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

The injured worker appeals the compensation judge’s findings following a remand in which the compensation judge was asked to analyze the worker’s independent contractor status pursuant to Minn. R. 5224.0110.  We affirm the compensation judge’s determination that the injured worker was an independent contractor.

This matter involves a worker who suffered a catastrophic spinal cord injury on November 1, 2017, while performing tree trimming services on the alleged employer’s premises.

Steven Dick owns and operates Andy & Steve’s Lawn & Landscaping (Andy & Steve’s) which provides mowing, fertilizing, shrub trimming, and spring and fall cleanups.  At no point was tree trimming a significant component of the business.  However, due to occasional requests by customers for tree trimming services, in 2013, Mr. Dick placed an advertisement on Craigslist for a tree trimmer.

William A. Schultz had been a tree trimmer for 40 years and at the age of 61 was looking for part-time work.  He had been both an employee for a large landscape company and a subcontractor.  He responded to the ad.  Communicating through text messages, Mr. Dick and Mr. Schultz agreed that Mr. Schultz would work on an as-needed basis as a subcontractor at the rate of $25.00 per hour.^[1]  There were no assigned hours of work, although tree trimming occurred during daylight hours.  Mr. Dick did not have enough tree trimming prospects to employ a full-time tree trimmer and told Mr. Schultz that he would be unable to pay for insurance for Mr. Schultz.

On May 6, 2013, Mr. Schultz signed an Independent Contractor Release which stated in part that he would provide services as an independent contractor and also certified that he had adequate insurance coverage for any injuries he sustained while providing those services.   Mr. Schultz testified that he did not obtain insurance.  Thereafter, Mr. Dick sent text messages to Mr. Schultz when Andy & Steve’s customers asked for tree trimming services.

Mr. Dick gave Mr. Schultz an Andy & Steve’s shirt to wear when trimming trees for Andy & Steve’s customers because he wanted his customers to not be alarmed by a stranger in their yards.  Between 2013 and 2016, Mr. Schultz performed tree trimming services by responding to emails or text messages from Mr. Dick indicating where a job was located.  Mr. Schultz was free to refuse the work if he was unavailable.  If he was unavailable, Mr. Dick would find another tree trimmer for the job.  Upon finishing the job, Mr. Schultz texted Mr. Dick the number of hours he worked.  Mr. Dick paid Mr. Schultz in cash without deducting payroll or other state or federal taxes.  Mr. Schultz carried cards indicating his name, the fact that he was a tree trimmer, and contact information.  He testified that he did not hand out his cards and did not advertise.

At one point, for a year’s time, Mr. Schultz took a break from tree trimming for Andy & Steve’s.  He did not notify Mr. Dick of his choice to not work, he simply did not respond to Mr. Dick’s inquiries for work.  During that season, Mr. Dick found another individual to trim trees.  Later, Mr. Dick, in need of a tree trimmer, again placed an ad on Craigslist, and again Mr. Schultz responded.  Mr. Schultz had worked other jobs during the time he trimmed trees for Andy & Steve’s.  However, in 2017, he testified that he trimmed trees only for Andy & Steve’s.

Mr. Dick employed six to eight seasonal employees who were paid by check, with taxes deducted.  They wore Andy & Steve’s Lawn & Landscaping shirts, used equipment provided by Andy & Steve’s, punched a clock,^[2] and reported to work at Andy & Steve’s shop around the same time every day.  After the end of their shift, they returned to Andy & Steve’s shop to punch out.  They also rode together in a company truck to various job sites for lawn and landscaping work.  The truck carried lawn mowers and equipment which Andy & Steve’s employees needed to perform their jobs.

In contrast, Mr. Schultz drove his own truck directly to and from a job site, not going to Andy & Steve’s shop, and when finished with the job, he left.  He did not punch a clock.  Having been a tree trimmer for almost 40 years, Mr. Schultz provided his own tools and safety equipment.  Andy & Steve’s employees cleaned the grounds and removed branches and debris after Mr. Schultz completed the job.  Mr. Dick did no inspection of Mr. Schultz’s work because he relied on Mr. Schultz’s expertise.  Although Mr. Schultz did not ask if he could bring his own assistants to the job, Mr. Dick testified that he would have had no objection to Mr. Schultz doing so.

