Jeffreys v. The Uninsured Employer's Fund
Jeffreys v. The Uninsured Employer's Fund
Opinion
Charlie Jeffreys was injured while renovating a historic school building. The Virginia Workers' Compensation Commission denied his claim for benefits against a church and a historical society, which Jeffreys had alleged were his statutory employers. The Court of Appeals affirmed. On appeal to us, Jeffreys argues that the Court of Appeals erred in affirming the Commission's decision not to award him benefits. We disagree.
I.
A.
By statute, determinations of the Commission "shall be conclusive and binding as to all questions of fact." Code § 65.2-706(A). Consequently, on appeal, "we do not retry the facts before the Commission nor do we review the weight, preponderance of the evidence, or the credibility of witnesses."
Caskey v. Dan River Mills, Inc.
,
B.
The Harvey Colored School ("the School") is a small building where African-American students in Pittsylvania County were educated from approximately the 1880s to the mid-1900s. About 15 former students and interested individuals, led by Annie Mosby, formed the Harvey School Historical Society ("the Historical Society") 1 "to restore the school to its original condition" and to register it as a historical site. 2 J.A. at 804. The Historical Society operated as a non-profit organization. Its mission was "to purchase, restore, preserve, and maintain the Harvey Colored School as a historical site." Id. at 801-02. Mosby lived in California and directed the Historical Society's activities from there.
Seeking tax-exempt status, the Historical Society became an "auxiliary" of the Mount Lebanon Missionary Baptist Church (the "Church") in 2003. Id. at 800, 811-12, 817-18. The record is unclear regarding the precise nature of this informal relationship. Practically speaking, however, the relationship appears merely to have allowed the Historical Society to meet in the Church building. The Church provided no financial support to the Historical Society, and the two entities maintained separate bank accounts. The Church neither participated in the decisions that the Historical Society made nor exercised any control over the Historical Society.
In 2012, Mosby entered into an agreement with William Johnson, an unlicensed contractor, to relocate and renovate the School. Having no construction experience, Mosby relied entirely on Johnson to plan and perform the renovation. While she was briefly present on site at the beginning of the project, Mosby lived in California and did not exercise any control over Johnson or over any aspect of his working conditions. Johnson initially worked with one other individual on the job, but he later asked Mosby for permission to hire Jeffreys as well. Mosby agreed. Johnson was the "boss" on the job, id. at 522, 700, and exclusively managed Jeffreys on the worksite. Johnson kept records of Jeffreys's work hours and reported them to Mosby for payment. Mosby never met Jeffreys and did not know his name prior to his injury.
While working for Johnson, Jeffreys was badly injured when a beam fell from the roof of the school building and struck him on the neck. He filed a claim for workers' compensation benefits against Mosby, the Church, and the Historical Society - but not against Johnson. Because none of the defendants had workers' compensation insurance, the Uninsured Employer's Fund ("UEF") was also made a party. Jeffreys argued that Mosby, the Church, and the Historical Society were his direct employers and thus owed him compensation. In the alternative, Jeffreys contended, each defendant was his statutory employer pursuant to Code § 65.2-302 because he had been performing work within their trade, business, or occupation.
A deputy commissioner agreed that Jeffreys had been the direct employee of the Historical Society as well as Mosby, who was acting as the Historical Society's "agent," and that the Historical Society was in turn "a part of the Church, making the Church an employer of" Jeffreys as well. 2 J.A. at 879-81. The deputy commissioner entered an award against the Church. The full Commission disagreed in part, holding that Mosby was not Jeffreys's direct employer because she had lacked any meaningful control over his work or over how he performed it. However, the Commission affirmed the deputy commissioner's award against the Church because no party had appealed that decision.
The Court of Appeals affirmed the Commission's finding that Mosby was not Jeffreys's direct employer, reversed the Commission's finding that the UEF had waived its argument regarding the Church and the Historical Society, and remanded the case for further factfinding.
See
Uninsured Emp'r's Fund v. Jeffreys
, Record No. 1676-15-3,
Having held that none of the three individual defendants were Jeffreys's direct employer, the Commission turned to the statutory-employer argument. "There is no evidence the Church and Historical Society were in the construction business," the Commission stated, "[h]ence there is no statutory employer situation at issue here." Id. Jeffreys appealed again to the Court of Appeals, which affirmed the Commission's decision.
