a QRC. Velocity admitted that Rocheford had been injured as claimed but denied that Rocheford was an employee.
The matter proceeded to hearing on January 25, 2006. In findings and order filed on March 23, 2006, the compensation judge found that Rocheford was an independent contractor at the time of the Marshall Fields/Target delivery on September 16, 2003, and denied the claims for workers= compensation benefits. Rocheford appeals.
STANDARD OF REVIEW
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 (2004). 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, 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.@ Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975).
Both parties rely on Minn. R. 5224.0292, covering AMessengers/Couriers,@ as the applicable rule for determining whether Rocheford was an employee or independent contractor. Minn. R. 5224.0292, subp. 2, provides that a messenger/courier is an independent contractor if all of the following criteria are substantially met:
A. The messenger/courier owns or holds a vehicle under a bona fide lease or leases a vehicle and provides driver services in local or intrastate transportation and interstate commerce the messenger/courier provides the means for the transportation of the property.
B. The messenger/courier is free to accept or reject jobs from a carrier and there is no control over when the individual works.
C. The messenger/courier=s compensation is based on factors related to the work performed including (1) a percentage of any schedule of rates, or (2) a percentage of a lawfully published tariff or (3) is compensated per delivery.
D. All expenses are paid by messenger/courier and the opportunity for profit or loss rests with him or her.
E. The messenger/courier is responsible for the operating costs, including fuel, repairs, supplies, and vehicle insurance.
F. The messenger/courier determines the details and means of performing the services, such as the selection of routes and the order of deliveries.
G. The messenger/courier is responsible for the completion of a specific job and is liable for failure to complete the job.
H. The messenger/courier enters into a contract that specifies the relationship to be that of an independent contractor and not that of an employee.
Rocheford contends that he was not an independent contractor at the time he made the Marshall Fields/Target delivery because he did not use his own vehicle for that delivery and did not enter into a lease to use Velocity=s vehicle, he was directed by Velocity to make the delivery right away, he understood he was going to be paid differently than his usual percentage rate, he did not have the opportunity for profit or loss, he was not responsible for operating costs of the vehicle used in the Marshall Fields/Target delivery, he was not free to determine the order of delivery, and he was not personally responsible to Marshall Fields for the rectification of any error in delivery. It is Rocheford=s position that, because he did not substantially meet all of the criteria for an independent contractor, he cannot be found to be an independent contractor.
Velocity contends that the events of September 16, 2003, Ashould not be taken out of the overall factual context from which they arose.@ Specifically, Velocity argues that there was no actual intent of the parties to change the independent contractor relationship that existed prior to September 16, 2003, and that the events of that one day must be viewed in the context of the Aoverall relationship of the parties as it had existed to that point in time.@ Velocity further contends that Rocheford met all the applicable criteria for independent contractor status on September 16, with the exception of item E. Velocity admits that Rocheford was not responsible for the operating costs of the Velocity vehicle that he was driving on the Marshall Fields/Target delivery.
The compensation judge was persuaded by Velocity=s arguments, finding as follows:
24. It is determined that on September 16, 2003 Mr. Rocheford was an independent contractor making the Marshall Fields/Target delivery using a Velocity Express vehicle. This isolated instance of using a Velocity Express vehicle on the September 16, 2003 Marshall Fields/Target delivery assignment does not negate and transform the entire nature of the relationship knowingly and willingly entered into between Mr. Rocheford and Velocity Express.
25. The specific rules under Minn. Rule 5224.0292 which govern messengers and couriers for a determination of independent contractor status have been substantially met.
The judge offered no analysis of the independent contractor/employee rules with respect to the Marshall Fields/Target delivery, nor did he provide a memorandum with any explanation for his findings.
As we interpret his decision, the compensation judge apparently concluded that, because Rocheford had operated as an independent contractor prior to September 16, 2003, he was operating as an independent contractor at the time of the Marshall Fields/Target delivery. However, the facts of the case require further analysis. While the parties have stipulated that Rocheford was an independent contractor prior to September 16, 2003, Rocheford=s relationship to Velocity may have changed for purposes of the Marshall Fields/Target delivery, and it is the circumstances of the employee=s employment when he was injured that are determinative of his claim for benefits. We therefore vacate the judge=s finding that Rocheford was an independent contractor at the time of the Marshall Fields/Target delivery and remand the case for reconsideration and new findings. Then, depending on the result of the compensation judge=s application of the independent contractor criteria for messengers and couriers, additional analysis may be required.
Both parties acknowledge that, if the safe harbor rules for independent contractor status have not been satisfied, then the safe harbor rules for employee status should be considered. Minn. R. 5224.0292, subp. 3, provides that a messenger/courier is an employee if all of the following criteria are substantially met:
A. The messenger/courier must work during specified hours or an assigned shift.
B. Payment is based solely by the hour or a similar time unit that is not related to a specific job.
C. The company utilizing the service of the messenger/courier reimburses all expenses to the messenger/courier including those contained in the company=s schedule of rates or lawfully published tariffs.
D. The company utilizing the services of the messenger/courier is responsible for providing the vehicle and all of its expenses.
E. There is no investment or opportunity for profit or risk of loss on the part of the messenger/courier.
F. The company utilizing the services of the messenger/courier is responsible for all operating expenses, including fuel, repairs, supplies, and vehicle insurance.
Rocheford contends that he meets all of the criteria for employee status, with the possible exception of the form of payment. Velocity contends Rocheford does not meet the employee safe harbor criteria. Because the compensation judge found Rocheford to be an independent contractor, he did not discuss or apply the employee criteria.
On remand, the compensation judge should make findings as to whether Rocheford substantially meets all the criteria for independent contractor status under Minn. R. 5224.0292, subp. 2, given the facts surrounding the Marshall Fields/Target delivery on September 16, 2003. If he finds that Rocheford does not substantially meet all the criteria for independent contractor status on that date, then the judge should make findings as to the criteria for employee status under Minn. R. 5224.0292, subp. 3. Furthermore, if the compensation judge finds that Rocheford does not meet the safe harbor criteria for either independent contractor or employee status , the judge must evaluate the case using the general criteria, contained in Minn. R. 5224.0320, for determining whether Rocheford is an independent contractor or an employee. See Minn. R. 5224.0010 (A[w]here a worker is within the scope of the definition of a part, but does not meet the safe harbor criteria for either independent contractor or employee status, the determination shall be made as described in part 5224.0320"). Finally, if the judge determines that Rocheford was an employee of Velocity on September 16, 2003, at the time of the Marshall Fields/Target delivery, then he must make findings as to Rocheford=s claims for temporary total disability benefits, temporary partial disability benefits, and medical expenses.
 We take no position on whether or not Rocheford=s relationship to Velocity changed. Rather, we point out that it is possible for such a relationship to change.