MD Court Says Tyson Was Co-Employer of Worker at Uninsured Chicken Farm

Where a chicken farm owner—who knew virtually nothing about raising chickens—exercised minimal control over an employee manager of the farm, yet Tyson Farms, Inc., which contracted with the farm owner to raise chickens according to strict Tyson guidelines and best practices, maintained substantial control over the day-to-day functions of the employee manager, Tyson could be properly determined to be a co-employer, held a Maryland appellate court [Uninsured Employers’ Fund v. Tyson Farms, Inc., 2019 Md. App. LEXIS 1023 (Nov. 22, 2019). Accordingly, where the chicken farm owner failed to maintain workers’ compensation coverage and employee manager sustained a work-related occupational disease to his lungs, Tyson would be liable for the employee’s benefits.

Background

The appellate court initially noted, with some degree of irony, that Tyson Farms, Inc. [emphasis added] did “not own a single chicken farm” . Rather, the company contracts with individual farmers to raise its chickens; the farmers own and operate the farms, while chickens are raised by the farmer according to Tyson’s guidelines and best practices. At all times relevant to the dispute, Tyson retained ownership of the chickens.

In 2009, Garcia was hired to work at a chicken farm owned by Terry Ung. At first, Garcia performed routine maintenance and other chores under Ung’s direction. When Ung became ill toward the end of 2009, Garcia began managing the firm. Upon Ung’s death in late 2009, Ung’s wife, became the owner of the farm.

She was unfamiliar with raising chickens and so, Tyson’s representatives taught Garcia how to operate the farm according to its standards. In 2013, Mrs. Ung sold the farm to Dai K. Nguyen, an absentee owner, who also knew nothing about raising chickens. Tyson agreed to contract with Nguyen only if Garcia remained on site as the resident manager of the farm.

Commission’s Determination

Garcia filed a claim for benefits against Nguyen. The Uninsured Employers’ Fund (“UEF”) was made a party to the claim when it became clear that Nguyen did not possess workers’ compensation insurance. Garcia and UEF then impleaded Tyson into the claim. Following a hearing, the Workers’ Compensation Commission declared that Garcia’s injuries arose out of and in the course of his employment, and that both Nguyen and Tyson were co-employers of Garcia at the time of his injuries. Tyson appealed the Commission’s decision to the Circuit Court for Worcester County.

Following a two-day trial, both UEF and Tyson made motions for judgment. The circuit court denied both motions and let the matter proceed to the jury. The jury returned a verdict that Tyson was not a co-employer at the time of Garcia’s injuries. UEF appealed.

UEF’s and Tyson’s Contentions

UEF contended that “the inescapable conclusion” was that Tyson was Garcia’s employer as a matter of law. To support the argument, UEF pointed to Tyson’s:

1. Training of Garcia;
2. Sending a representative to review farm operations one to three times a week;
3. Informing Garcia of the tasks that needed to be done; and
4. Having the right to take control of its chickens and terminate the contract upon failure to comply with the conditions in the Contract.

Tyson, on the other hand, argued that its so-called “minimal contact” with Garcia did not establish an employment relationship. Tyson specifically argued that Nguyen, the owner of the farm, was an independent contractor for Tyson, and that the fact that Tyson had the right to inspect its flock did not mean that it was in control of Nguyen’s employee, such that an employment relationship could be said to have existed. Tyson further supported its argument by noting the ability of Nguyen alone to hire, pay, and terminate Garcia, as well as the right to terminate the contract at will.

Five-Factor Employment Test

The appellate court noted that Maryland highest court, in Mackall v. Zayre Corp., 293 Md. 221, 230, 443 A.2d 98 (1982), had established five criteria to determine whether the employer-employee relationship existed. Those factors include:

1. The power to select and hire the employee,
2. The payment of wages,
3. The power to discharge,
4. The power to control the employee’s conduct, and
5. Whether the work is part of the regular business of the employer.

Control is the Most Important Factor

According to the Mackall Court, the factor of control stands out as the most important.

The appellate court concluded that here, Tyson’s control over Garcia’s work was more than sufficient to establish an employment relationship as a matter of law. Specifically, as a condition of its contract with Nguyen, Tyson required that Garcia remain on the farm 24 hours a day, 7 days a week, to manage its operation. In the contract itself, Tyson’s 18-page “Broiler Growing Guide” detailed instructions and requirements for how to raise the chickens at each stage of their life cycle. This Guide included detailed instructions on how Garcia should adjust various factors such as the chickens’ food intake, light exposure, and ventilation, on a weekly, if not daily, basis.

Moreover, Tyson’s employees taught Garcia everything he needed to know about raising the chickens, including how to operate the various systems involved in the process. Tyson’s employees inspected the farm before every new flock of chickens was delivered, came to the farm one to three times a week to evaluate how Garcia was raising the chickens, and subsequently informed Garcia of the tasks that he needed to complete to improve his performance. Importantly, Tyson held the unilateral ability to terminate its relationship with Nguyen if Garcia did not comply with the requirements in the Contract or those given to him by Tyson employees.

The court also stressed that the fact that Garcia was also an employee of Nguyen at the time he was injured did not alter the court’s conclusion that Tyson was a co-employer. The court observed that at the end of the two-day jury trial, both Tyson and Garcia moved for judgment, “thereby signaling their common understanding that Tyson’s status as a co-employer should be decided as a matter of law.” The appellate court agreed with the parties’ common understanding that there was no material factual dispute and that the outcome depended solely on the application of the law to the undisputed facts. Thus, because Tyson was a co-employer of Garcia at the time he was injured, the court held the circuit court erred in not granting UEF’s motion for judgment.