Employment Status

• Publication year: 2021

76 Nebraska L. Rev. 999. Employment Status

999

Note*

Individuals as Independent Contractors or Employees in Nebraska: An Examination of Larson v. Hometown Communications, Inc., 248 Neb. 942, 540 N.W.2d 339 (1995)

TABLE OF CONTENTS

I. Introduction 1000
II. Facts 1001
A. Brauner's Newspaper Carrier
Agreement with the Tribune 1001
B. Larson's Relationship with the Tribune 1002
C. Litigation of Larson's Claim 1002
III. Background 1002
A. Statutory Interpretation of the Scope of Review 1003
B. Employee/Independent Contractor Analysis 1005
C. Substitute Workers as Employees 1009
IV. Analysis 1010
A. Clarifying the Ambiguity 1011
B. Ten-Factor Analysis Applied to Larson 1013
C. Other Considerations of the Ten-Factor Analysis . . . 1017
D. Substitute Employee Doctrine Established in
Larson 1018
V. Conclusion 1019

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I. INTRODUCTION

Determining whether an individual is an employee or an independent contractor is of primary importance when the individual is injured while performing assigned or contracted work. Under Nebraska law, an employee who is injured in the course of her employment is entitled to compensation from the employer.(fn1) Once an injury occurs in the course of work, the injured individual has an incentive to argue that she is an employee. If her argument is accepted, she will be entitled to receive compensation from her employer or, more likely, the employer's insurance provider. The employer or employer's insurance provider has an opposite incentive: they want the individual classified as an independent contractor so they may avoid liability for the injury.

The Nebraska Supreme Court in Larson v. Hometown Communications, Inc.(fn2) addressed these two competing interests. In Larson, the court was faced with determining whether a young girl, Jennifer Lar-son, injured while delivering newspapers for the Fremont Tribune, was an independent contractor or an employee. At stake was whether the paper and its insurance provider would have to provide insurance coverage for Larson's injuries, which left her in a persistent vegetative state. The Tribune maintained she was an independent contractor and argued against awarding benefits under Nebraska's Workers' Compensation Act. Larson, through her father as next friend, urged the court to classify her as an employee.

In determining Larson's status as an employee or independent contractor, the court relied upon the ten-factor analysis first established in Erspamer Advertising Co. v. Department of Labor.(fn3) Along with analyzing the facts under this ten-factor analysis, the Larson court had to rule on an ambiguity between two Nebraska statutes: section 48-179 and section 48-185. Also important to the holding was whether a substitute employee is entitled to benefits under Nebraska's Workers' Compensation Act.

The Larson court clarified the statutory ambiguity in the workers' compensation law, held that substitute employees can receive workers' compensation benefits, and held that Jennifer Larson was an employee under the ten-factor analysis. Although this ruling creates no new law, Larson is important because it clarifies issues of Nebraska workers' compensation law.

The court in Larson clearly establishes the ten-factor analysis as controlling in determinations of employee or independent contractor status. Larson stands apart from other holdings because it emphasizes how each factor of the test should be applied to the facts. Larson

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also develops many individual factors of the test more fully than previous holdings concerned with employee/independent contractor determinations.

The court resolved the latent ambiguity in section 48-179 and section 48-185 by clarifying the appellate process in workers' compensation cases. Equally important was the holding that substitute employees were eligible to receive workers' compensation benefits. The court correctly held that substitute workers who are authorized by employers have the same rights as employees injured during the course of work.

Larson is the clearest application of issues concerning employee/ independent contractor analysis to date. Part II sets out the facts of this case. Part III describes the background of the statutory analysis, the development of the ten-factor test, and the background of the substitute employee doctrine. Part IV is an analysis of the court's reasoning concerning the statutory analysis, the ten-factor test, and the substitute employee doctrine. Part V concludes by summarizing the holding in Larson and by noting that the holding is a logical extension of past precedent.