II.
On appeal to us, Jeffreys contends that the Court of Appeals and the Commission erroneously held that the Church and the Historical Society were not his statutory employers. We disagree.
A.
The Workers' Compensation Act requires an employment relationship of some kind to exist between a claimant and the party allegedly liable for compensation. The usual scenario is a true employer-employee relationship in which the employer controls the employee's jobsite conditions, employment tasks, and working hours. In 1991, however, the General Assembly enacted Code § 65.2-302, which created a new category of employment relationship called "Statutory employer." In relevant part, that section provides:
A. When any person (referred to in this section as "owner") undertakes to perform or execute any work which is a part of his trade, business or occupation and contracts with any other person (referred to in this section as "subcontractor") for the execution or performance by or under such subcontractor of the whole or any part of the work undertaken by such owner, the owner shall be liable to pay to any worker employed in the work any compensation under this title which he would have been liable to pay if the worker had been immediately employed by him.
B. When any person (referred to in this section as "contractor") contracts to perform or execute any work for another person which work or undertaking is not a part of the trade, business or occupation of such other person and contracts with any other person (referred to in this section as "subcontractor") for the execution or performance by or under the subcontractor of the whole or any part of the work undertaken by such contractor, then the contractor shall be liable to pay to any worker employed in the work any compensation under this title which he would have been liable to pay if that worker had been immediately employed by him.
C. When the subcontractor in turn contracts with still another person (also referred to as "subcontractor") for the performance or execution by or under such last subcontractor of the whole or any part of the work undertaken by the first subcontractor, then the liability of the owner or contractor shall be the same as the liability imposed by subsections A and B of this section.
Code § 65.2-302(A)-(C). See generally Lawrence J. Pascal, Virginia Workers' Compensation Law and Practice § 2.08[3][a]-[b], at 2-35 to -39 (4th ed. 2011). 2
Subsection A addresses the scenario in which "any person" contracts with an independent contractor to perform work within the "trade, business or occupation" of that "any person." Code § 65.2-302(A). This situation often occurs when a business outsources its own unique "trade, business or occupation,"
id.
, to an independent contractor, for example, when a roofing company hires an independent contractor to repair a roof. In these situations, we have applied what has become known as the normal-work test, which asks whether the activity in which the independent contractor engages is "
normally
carried on through employees rather than independent contractors."
Shell Oil Co. v. Leftwich
,
In this way, subsection A involves a two-tiered scenario: Party X contracts with Party Y to do work within Party X's trade, business, or occupation. When this takes place, Party X becomes the statutory employer of Party Y's employees.
Subsection B involves a three-tiered scenario: A "person" hires a contractor to perform work
outside
the scope of
that
person's "trade, business or occupation." Code § 65.2-302(B). The contractor then hires a subcontractor to do some or all of that work. In this scenario, we have applied what has become known as the subcontracted-fraction test.
See
Cooke v. Skyline Swannanoa, Inc.
,
The Act makes clear, however, that these scenarios are exceptions to the general rule that "nothing in [the Act] shall be construed to make the employees of any independent contractor the employees of the person or corporation employing or contracting with such independent contractor." Code § 65.2-101. Consequently, "the mere fact a business owner engages an independent contractor does not make that independent contractor's employees statutory employees of the owner."
Rodriguez
,
B.
Before focusing on the specific provisions governing this case, we must address Jeffreys's overarching assertion that the Workers' Compensation Act should receive "a liberal construction and application of the law in favor of the worker" in order to "accomplish the purpose of the Legislature in enacting our Workers' Compensation statute," Appellant's Br. at 7, 28-29. We frequently apply this simple principle 6 but guard against doing so simplistically. 7
Our caution stems from the unique nature of the Workers' Compensation Act. The Act reflects a legislative "quid pro quo" that gave workers the right to assert no-fault liability against their employers (a right that they had never possessed) and took from them the right to sue their employers in tort for negligence (a right that they had possessed under the common law). 8 The liberal-construction principle, if misapplied, could upset this delicate balance. A view of the Act's coverage that is too broad would authorize an award of compensation benefits but would bar a tort recovery, and a view that is too narrow would authorize a tort recovery but would bar an award of compensation benefits.