In late spring 2017, Mr. Dick told Mr. Schultz that he had work available at property he owned and on which Andy & Steve’s kept its equipment.  Because Mr. Dick planned to fence the perimeter of the property, a number of trees needed removal.  Mr. Dick told Mr. Schultz in a text message dated October 4, 2017, that he could do that tree work on that property “whenever you want.”  (Ex. B at 6.)  In a text message exchange beginning on October 26, 2017, Mr. Dick asked Mr. Schultz when he could “take the big tree down.”  (Id. at 7.)  In October 2017, Mr. Schultz began removal of 40 trees.  One of these trees was two to three feet in diameter and stood 30 feet tall.  Mr. Schultz told Mr. Dick when he was available to remove the tree, and Mr. Dick scheduled a crew member to meet Mr. Schultz on the property.

On November 1, 2017, Mr. Schultz began cutting a limb from the large tree on Mr. Dick’s property before the Andy & Steve’s crew member had arrived.  The tree limb hit the ground and rolled onto a platform where Mr. Schultz stood.  The force propelled Mr. Schultz off the platform and onto the ground where he fractured multiple vertebrae.  As a result of the fall, he suffered a spinal cord injury, which resulted in paraplegia.  Mr. Dick retained another tree trimmer to finish removing the large tree from the property.

Mr. Schultz filed a claim petition on November 30, 2017.  Andy & Steve’s and its insurer denied that an employment relationship existed between Andy & Steve’s and Mr. Schultz, asserting he was an independent contractor.  The matter was heard before a compensation judge on April 5, 2019, with the parties agreeing that if Mr. Schultz was judicially determined to be an employee, he would have been permanently and totally disabled as of November 1, 2017.  On June 4, 2019, the compensation judge found that Mr. Schultz was an independent contractor.

Mr. Schultz appealed, arguing that the judge had failed to analyze the work under the safe harbor provisions of Minn. R. 5224.0110, subps. 2 and 3.  We agreed, and remanded the matter to the compensation judge to apply each of the criteria under Minn. R. 5224.0110 to the facts in support of her conclusion that the safe harbor provisions were not substantially met.  Schultz v. Andy & Steve’s Lawn & Landscaping, 79 W.C.D. 763 (W.C.C.A. 2019).  Due to the number of years Mr. Schultz trimmed trees for Andy & Steve’s, and a change from jobs exclusively for Andy & Steve’s customers, to a job for Mr. Dick on Mr. Dick’s property around November 2017, we asked the judge to consider the facts at or around the time of the injury of November 1, 2017, in analyzing the safe harbor provision.  Id.

On remand, the compensation judge did not take any additional testimony or evidence but made specific findings on each of the safe harbor criteria and determined that Mr. Schultz did not substantially meet the criteria in the safe harbor provisions.  The judge relied on her previous analysis of Minn. R. 5224.0330 and Minn. R. 5224.0340 in her original Findings and Order in concluding that Mr. Schultz was an independent contractor.  Mr. 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.  The applicable rules include safe harbor criteria for determining employee or independent contractor status for over 30 specific occupations.  Minn. R. 5224.0020 to 5224.0312.  If a worker does not meet the 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.^[3]  See Minn. R. 5224.0010.  Mr. Schultz’s occupation of tree trimmer falls under the rule for laborers, Minn. R. 5224.0110.

On remand, the compensation judge found that Mr. Schultz did not meet the safe harbor criteria for an employee or for an independent contractor.  The judge then concluded that Mr. Schultz was an independent contractor, relying on her analysis of Minn. R. 5224.0330 and Minn. R. 5224.0340 in her June 4, 2019, Findings and Order.  On appeal, Mr. Schultz argues that the judge erred in failing to focus the analysis on the employment status on or around November 1, 2017, claiming that during the last year of work, he met the safe harbor criteria for an “employee” under Minn. R. 5224.0110, subp. 3.  Andy & Steve’s and its insurer argue that Mr. Schultz met the safe harbor criteria for an “independent contractor” under Minn. R. 5224.0110, subp. 2.

