Factors for determining independent contractor or employee status in Ohio’s workers’ compensation system
Determining whether workers are employees or independent contractors is an issue that comes up time and again in many employment contexts. The Ohio Supreme Court has recently weighed in on this topic in a workers’ compensation case that focused on application of the right-to-control test in determining whether a worker is an independent contractor or employee for purposes of Ohio workers’ compensation. (State ex rel. Friendship Supported Living v. Ohio Bureau of Workers’ Compensation, ___Ohio St.3d___, 2023-Ohio-957). In assessing the status of direct-care workers at an in-home care provider, the Ohio Supreme Court’s decision emphasized the fact-intensive analysis required.
In the recent case, the employer, Friendship, was a provider of in-home direct-care services to developmentally disabled persons under an Ohio Department of Developmental Disabilities program. The issue before the court was the classification of Friendship’s direct-case workers for workers’ compensation purposes.
The case started with a 2017 premium audit of Friendship by the Bureau of Workers’ Compensation (BWC). In previous BWC premium audits, Friendship’s direct-care workers were classified as independent contractors. However, in the 2017 premium audit, the BWC determined that the direct-care workers were employees, not independent contractors.
The BWC’s adjudicating committee and then its administrator’s designee denied Friendship’s subsequent protests finding that the direct-care workers were employees and not independent contractors. In fact, the designee found “that there is sufficient control by Friendship over the activities of the workers to conclude that the workers are employees of Friendship.”
On appeal to the Tenth District Court, things turned Friendship’s way. The court granted Friendship a writ of mandamus, ordering the bureau to vacate its order classifying Friendship’s direct-care workers as employees and to return the premium payments made by Friendship. Friendship won! Then, the BWC appealed to the Ohio Supreme Court.
In its review, the Ohio Supreme Court cited common-law factors for deciding whether a worker is an employee or independent contractor for workers’ compensation purposes. The key determination according to the court is, who has the right of control over the manner or means of doing the work. The right-to-control test is not marked by a bright-line rule but rather a set of non-exhaustive factors. The court analyzed the following factors of the right-control-test:
- Who controls the details and quality of the work
- Who controls the hours worked
- Who selects the materials, tools and personnel used
- Who selects the routes traveled
- The length of employment
- The type of business
- The method of payment
- Any pertinent agreements or contracts
The Supreme Court ultimately found that the BWC’s explanation for concluding that the direct-care workers were employees was vague and did not address many of the factors listed above. The court returned the issue to the BWC with instructions to consider the above factors.
For employers facing a BWC premium audit, the challenge of navigating the appeal process from the bureau’s adjudicating committee to the administrator’s designee, to filing a writ of mandamus with the Court of Appeals to the Ohio Supreme is a lengthy, arduous process. An employer hit with a BWC premium audit after any type of change in the classification of its workers should be prepared to marshal all the relevant facts to support its desired classification.
Employers facing a disputed premium audit should contact their McDonald Hopkins workers’ compensation attorney for assistance.