Jeffreys contends that he lost his claim for compensation benefits because the Court of Appeals and the Commission had failed to interpret Code § 65.2-302 liberally in his favor. This result is illiberal, however, only because Jeffreys has no viable negligence claim against the Church or the Historical Society. If he had such a claim and had asserted it, the Church and the Historical Society - not Jeffreys - would be insisting that Code § 65.2-302 be construed broadly. See Code § 65.2-307(A) ; Pascal, supra , § 2.08[3][a], at 2-36 (4th ed. 2011). A precedent-setting construction of the Act cannot depend on whether the injured worker is before the Commission seeking an expansive application of the Act's coverage or before a circuit court seeking a restrictive application. 9 A uniform principle of law, by its nature, cannot fluctuate based upon the forum in which it is advocated or the identity of its advocates.
Rightly applied, the liberal-construction principle means only that an interpretation of the Workers' Compensation Act should take into account the humane, beneficent purposes embedded in the legislative quid pro quo. That interpretative preset does not "permit a liberal construction to change the meaning of the statutory language or the purpose of the Act,"
American Furniture Co. v. Doane
,
C.
1.
The contest in this case involves the application of subsection A of Code § 65.2-302. We have applied that provision and its predecessors in various contexts, including those involving both private-business employers
12
and governmental employers.
13
Applying subsection A "is not a simple, straightforward exercise."
Rodriguez
,
The starting point in the analysis is "identifying 'the nature of the particular owner' " or contractor, which often requires us to distinguish between a "governmental entity or public utility" on the one hand and "a private entity" on the other.
Id.
at 195,
When addressing private entities, we generally apply the normal-work test to subsection A of Code § 65.2-302. This test asks not
whether the subcontractor's activity is useful, necessary, or even absolutely indispensable to the statutory employer's business, since, after all, this could be said of practically any repair, construction or transportation service. The test ... is whether this indispensable activity is, in that business, normally carried on through employees rather than independent contractors.
Shell Oil Co.
,
One recurring problem in applying this statute is how to treat a company with no employees. We have stated that a construction company whose trade, business, or occupation is obviously construction cannot disclaim statutory-employer status simply by hiring no employees and subcontracting all of its construction projects to others.
See
id.
at 194,
In
Rodriguez
, a developer was engaged in the business of developing an industrial warehouse park. Having no employees of its own, the developer hired a contractor to construct the warehouses. We observed that "[t]he development of the property, including the construction of the warehouses, was obviously essential" to the developer's business plan.
Id.
at 197,
Put another way, "[t]he test is not whether the owner, by engaging an independent contractor to perform some part of his business, thereby engages in the business of the independent contractor. It is whether the
independent contractor is performing work that is part of the trade, business or occupation of the owner."
Floyd v. Mitchell
,
2.
In this case, Jeffreys had the burden of proving his statutory-employer claim for workers' compensation benefits from the Church and the Historical Society.
See
Byrd v. Stonega Coke & Coal Co.
,
The Court of Appeals began its analysis by "identifying 'the nature of the particular owner' " or contractor.
Rodriguez
,
When we review the characteristics of the Historical Society and the activities normally carried out by its members, we conclude that the complete reconstruction of the Harvey School was not a part of the Historical Society's "trade, business, or occupation." While the ultimate goal of the Historical Society was to "restore" the school, the rebuilding project at issue was simply beyond its capabilities.
The Historical Society was not a construction company or a commercial property developer. It was a small, grassroots, nonprofit organization with limited resources. It had approximately fifteen members at the height of its success. None of the evidence presented in this case established, or even implied, that the members of the Historical Society could undertake the construction project at issue.
Similarly, the evidence failed to establish that the members of the Historical Society engaged in construction-related activities on a regular basis. Rather, the members of the Historical Society engaged in fundraising activities and activities designed to encourage community support for their project. Correspondence between Mosby and members of the Historical Society established that the Historical Society intended to hire contractors to dismantle, move, and rebuild the school, and the evidence presented in this case did not imply that members of the Historical Society intended to participate in this project.
We acknowledge that the restoration of the Harvey School necessarily involved certain construction-related activities. The complete reconstruction of the school building, however, fell outside of any routine restoration work. While the Historical Society was formed to "restore" the school, its "trade, business, or occupation" did not include the complete reconstruction of the building.