The determination of employment status is ultimately a legal issue.  Hunter v. Crawford Door Sales, 501 N.W.2d 623, 624, 48 W.C.D. 637, 639 (Minn. 1993).  The facts upon which that determination is based may include “facts as found by the compensation judge.”  Id. at 625, 48 W.C.D. at 639; see also Oelrich v. Schlagels, Inc., 426 N.W.2d 430, 433, 41 W.C.D. 84, 87 (Minn. 1988) (where the evidence is free from conflict as to the controlling facts, the question of whether a person is an employee is a question of law).  The most significant factor in determining the existence of an employment relationship is the right to control the means and manner of performance of the work.  Hunter, 501 N.W. 2d at 624, 48 W.C.D. at 638; Hammes v. Suk, 291 Minn. 233, 235, 190 N.W.2d 478, 481, 26 W.C.D. 43, 46 (1971); Minn. R. 5224.0330, subp. 1.

Although a contract was signed in 2013 indicating that Mr. Schultz was an independent contractor, as a general rule, the “nature of the relationship of the parties 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.”  Edelston v. Builders and Remodelers, Inc., 304 Minn. 550, 551, 229 N.W.2d 24, 25, 27 W.C.D. 909, 910 (1975); see also Hunter, 501 N.W.2d at 624, 48 W.C.D at 639.

Applying the safe harbor provisions of an independent contractor, the compensation judge found that not all of the applicable criteria were substantially met.  Minn. R. 5224.0110, subp. 2, provides eight criteria in paragraphs A – H for consideration of independent contractor status.

Mr. Schultz’s relationship with Andy & Steve’s demonstrates his business judgment.  At the time he responded to Andy & Steve’s ad, he emphasized his 40 years of experience in tree trimming, including his 12 years as a foreman for a tree trimming company.  He initially negotiated a pay rate which was mutually acceptable.  Later, Mr. Schultz insisted on an increased pay rate which Andy & Steve’s paid to retain his services.  The tools necessary for safety and efficient tree work were owned by Mr. Schultz.  Andy & Steve’s provided no training.  Mr. Schultz had the expertise and acquired technique to trim and cut trees based on his years of experience.  Substantial evidence supports the compensation judge’s finding that Mr. Schultz met this factor.

During the year Mr. Schultz was absent by his own volition from tree trimming, Mr. Dick retained another tree trimmer.  After Mr. Schultz suffered the injury, Mr. Dick found another tree trimmer to complete the job.  Furthermore, Mr. Dick testified that he had no objection to Mr. Schultz hiring someone else for the job.  The compensation judge noted no testimony to the contrary and concluded that Mr. Dick credibly testified that Mr. Schultz could have hired assistants or have others perform the work.  Substantial evidence supports the judge’s finding that there was no requirement that Mr. Schultz personally perform the tree trimming work.

The compensation judge found that Mr. Schultz did not meet this criterion, noting that he did not advertise, maintain a business listing, or hand out business cards.  Mr. Schultz had business cards but he testified that he did not hand them out.  Though Mr. Schultz testified that he understood that he was an independent contractor at the time the Independent Contractor Release was signed in May 2013, the judge’s conclusion that Mr. Schultz did not hold himself out to the public as available for furnishing tree trimming services is not manifestly contrary to the evidence.

Although Mr. Schultz did not hire assistants, Mr. Dick had no objection to Mr. Schultz hiring them.  The plain language of this criteria is not whether Mr. Schultz hired assistants, but whether he was free to do so.  Substantial evidence in the record supports the compensation judge’s determination that Mr. Schultz met this criterion.

Mr. Schultz testified that he used his own personal chain saws, ropes, ladders, and hoists during his work.  He also maintained his own equipment.  Andy & Steve’s did not have the equipment required for safe off-the-ground tree trimming.  This criterion provides only that the laborer furnishes tools, and does not specify a minimum percentage.  Price v. Fox, 73 W.C.D 597 (W.C.C.A. 2012), summarily aff’d (Minn. Sept. 3, 2013).  The compensation judge reasonably concluded that Mr. Schultz met this factor indicative of an independent contractor.

