Self-Employed SC Roofer May Have Been Roofing Co.’s Employee
The Court of Appeals of South Carolina reversed, in part, a decision by the state’s Workers’ Compensation Appellate Panel that had found an injured roofer was an independent contractor—and not an employee—of a roofing contractor [Ramirez v. May River Roofing, 2021 S.C. App. LEXIS 61 (June 23, 2021). Citing Larson’s Workers’ Compensation Law, the court indicated that while some relevant factors pointed toward an independent contractor relationship between the contractor and the injured roofer, other factors pointed to an employment relationship. The case was remanded for further proceedings on that issue.
Background
Ramirez earned a living as a roofer in Beaufort County, SC, and was the sole proprietor of Cedano Roofing. When he started the business, he purchased a general liability and workers’ compensation insurance policy from Travelers Insurance. Ramirez did not, however, elect to cover himself as an employee under the workers’ compensation portion of the policy. Doing so would have significantly raised his insurance premium.
Ramirez began work with May River Roofing about a year after he started Cedano Roofing. In January 2016, after working continuously and exclusively with May River for about three years, he sustained serious injuries when he fell from a roof to the ground below. Ramirez filed two workers’ compensation claims. In one, he claimed that he was May River’s direct or statutory employee. In the other, he claimed that he was covered under the workers’ compensation policy that he had purchased.
Single Commissioner’s Decision
The Single Commissioner found Ramirez was not covered under the Travelers policy because he had elected not to cover himself. The Single Commissioner also found Ramirez was not May River’s direct or statutory employee because he was an independent contractor. An appellate panel of the Commission affirmed and Ramirez appealed.
Court of Appeals: No Coverage Under Travelers Policy
The appellate court stressed that the coverage issue regarding the policy Ramirez had purchased from Travelers hinged on whether, as a sole proprietor, he had elected to include himself as of the business’s employees [see S.C. Code Ann. § 42-1-130 (2015)]. That Ramirez was listed as the “insured” was not controlling, said the court. Nothing indicated that Ramirez had notified Travelers that he elected coverage for himself. Nothing in the policy bolstered his argument that he was covered. Indeed, his application of coverage plainly revealed that he chose to be excluded.
Sole Proprietor Not Generally a Statutory Employee
Addressing Ramirez’s argument that he was May River’s statutory employee, the court stressed that while a sole proprietor’s employees might be the statutory employees of a third business, the sole proprietor generally could not be [see Smith v. T.H. Snipes & Sons, Inc., 306 S.C. 289, 411 S.E.2d 439 (1991)].
Ramirez Might Be Direct Employee of May River
The court found, however, that Ramirez might be May River’s direct employee. Four factors were to be considered:
- Direct evidence of the right or exercise of control;
- Furnishing of equipment;
- Method of payment; and
- Right to fire.
Factors Against Statutory Employer Relationship
The court found that the facts weighed both for and against a finding that May River was Ramirez’s statutory employer. For example, it was undisputed that Ramirez was a skilled roofer who did not need day-to-day supervision. There was little evidence that May River controlled the finer points of how Ramirez went about his work as a roofer.
Ramirez appeared to have a great deal of autonomy. He set his own schedule, did not punch a time clock, and was free to negotiate for additional payment when he arrived at a job site. He could choose to decline a job. He was free to enlist others if the job was too big for him to handle.
Factors in Favor of Statutory Employer Relationship
Other factors, however, pointed to an employment relationship between May River and Ramirez. Ramirez was required to wear May River shirts while at a job site. He was provided with a magnetic decal showing May River’s name for his truck. Ramirez’s relationship with May River appeared to be exclusive. That is to say, for roughly three years before his injury, May River provided Ramirez with all of his work. Ramirez indicated he believed he was not allowed to work for any other roofing company. While May River disputed this, it admitted it preferred workers like Ramirez to accept work only from May River. This apparent exclusive relationship weighed in favor of an employment relationship. It suggested that Cedano Roofing was less than an “independent” business, and more an extension of May River.
Other Factors
As to equipment supplied to Ramirez, it had been shown that May River would also occasionally lend Ramirez equipment and assisted Ramirez financially when he purchased some of his own equipment. And, as mentioned above, May River provided Ramirez with a branded t-shirt and magnetic decal for his truck. These factors weighed in favor of an employment relationship.
Ramirez was paid by the hour for repair work, but most of his work was compensated “per roofing square.” Apparently this was common practice in the industry. In as much as most of Ramirez’s compensation depended upon how much work he did, and did not depend upon the time he spent, this factor weighed toward an independent contractor relationship.
The right to fire prong of the employment arrangement did not favor either party, indicated the court. The court noted that the record indicated that several years before Ramirez’s injury, May River switched from using roofers who were admittedly employees to a roofing workforce consisting entirely of people purportedly classified as independent contractors. May River claims to have made this change for a variety of reasons, including that it found workers more motivated and responsible when they were paid more money as independent contractors and paid by the job rather than by the hour.
Citing Larson’s Workers’ Compensation Law, § 60.05, the court noted that the ultimate purpose of the state’s Workers’ Compensation Act was to protect workers, owners, and businesses by requiring a business covered by the Act to insure its workforce against the cost of industrial accidents. Based on the foregoing, the court affirmed the Commission’s finding that Ramirez was not covered under the Travelers policy. However, it reversed the Commission’s compensability finding as to Ramirez’s claim against May River. The court remanded the case for further proceedings consistent with the opinion.