Order Michigan Supreme Court
Lansing, Michigan
December 4, 2009 Marilyn Kelly,
Chief Justice
137987 Michael F. Cavanagh
Elizabeth A. Weaver
JAMES A. LOOS, JR., Maura D. Corrigan
Robert P. Young, Jr.
Plaintiff-Appellee, Stephen J. Markman
Diane M. Hathaway,
v SC: 137987 Justices
COA: 275704
WCAC: 05-000246
J.B. INSTALLED SALES, INC., a/k/a J.B.
SUPPLY and ACCIDENT FUND
INSURANCE COMPANY OF AMERICA,
Defendants-Appellants,
and
ROBINSON ROOFING,
Defendant-Appellee.
_________________________________________/
On November 4, 2009, the Court heard oral argument on the application for leave
to appeal the November 20, 2008 judgment of the Court of Appeals. On order of the
Court, the application is again considered. MCR 7.302(H)(1). In lieu of granting leave
to appeal, we REVERSE the judgment of the Court of Appeals and REINSTATE the
decision of the worker’s compensation magistrate. The Court of Appeals improperly
held that income tax records regarding whether the plaintiff was paid wages or non-
employee compensation are irrelevant to the question of whether the plaintiff is an
employee under MCL 418.161(1)(n). Such records are directly relevant to the question
of employee status. Blanzy v Brigadier, 240 Mich App 632 (2000); Betancourt v Ronald
Smith, 1999 ACO #608. Based on the Court of Appeals erroneous legal conclusion in
this case, it mistakenly concluded that the Workers’ Compensation Appellate
Commission (WCAC) had properly performed its administrative appellate review
function. The WCAC improperly reversed the magistrate’s decision based on a de novo
assessment of the record and application of incorrect legal principles regarding whether
the plaintiff was an employee. Mudel v Great Atlantic & Pacific Tea Co, 462 Mich 691,
700 (2000).
CAVANAGH, J. (concurring in part and dissenting in part).
I concur with the majority’s statement that tax records are relevant to the question
of whether a plaintiff is an employee under MCL 418.161(1)(n). However, because I
2
believe that the Workers’ Compensation Appellate Commission (WCAC) properly
performed its appellate review function, I respectfully dissent and would affirm the result
reached by the Court of Appeals.
Plaintiff fell from a roof and sustained injuries while working for Robinson
Roofing, which had contracted with J.B. Installed Sales, Inc., (J.B.) to perform roof work.
Plaintiff sought worker’s compensation benefits from J.B. under MCL 418.171. The
magistrate found that plaintiff was an independent contractor, and therefore denied
benefits, because plaintiff’s tax records revealed that his earnings from Robinson Roofing
were reported as non-employee earnings; his Social Security records indicated that
plaintiff was not an employee of Robinson Roofing; his hospital records indicated that
plaintiff identified himself as self-employed; Robinson Roofing did not inform J.B. that it
had any employees, as required by their contract; and plaintiff used some of his own tools
while working for Robinson Roofing. The WCAC reversed in a unanimous decision,
stating that “the statutory language [of MCL 418.161(1)(n)] makes it clear that the proper
focus is on the plaintiff’s actions and not the parties’ labels.” 2006 ACO 309, p 6. I
agree.
The Worker’s Disability Compensation Act defines “employee” in MCL
418.161(1)(n). The statute states that a claimant is an employee “if the person in relation
to this service does not maintain a separate business, does not hold himself or herself out
to and render service to the public, and is not an employer subject to this act.” MCL
418.161(1)(n) (emphasis added). Given the statutory language, I agree with the WCAC
that the proper focus is on the conduct of the person seeking benefits rather than the
labels attached to the relationship by the parties. Robinson Roofing’s “labeling” that it
had no employees, plaintiff’s “labeling” of himself as self-employed, and plaintiff’s tax
records, which were filed based on a Form 1099 that was supplied by Robinson Roofing,
should not have been the focus of the magistrate’s analysis. Thus, I believe that the
WCAC did not misapprehend its administrative appellate review when it determined that
the magistrate applied its findings of fact to a misconception of the law. Because I
believe that the WCAC did not misapprehend its administrative appellate role in
reviewing the magistrate’s decision, and there is evidence to support the WCAC’s
decision, I would affirm the result reached by the Court of Appeals. See Holden v Ford
Motor Co, 439 Mich 257, 268-269 (1992).
KELLY, C.J., and HATHAWAY, J., join the statement of CAVANAGH, J.
I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
December 4, 2009 _________________________________________
1201 Clerk