Mr. Schultz did not obtain his work by recommendation.  Furthermore, he did not advertise, nor did he maintain a business listing in any equivalent of a telephone or service directory.  Substantial evidence supports the compensation judge’s finding that Mr. Schultz did not substantially meet this factor.

Mr. Dick did not direct Mr. Schultz’s work.  He lacked experience where Mr. Schultz had the expertise.  The methods and means for tree trimming were left to Mr. Schultz, as the expert, to complete the job.  There were no set hours of work, except that work be done during daylight hours.  Mr. Schultz could work according to his availability. The record in this case supports the compensation judge’s determination that this factor was substantially met.

The judge found that neither Mr. Schultz or Andy & Steve’s took out or provided lien waivers.  Mr. Schultz testified that he was not aware of a lien being placed on property where he was working or providing a lien waiver.  This subpart is inapplicable in this situation and need not be met for the safe harbor provision for an independent contractor to apply.  See Price, 73 W.C.D. at 607.

We affirm the compensation judge’s conclusion that Mr. Schultz did not meet all of the applicable safe harbor criteria of an independent contractor.

The compensation judge also considered whether Mr. Schultz substantially met the criteria of an employee under Minn. R. 5224.0110, subd. 3.  The safe harbor provision for employee status in Minn. R. 5224.0110, subp. 3, provides five criteria in paragraphs A - E.

The compensation judge found that the preponderance of the evidence supports a finding that Mr. Dick would have allowed Mr. Schultz to have work done by another person.  Mr. Schultz argues that no credible evidence supports this conclusion.  The compensation judge weighed Mr. Dick’s testimony regarding Mr. Schultz’s ability to hire other workers.  Although Mr. Schultz did not hire others, the language of this section is mandatory, which is not supported by the evidence.  Mr. Dick’s unopposed testimony was that Mr. Schultz could hire others.  As that testimony was found credible by the compensation judge, substantial evidence supports the determination that this factor was not met.

The compensation judge determined that this factor was not met because Mr. Schultz had control over the specific time of the service and used his own tools.  Mr. Schultz argues that he substantially meets this factor because Mr. Dick texted or emailed the location at which trees were to be trimmed, Mr. Schultz used his own tools, which was standard in the industry, and provided tree trimming services on a recurring basis due to the nature of the landscaping business.  Substantial evidence supports the compensation judge’s finding that this factor was not met.

The compensation judge found that Mr. Schultz was paid on an hourly basis rather than a lump sum basis and concluded that this factor minimally supported a finding of employee status.  Yet based on 40 years of experience, Mr. Schultz negotiated his pay rate per hour and increased it so the initial rate of $25 an hour rose to $40 an hour during the four years he trimmed trees.  Working at his own pace, he received pay based on how long it took him to complete the job.  Substantial evidence supports the compensation judge’s finding that this factor was met and “minimally supports” employee status.  (Finding 16.)

The compensation judge found that Mr. Dick could not require Mr. Schultz to redo work, but could ask him to do so with the implication that Mr. Schultz would be paid by the hour.  There was also no evidence to support the pace of work being controlled by Mr. Dick.  Rather, Mr. Dick expressed that the pace of work was not to be rushed but a good pace, leaving it to the expert tree trimmer to take the time required to finish the job.  Substantial evidence supports the compensation judge’s finding that Mr. Schultz did not meet this criterion.

Mr. Dick testified that in the event the job was not completed, he would hire another tree trimmer to complete the job.  In fact, Mr. Dick hired another tree trimmer after Mr. Schultz had suffered the injury on November 1, 2017.  Therefore, it was reasonable for the compensation judge to find that this factor was met.

Substantial evidence in the record supports the compensation judge’s findings Mr. Schultz did not meet the criteria for independent contractor or employee status under the safe harbor provisions of Minn. R. 5224.0110, and we affirm.  Thus, because neither safe harbor provision is fully met, we turn to the application of Minn. R. 5224.0330 and 5224.0340 in determining who controlled the means and manner of performing the tree trimming job.

