Hopp v. Advanced Contractors and Remodelers

Hopp v. Advanced Contractors and Remodelers, No. WC21-6440 (W.C.C.A. May 4, 2022)

The employee incorporated a siding work business under the name Hopp To It (HTI) in April of 2015 after several hears of doing siding work. HTI had no other employees. He contacted an insurance agent to obtain workers’ compensation and liability insurance for personal and corporate coverage.

The employee responded to an ad placed by Advanced Contractors and Remodelers (ACR) which was looking, in part, for workers for siding work. ACR uses both employees and independent contractors, using contractors to fill in as needed based on work volume. ACR paid employees hourly with taxes and benefits withheld. They paid subcontractors hourly also, but at a higher rate, based on biweekly invoices prepared by the subcontractor. The employee testified that he followed ACR’s subcontractor procedures. ACR did not withhold any taxes from the employee’s earnings. His 2015 tax returns showed a 1099 listing “ACR non-employee comp” and a Sole Proprietorship business filing.

On September 30, 2015, the employee broke both of his legs after scaffolding, erected by an ACR employee, collapsed. He reported his claim to the ACR work comp insurer, but his claim was denied on the basis that he was not an employee, and he did not contest the denial.

In February of 2016, he filed a claim in district court against ACR for negligence as a result of the ACR employee assembling the scaffolding that collapsed. In his compliant, he alleged he was an independent contractor of ACR when he was injured. He settled that claim before trial.

In October of 2017 he then sued the insurance agent alleging negligence in failing to provide workers’ compensation insurance coverage that would cover the employee personally. Again, in his complaint he alleged he was an independent contractor for ACR when he was injured. That claim also settled before trial.

In September of 2018 the employee finally brought a workers’’ compensation action against ACR and its insurer. His claim was denied at a hearing on the basis that he was not an employee of ACR at the time of his injury. The employee appealed.

On appeal, the WCCA affirmed that the employee was not an employee of ACR at the time of his injury and was instead a self-employed independent contractor ineligible for benefits. The WCCA cited the employee’s own actions such as submitting his own invoices for work to be paid, no taxes or other deductions taken from his paychecks, claiming he was an independent contractor in his district court filings, and filing tax returns claiming self-employment.

They also found no liability under Minn. Stat. 176.215 subd. 1 because the employee isn’t an “employee of a subcontractor” but is the subcontractor who failed to comply with the Statute.

The WCCA also affirmed that the employee’s claim was denied under the election of remedies provision of Minn. Stat. 176.061 subd. 1 – he chose to pursue a negligence action against ACR and in doing so, elected his remedy and is barred from pursing a workers’ compensation claim against ACR.