§ 1.4.6 WORKERS' COMPENSATION.

• Jurisdiction: Arizona

§ 1.4.6 Workers' Compensation. Whether or not an employer is required to pay workers' compensation depends on the employment status of the particular worker.¹¹ A.R.S. § 23-902(D) sets forth guidance for creating an independent contractor through a written agreement that creates a rebuttable presumption of an independent contractor relationship, including eight specific criteria that must be satisfied by the agreement. Additionally, A.R.S. § 23-902(C) establishes that a person who is in engaged in performing a definite job or piece of work for a business is an independent contractor, as long as that person is independent of the business in the execution of the work and not subject to the rule or control of the business for which the work is done.

If the worker is considered an employee, the employer must pay workers' compensation. However, if the worker is an independent contractor, the employer is not required to pay workers' compensation. The general test to determine employment status often hinges on how much control an employer exercises over the services of the person in question. The Arizona Court of Appeals, in a case where a pulp wood contractor incorrectly classified woodcutters as independent contractors, stated the following:

In determining the status of petitioner the independent contractor issue must be resolved only after considering "the totality of the facts and circumstances of each case, examining various indicia of control." The "right to control" a worker's activities must be exercised within the context of an ongoing and integral business process before the worker will be deemed an employee. The relevant indicia include the [following] factors: . . . the duration of the employment, the method of payment, who furnishes necessary equipment; the right to hire and fire; who bears responsibility for workmen's compensation insurance; the extent to which the employer may exercise control over the details of the work; and whether the work was performed in the usual and regular course of the employer's business.12

The facts before us clearly show a business entrepreneur who, while taking great pains to disclaim the right to control his employees except as to the end result of their labors, simultaneously "contracted out the very heart" of his own enterprise. We hold that under the facts of this case such hirelings, whose work is the "very heart" of the entrepreneur's business, whose efforts are expended in the usual and regular course of the owner's business, and whose job is an ongoing basic employment activity, of the business owner as opposed to an incidental part of the owner's normal operation, are not independent contractors for the purpose of workers' compensation law.¹³

The Arizona Court of Appeals applied the same test quoted above in holding that an off-duty uniformed Phoenix policeman was an independent contractor of a Phoenix motel where he was fatally wounded when he stopped a suspected robber.¹⁴ The court held that the motel was not responsible to pay workers' compensation benefits to the officer's survivors because the motel had no control over the performance of security duties by the officer. However, the court held that the City of Phoenix was liable to pay survivor's benefits because, even though off duty, the officer was acting in the line of duty as a police officer when he stopped the suspected robber.

In another case applying this control test, a homebuilder contracted with an individual to act as a "superintendent" at various construction sites. His responsibilities included supervising subcontractors, overseeing the progress of construction and hauling trash. The company provided the...