In analyzing the period of time leading up to the injury, substantial evidence supports a conclusion that the control of the means and manner of performance rested with Mr. Schultz.  Mr. Dick did not supervise the details of Mr. Schultz’s work.  See Minn. R. 5224.0330, subp. 3 (compliance with detailed instructions not required).  He was not present when Mr. Schultz performed his work and Mr. Schultz was alone on the property at the time of the accident.  There were no detailed instructions given for the work performed except that Mr. Dick asked Mr. Schultz to remove the trees on his property.  It was Mr. Schultz’s expertise that accomplished the desired result of trimming trees.  The place of work was where the trees were located, including the one on Mr. Dick’s property when the injury occurred.  See Minn. R. 5224.0330, subp. 5.  This factor alone would not be determinative.

While the relationship between Mr. Dick and Mr. Schultz existed for five years, Mr. Schultz was free to not show up, as he did for an entire season when he did not respond to Mr. Dick’s inquiries.  See Minn. R. 5224.0330, subp. 7 (not a continuing relationship).  There were no fixed hours of work and the work was intermittent.  See Minn. R. 5224.0330, subp. 8 (no set hours of work).  Having no experience in tree trimming, Mr. Dick would be unable to train Mr. Schultz and Mr. Schultz required no training as he had 40 years of experience.  See Minn. R. 5224.0330, subp. 9.  There was no requirement that Mr. Schultz devote himself full time to the activity.  See Minn. R. 5224.0330, subp. 10.  Although standard in the tree trimming business, Mr. Schultz furnished his own tools and safety equipment.  See Minn. R. 5224.0330, subp. 12.  There was no reimbursement of expenses including mileage reimbursement for the miles Mr. Schultz drove to get to the job site.  See Minn. R. 5224.0330, subp. 13.

In contrast, those crew members who worked as Andy & Steve’s employees arrived at the job site together in an Andy & Steve’s truck, utilizing equipment owned by Andy & Steve’s.  They had specific hours and punched a clock.  Mr. Dick could make them available to assist Mr. Schultz if it was necessary.  They each received a payroll check with deductions and were purportedly covered by workers’ compensation insurance, while Mr. Schultz was paid in cash, without tax deductions.  Further, at the commencement of their relationship, Mr. Dick advised Mr. Schultz verbally and in writing that it was up to Mr. Schultz to obtain his own insurance.

The compensation judge’s determination that control over the means and manner of performing the job rested with Mr. Schultz, not Mr. Dick, is supported by substantial evidence.

The compensation judge also considered the factors listed in Minn. R. 5224.0340 in determining that Mr. Schultz was an independent contractor.  The judge noted that both Mr. Schultz and Mr. Dick had the right to end the working relationship at any time.  See Minn. R. 5224.0340, subps. 2, 6.  Mr. Schultz was paid on an hourly basis but the evidence that he incurred a profit or loss on his work for Andy & Steve’s was inconclusive.

While there is evidence supporting factors for employee or independent contractor status, substantial evidence supports the compensation judge’s finding that Mr. Schultz was an independent contractor, and we affirm.

Finally, Mr. Schultz requests reimbursement of cost of the transcript for the initial appeal in the amount of $696.00.  Minn. R. 9800.1700 provides that a party on appeal to this court may petition to this court for taxation of disbursements.  The petition must be filed with this court within 45 days of “the final appellate decision in the main action.” 

Mr. Schultz petitioned this court on June 5, 2020, based upon this court’s remand decision dated December 11, 2019.  Whether the remand decision of this court in December 2019 was a “final appellate decision in the main action,” such that this court could have awarded those disbursements, is an issue that we need not reach.  See Mattson v. Underwriters at Lloyds of London, 414 N.W.2d 717, 720 (Minn. 1987) (if complete finality cannot be accomplished or something remains to be done below, the appellate court will so indicate by remand with directives or a mandate which the trial court must follow) (citing Chicago Great W. R.R. Co. v. Zahner, 149 Minn. 27, 29, 182 N.W. 904, 904 (1921)).  Because the petition was untimely, it is denied.