Nebraska Court Agrees Truck Driver Was Independent Contractor
In a decision that stands in stark contrast to court holdings in some other states—particularly California—a Nebraska appellate court affirmed a decision by the state’s compensation court that had found a tractor-trailer driver to be an independent contractor and not an employee, in spite of the fact that the freight company supplied the necessary equipment for the hauling jobs [Cajiao v. Arga Transp., Inc., 30 Neb. App. 700, 2022 Neb. App. LEXIS 44 (Mar. 1, 2022)]. Identifying 10 factors that should be considered in determining whether a worker is an independent contractor or an employee—as opposed to the three-factor “ABC” test utilized in California—the appellate court said there was adequate evidence to support the compensation court’s decision.
Background
In November 2017, Cajiao was injured in a motor vehicle accident while he was driving a semi-tractor trailer leased by Arga. Cajiao alleged that he was an employee of Arga and entitled to workers’ compensation benefits for his injuries. Arga claimed that Cajiao was an independent contractor at the time of the accident and therefore not entitled to benefits.
Prior to 2010, Cajiao owned his own semi-tractor and used it in his business as an over-the-road truck driver. He would search online trucking broker companies to find loads that were convenient for him to haul. The companies that needed freight hauled provided the details of the job, including the pickup and delivery locations, the number of miles between locations, and the weight of the load. Once the delivery was complete, Cajiao would send a bill of lading to the company and it would send him payment.
Cajiao sold his truck in 2010, but continued working as a truck driver. He continued to use the same search and application process to find loads to haul, and the companies would provide a truck for him to use to complete their delivery. Cajiao acknowledged that while he drove for one company, he could not drive for another company, but that he could, and did, move back and forth among companies at any time. He worked for many companies in the 15 years prior to the accident, including Arga. In the 6 months prior to the accident, however, he was driving loads for only Arga.
The compensation court determined that Cajiao was an independent contractor and dismissed his petition. Cajiao appealed.
Employee vs. Independent Contractor Test
Initially, the appellate court stressed that there was no single test for determining whether one performs services for another as an employee or as an independent contractor; rather, the following factors must be considered:
- The extent of control which, by the agreement, the employer may exercise over the details of the work;
- Whether the one employed is engaged in a distinct occupation or business;
- The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
- The skill required in the particular occupation;
- Whether the employer or the one employed supplies the instrumentalities, tools, and the place of work for the person doing the work;
- The length of time for which the one employed is engaged;
- The method of payment, whether by the time or by the job;
- Whether the work is part of the regular business of the employer;
- Whether the parties believe they are creating an agency relationship; and
- Whether the employer is or is not in business.
Core Issue: Control
Citing Sparks v. M&D Trucking, 301 Neb. 977, 921 N.W.2d 110 (2018), the court explained further that the extent of control was the chief factor distinguishing an employment relationship from that of an independent contractor. The court stressed that there was an important distinction between control over the means and methods of the assignment vis-a-vis control over the end product of the work to be performed. Moreover, the party contracting with an independent contractor could, without changing the status, exercise such control as was necessary to assure performance of the contract in accordance with its terms.
Method and Manner
Stressing also that federal regulations, and compliance therewith, do not determine whether an employer-employee relationship exists, the court said the pertinent question was the degree of control Arga exercised over the method and manner of performing the work. Here, the compensation court had determined that although Arga may have exercised control over the result of the work, the evidence did not support a finding that it exercised control over the actual operation of the truck or the manner in which Cajiao completed the delivery. Arga scheduled the pickup and dropoff locations as well as the delivery time; otherwise, Cajiao had the ability to accept the loads he wanted, take days off as he wanted, and select the route to travel. The evidence did not suggest that Arga controlled the actual operation of the truck Cajiao used to complete the delivery, only that it mandated the delivery location and time. Thus, the evidence indicated that Arga had control over the result of the work, but not as to the means or methods used.
Other Factors
The court noted that other factors also supported a finding that Cajiao was an independent contractor rather than an employee of Arga. Cajiao was engaged in a distinct occupation or business. For example, the compensation court had noted that Cajiao worked as a semi-tractor driver for at least 15 years prior to the accident. The compensation court concluded that it took specialized skill to drive a semi-tractor, a factual finding that was not clearly wrong and supported a finding that Cajiao was an independent contractor.
Cajiao received a Form 1099-MISC instead of a W-2 wage and tax statement, did not receive any other compensation or benefits from Arga other than a discretionary bonus, and was paid per mile rather than a set salary. He did not get paid if he did not work. The court noted that employees are normally compensated by the hour, and independent contractors are compensated by the job. Considering the entirety of the relationship, the court concluded that the compensation court did not err in determining that Cajiao was an independent contractor rather than an employee of Arga.
Commentary
While I agree with the court’s decision and note as well that it is in line with the majority of American jurisdictions, I think Cajiao offered some legitimate points. First, the “1099 issue” is one that most jurisdictions find unimportant. That is essentially a “form over substance” point. Second, many state courts would have examined the ownership of equipment factor in much greater detail. Where the company provides an expensive tractor-trailer and the trailer to be pulled, it is supplying the important, costly components to the relationship. I suspect that the most important factor her was that Cajiao was totally free to set his work schedule; he only worked when he agreed to do so. And while he indicated that he tended to drive for one company at a time, there appears to have been no legal impediment to his providing driving services for other companies.
We’ve noted that a number of states—particularly California—are much less prone to assign independent contractor status to workers like Cajiao. One of the strengths, however, in the American system—at least from my viewpoint—is that the states are free to allow greater contract flexibility between purported employers and those who perform the work.