For these reasons, we conclude that the reconstruction of the Harvey School was not the Historical Society's "trade, business, or occupation." The complete reconstruction of the school was beyond the restoration project envisioned by the Historical Society, and its members were not involved in the reconstruction project or other construction activities. Accordingly, we conclude that the Commission correctly determined that the Historical Society and the Church were not engaged in the construction business, and we affirm its decision that neither of those parties was Jeffreys's statutory employer.
Jeffreys v. Uninsured Emp'r's Fund
, Record Nos. 0660-17-3, 0693-17-3,
When the legal principles properly frame the question, "[d]etermining whether work is part of the trade, business, or occupation of an owner 'depends upon the facts and circumstances of the particular case,' "
Rodriguez
,
III.
We affirm the Court of Appeals, finding no error in its reasoning or in its result.
Affirmed.
The Historical Society sometimes refers to itself as the Harvey School Restoration Society. See, e.g. , 2 J.A. at 804.
The Act similarly protects loaned or borrowed employees.
See, e.g.
,
Metro Mach. Corp. v. Mizenko
,
Subsection C extends the reach of subsections A and B to cover situations where the first covered subcontractor hires his own subcontractors.
Depending upon the circumstances, subsections A and B can overlap each other. But they do not necessarily do so. When subsection B applies, the contractor becomes the statutory employer of the subcontractor's employees, and "[t]his is true even if that work is not normally a part of the [ ]contractor's normal work, but is a subcontracted fraction of the main contract." 15 Virginia Practice Series, Workers' Compensation § 4:12, at 24 (2018 ed.).
The general rule and its exceptions harmoniously serve the statute's
purpose to bring within the operation of the Compensation Act all persons engaged in any work that is a part of the trade, business or occupation of the original party who undertakes as owner, or contracts as contractor, to perform that work, and to make liable to every employee engaged in that work every such owner, or contractor, and subcontractor, above such employee. But when the employee reaches an employer in the ascending scale, of whose trade, business or occupation the work being performed by the employee is not a part, then that employer is not liable to that employee for compensation. At that point [Code § 65.2-101 ] intervenes and the employee's right of action at common law is preserved.
Cinnamon
,
In certain contexts, this liberal-construction principle has played a measurable role in our construction of the Act.
See, e.g.
,
American Original Foods, Inc. v. Ford
,
In other contexts, this principle has played no role at all.
See, e.g.
,
Redifer v. Chester
,
See
Gibbs v. Newport News Shipbuilding & Drydock Co.
,
The line between coverage and non-coverage under the Act is a matter of great significance. A claimant seeking benefits under the Act, unlike a plaintiff in a tort suit, cannot recover damages for pain and suffering or for loss of future earning capacity.
See
Clinchfield Carbocoal Corp. v. Kiser
,
See also
Conner v. Bragg
,
See also
Morris v. Morris
,
See, e.g.
,
Rodriguez
,
See, e.g.
,
Jones v. Commonwealth
,
In reaching this conclusion, the Court of Appeals correctly distinguished
Pfeifer v. Krauss Construction Co. of Virginia
,
Jeffreys claims that the Court of Appeals made erroneous factual findings and thereby violated his due process right to an appeal. See Appellant's Br. at 21-25, 37-42; Reply Br. at 14. We disagree. The lengthy quotation above from the opinion of the Court of Appeals demonstrates that it did not engage in its own factfinding but instead relied solely on the facts established before the Commission. We find no due process violation.
Jeffreys also takes issue with several statements of the Court of Appeals and the Commission to the effect that the Church and the Historical Society were not engaged in construction.
See
Appellant's Br. at 25-27; Reply Br. at 6-7; Oral Argument Audio at 1:18 to 3:11, 30:50 to 31:25. To Jeffreys, these statements suggest that the Commission and the Court of Appeals misunderstood the proper legal standard. We find no merit in this assertion because "we will not fix upon isolated statements of the [Court of Appeals or the Commission] taken out of the full context in which they were made, and use them as a predicate for holding the law has been misapplied,"
Yarborough v. Commonwealth
,
Reference
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- Charlie JEFFREYS v. the UNINSURED EMPLOYER'S FUND, Et Al.
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