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Sellers v. Tech Service, Inc.

Court of Appeals of South Carolina

August 9, 2017

Stacey Sellers, Claimant, Respondent,
Tech Service, Inc., Employer, and Builders Mutual Insurance Company, Carrier, Appellants. Appellate Case No. 2015-001676

          Heard May 3, 2017

         Appeal From The Workers' Compensation Commission

          Richard C. Detwiler and Jacqueline M. Pavlicek, of Callison, Tighe & Robinson, LLC, of Columbia, for Appellants.

          Robert Fredrick Goings, of Goings Law Firm, LLC, of Columbia, for Respondent.

          MCDONALD, J.

         In this appeal from the Appellate Panel of the South Carolina Workers' Compensation Commission (the Commission), Appellant Tech Service, Inc. (Tech Service)[1] argues the Commission erred in (1) finding Respondent Stacey Sellers was a Tech Service employee, rather than an independent contractor, at the time of his injury and (2) basing its determination on immaterial information. We affirm.

         Facts and Procedural Background

         On November 8, 2013, Sellers sustained injuries while performing heating, ventilation, and air conditioning (HVAC) construction at a single-family home in the Market Commons subdivision in Myrtle Beach (City). Sellers fell from a thirty-foot extension ladder while he was "trimming out" a house and sustained injuries to his legs, back, and neck. He was subsequently hospitalized.

         On November 9, Sellers notified Riverport Insurance Company (Riverport) of his accident. On November 20, Riverport's third-party claims administrator denied the claim because Sellers had "knowingly and voluntarily" excluded himself from its workers' compensation insurance policy.[2] That same day, Sellers filed a Form 50 naming Tech Service of Myrtle Beach, LLC (TSMB) as a party to his case and requesting a hearing. On December 13, 2013, Sellers filed an amended Form 50 naming Tech Service as a party.[3]

         At the March 25, 2014 hearing before the single commissioner, Sellers testified he was a longtime employee of both Tech Service and TSMB and was working in the course and scope of this employment at the time of his accident. Sellers explained that his first cousin, Tracy Davis, is the owner of Tech Service and a co-owner of TSMB.

         In early 2013, Sellers complained to Davis about not receiving proper overtime pay and deductions from his paycheck. According to Sellers, Davis occasionally avoided paying overtime by separating the hours Sellers worked between Tech Service and TSMB. Sellers testified Davis offered to make him a "1099 employee" and help Sellers with his taxes when he filed.[4] Sellers stated Davis gave him $1, 250 in cash and instructed him to purchase his own workers' compensation insurance policy for "tax purposes only." On February 21, 2013, Sellers purchased the Riverport policy but excluded himself from it because he believed he was covered by Tech Service's policy.

         In March 2013, Davis began paying Sellers without deducting for income taxes and reporting his wages using a Form 1099 rather than a Form W-2. Although Sellers performed "side work" to make extra money both before and after the March 2013 payment change, he denied signing an independent contractor agreement or otherwise changing his employment relationship with Tech Service. Beginning March 4, however, Sellers submitted weekly "Sellers Heating and Cooling" invoices to Tech Service for payment as directed by Davis.

         To the contrary, Davis testified Sellers first approached him in January 2013 about his desire to work for himself as a subcontractor because he wanted to make more money. Davis denied that Sellers ever complained about not receiving proper overtime pay or deductions from his paycheck. However, Davis had no documentation reflecting the purpose and nature of his deductions from Sellers's pay. Davis told Sellers he could begin working as a subcontractor after he obtained a workers' compensation insurance policy and adamantly denied giving Sellers cash to purchase the policy. Davis explained that if he were going to give Sellers such funds, he would have given him a check to document the expenditure for his own business records. Davis learned about Sellers's accident from Tech Service supervisor Jacob Hamilton. Both Hamilton and Davis told Sellers he could not file a claim under Tech Service's policy because recently audited documents reflected Sellers was a subcontractor.

         By order dated August 29, 2014, the single commissioner determined Sellers was an employee of Tech Service at the time of his injury pursuant to section 42-1-130 of the South Carolina Code (2015).[5] The single commissioner dismissed TSMB. On July 17, 2015, the Commission affirmed and adopted the single commissioner's order in its entirety.

         Standard of Review

         The Administrative Procedures Act (APA) establishes the standard for our review of Commission decisions. Lark v. Bi-Lo, Inc., 276 S.C. 130, 135, 276 S.E.2d 304, 306 (1981). Under the APA, this court may reverse or modify the decision of the Commission when the substantial rights of the appellant have been prejudiced because "the decision is affected by an error of law or is clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record." Transp. Ins. Co. & Flagstar Corp. v. S.C. Second Injury Fund, 389 S.C. 422, 427, 699 S.E.2d 687, 689-90 (2010); S.C. Code Ann. §1-23-380(5)(d)-(e) (Supp. 2016). Because the existence of an employer-employee relationship is a jurisdictional question, "the [c]ourt may take its own view of the preponderance of the evidence." Shatto v. McLeod Reg'l Med. Ctr., 406 S.C. 470, 475, 753 S.E.2d 416, 419 (2013) (quoting Wilkinson ex rel. Wilkinson v. Palmetto State Transp. Co., 382 S.C. 295, 299, 676 S.E.2d 700, 702 (2009)). However, "this broader scope of review does not require this [c]ourt to ignore the findings of the Commission, which was in a superior position to evaluate witness credibility." Paschal v. Price, 392 S.C. 128, 133, 708 S.E.2d 771, 773 (2011).

         Law and Analysis

         I. Employment Test

         We are presented with the question of whether Sellers was, at the time of his injury, an employee of Tech Service rather than an independent contractor.[6] "No award under the Workers' Compensation Law is authorized unless the employer-employee or master-servant relationship existed at the time of the alleged injury for which [a] claim is made." McLeod v. Piggly Wiggly Carolina Co., 280 S.C. 466, 469, 313 S.E.2d 38, 39 (Ct. App. 1984). "The burden of proving the relationship of employer and employee is upon the claimant, and this proof must be made by the greater weight of the evidence." Lewis v. L.B. Dynasty, 411 S.C. 637, 641, 770 S.E.2d 393, 395 (2015). "South Carolina's policy is to resolve jurisdictional doubts in favor of the inclusion of employers and employees under the Workers' Compensation Act." Spivey v. D.G. Constr. Co., 321 S.C. 19, 21-22, 467 S.E.2d 117, 119 (Ct. App. 1996).

         "Under South Carolina law, the primary consideration in determining whether an employer/employee relationship exists is whether the alleged employer has the right to control the employee in the performance of the work and the manner in which it is done." Paschal, 392 S.C. at 132, 708 S.E.2d at 773. "The test is not the actual control exercised, but whether there exists the right and authority to control and direct the particular work or undertaking." Id. (quoting Kilgore Grp., Inc. v. S.C. Emp't Sec. Comm'n, 313 S.C. 65, 68, 437 S.E.2d 48, 49 (1993)). The four employment test factors regarding the right of control include: "(1) direct evidence of the right or exercise of control; (2) furnishing of ...

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