II. FACTS

Jennifer Larson started delivering newspapers for the Fremont Tribune through her friendship with Valerie Brauner, who had an established newspaper route with the Tribune.(fn4) When Jennifer was twelve-years-old, she was struck by an automobile while she was delivering newspapers for the Tribune,(fn5) a publication of Hometown Communications, Inc. and Hometown Operations, Inc.(fn6) Jennifer sustained severe and permanent injuries and as a result was left in a persistent vegetative state.(fn7)

A. Brauner's Newspaper Carrier Agreement with theTribune(fn8)

During July 1989, Valerie Brauner entered into an "Independent Carrier Agreement" with the Tribune. The Tribune agreed to furnish a delivery schedule and Brauner, as carrier, agreed to deliver all newspapers according to the schedule. Under the agreement, the Tribune was to furnish Brauner with the required quantity of newspa

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pers. Brauner agreed to pay for the papers, but she was free to engage in other business activities as long as the papers were delivered on time. Additionally, the agreement provided for the dissolution of the relationship by either party upon twenty-four days notice. The Tribune supplied Brauner with a "Carrier Handbook," a "Vacation Handbook for Your Substitute," collection receipt cards, and a collection calendar.

The "Carrier Handbook" is a multiple page book detailing every aspect of the delivery process. The handbook states that the carrier is not an employee of the Tribune, but is an "Independent Contract Merchant." The handbook instructs the carrier on when the papers are to be delivered and where the papers are to be placed for the customer. The carrier is given detailed instructions on how to deal with situations when a customer stops a subscription or papers pile up on a porch. The carrier is also instructed to find and train substitutes if she goes on vacation. The collection calendar indicates when collections should occur. The collection cards are provided so the carrier can keep track of payments by subscribers and so the carrier can know how she is supposed to interact with each customer.

The Tribune provides all supplies, which are charged to the carrier. These supplies include rubber bands, plastic bags, carrier bags, collection cards, introduction pads, and collection pads. Every carrier is required to maintain a savings account balance to cover these bills. The Tribune also provides sales tips and promotional fliers to encourage the carrier to solicit new business and awards bonuses for each new customer the carrier obtains.

The "Vacation Handbook for Your Substitute" instructs the substitute carrier on the basics of newspaper delivery. The regular carrier is instructed on a number of steps to follow before she turns over her route to a substitute carrier. The regular carrier is required to review every aspect of the handbook with the substitute. In addition, the carrier is required to notify the Tribune when a substitute is used.

Valerie Brauner, Jennifer Larson's friend, was instructed on this material before beginning work for the Tribune. Nevertheless, Brauner had trouble completing her route and became tired of having sole responsibility for it. Splitting her route with Jennifer Larson became the solution to Valerie Brauner's delivery problems.

B. Larson's Relationship with the Tribune(fn9)

Brauner and Larson discussed dividing the delivery schedule. The girls' mothers then worked out a schedule to split the route. Brauner retained the collection duty, but the profits of the route were divided equally between the two girls. In August 1990, the Tribune was noti

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fied by letter of the arrangement, although Larson never signed a carrier agreement. The Tribune never objected to the arrangement, and the district manager responsible for the girls' route once asked the girls whether their arrangement was satisfactory. The arrangement lasted fewer than six months because of the accident involving Larson.

On February 22, 1991, Larson was struck by an automobile while delivering newspapers. She sustained traumatic brain injuries and was left in a persistent vegetative state. Demand was made upon the Tribune for workers' compensation insurance coverage. The Tribune denied coverage on the grounds that Larson was an independent contractor and not entitled to benefits. Because coverage was denied, David Larson, Jennifer's father, filed suit to force the Tribune and its insurer to cover the injuries.

C. Litigation of Larson's Claim(fn10)

David Larson, as Jennifer's father and next friend, filed suit with the Workers' Compensation Court for benefits. The trial before a single judge was bifurcated to determine first if Larson was an employee of the Tribune, and if she was, then to determine her average weekly wage. The judge ruled that Larson was an employee of the Tribune and entered a final award for benefits on June 28, 1993. The Ne-braska Workers' Compensation Review Panel reversed the award, finding as a matter of law that the trial judge erred by ruling Jennifer was an employee of the paper. David Larson appealed the ruling. The court of appeals reversed the review panel and reinstated the trial judge's decision. The Tribune and its...