Randall v. Ocean View Construction Co.

WOLLHEIM, J.,

dissenting.

The majority concludes that petitioner was not subject to the conclusive presumption of ORS 656.027(7)(b), the statute that the ALJ relied on in determining that petitioner was, in fact, an independent contractor. Choosing to focus on petitioner’s status rather than the nature of the work in order to determine whether he is a “nonsubject worker,” the majority’s conclusion may yield a kinder result, but it is an incorrect one. Because petitioner is, in fact, a nonsubject worker under ORS 656.027(7)(b), I respectfully dissent.

A historical overview of this problem will provide context for the current dispute.

Whether an individual is covered or excluded from coverage under the Oregon Workers’ Compensation Act has plagued both the legislature and the courts since the adoption of Oregon’s first Workmen’s Compensation Act. Both branches of government have repeatedly attempted to establish a “bright line” rule, and, as this controversy so ably demonstrates, establishing a “bright line” rule continues to be an elusive task.

Initially, the courts attempted to use the common-law doctrine of master and servant. As the Supreme Court recognized in Woody v. Waibel, 276 Or 189, 192, 554 P2d 492 (1976), “[a]n examination of the cases, both in the workmen’s compensation field and in the area of vicarious liability, reveals that in many instances it is impossible through the employment of any rational process to determine [whether an individual is a worker or independent contractor].” Next, the courts used the right to control test to determine if an individual was a worker or an independent contractor. When the right to control test proved unsatisfactory, the courts judicially adopted the relative nature of the work test. Id. at 195. Over time, this test, too, proved to be unsatisfactory.

The legislature has also tackled this problem. The basic premise is that all workers are subject workers unless *164the worker is excluded. ORS 656.027. Currently, there are 27 exceptions that identify nonsubject workers. The legislature has attempted to draw a bright line by adopting a single definition of “independent contractor” that applies in multiple areas, e.g., unemployment, income tax, construction contracts, and workers’ compensation. ORS 670.600. The last major revision of ORS 656.027(7) was in 1995; that is the statute we interpret here.

The legislature has adopted a “conclusive presumption” that an individual is an independent contractor if that person has a CCB license and is involved in activities subject to ORS 701.035. ORS 656.027(7)(b). There can be no question concerning the legislature’s intent. However, determining workers’ compensation coverage for construction workers continues to defy quick resolution.

The facts in this controversy establish that both Ocean View and petitioner intended to establish an employer and employee relationship. However, the parties’ subjective intent does not control, because whether an individual is a worker or independent contractor is a question of law. Oregon Drywall Systems v. Natl. Council on Comp. Ins., 153 Or App 662, 666, 958 P2d 195 (1998).

The issue is whether petitioner is a “subject worker” or a “nonsubject worker” under ORS 656.027, which provides, in part:

“All workers are subject to this chapter except those nonsubject workers described in the following subsections:
«if: if: if: if: if:
“(7)(a) Sole proprietors, except those described in paragraph (b) of this subsection. When labor or services are performed under contract, the sole proprietor must qualify as an independent contractor.
“(b) Sole proprietors actively registered under ORS 671.525 or licensed under ORS 701.035. When labor or services are performed under contract for remuneration, notwithstanding ORS 656.005(30), the sole proprietor must qualify as an independent contractor. Any sole proprietor registered under ORS 671.525 or licensed under ORS *165701.035 and involved in activities subject thereto is conclusively presumed to be an independent contractor.”

(Emphasis added.) Thus, to be a nonsubject worker under ORS 656.027(7)(a), a sole proprietor working under contract must qualify as an independent contractor. Under ORS 656.027(7)(b), a sole proprietor is conclusively presumed to be an independent contractor if he or she holds a CCB license under ORS 701.035 and is “involved in activities subject thereto.”

It is undisputed that petitioner was a sole proprietor licensed under ORS 701.035, which provides that “[a]n applicant must qualify as an independent contractor under ORS 670.600 to be eligible for a license with the [CCB].” In turn, ORS 670.600 provides a list of standards for determining independent contractor status.1 Thus, a sole proprietor who has obtained a license pursuant to ORS 701.035 has already been determined to be an independent contractor under ORS 670.600.

A sole proprietor is conclusively presumed to be an independent contractor if he or she is licensed under ORS 701.035 and is “involved in activities subject thereto.” In order to determine exactly what “activities subject thereto” are under ORS 701.035,1 must embark on a journey of statutory interpretation.

ORS 701.035 provides the qualifications for licensing under the CCB. ORS 701.035(4) provides that a decision by the CCB that a person is an independent contractor “applies only when the person is performing work of the nature described in ORS 701.055 and 701.060 ”2 In turn, ORS *166701.055(1) provides that “[a] person may not undertake, offer to undertake or submit a bid to do work as a contractor unless that person has a current, valid license issued by the [CCB] .”3 Under ORS 701.005(2), a “contractor” is defined as

“a person who, for compensation or with the intent to sell, arranges or undertakes or offers to undertake or submits a bid to construct, alter, repair, add to, subtract from, improve, inspect, move, wreck or demolish, for another, any building, highway, road, railroad, excavation or other structure, project, development or improvement attached to real estate or to do any part thereof. ‘Contractor’ includes general contractors, residential-only contractors and specialty contractors as defined in this section.”

Therefore, work subject to licensing under ORS 701.035 is the work of a contractor as discussed in ORS 701.055 and defined by ORS 701.005. Petitioner’s work performing “construction carpentry work, primarily framing,” was work “as a contractor” under ORS 701.005, ORS 701.055, and ultimately ORS 701.035.

The majority correctly states that work of the nature described in ORS 701.055 is the work of a contractor that requires a CCB license under ORS 701.035. 196 Or App at 159. However, the majority’s focus on a different word in the statute causes us to part ways. The majority stresses the need for a license and frames the question as whether petitioner was performing work that required a license. The majority states that, because petitioner was an employee of a contractor, under ORS 701.010(8), the work petitioner performed did not require a license. Id.

ORS 701.010 provides, in part:

“The following persons are exempt from licensure under this chapter:
*167«Hí H? H< ‡
“(8) A person who performs work subject to this chapter as an employee of a contractor.”

The legislature did not indicate that employees of contractors were removed from the definition of “contractor” in ORS 701.005. Instead, the legislature included employees of contractors among those who are eocempt from licensure as contractors. The idea of exemption implies that, although they fall by definition within a category, the legislature has decided to treat employees of contractors differently. See Black’s Law Dictionary 593 (7th ed 1999) (“exempt” defined as “[firee or released from a duty or liability to which others are held”). For example, income that is exempt from taxation is no less still income. Here, the fact that the legislature recognized employees of contractors as a group that specifically had to be identified and exempted in order not to be subject to the licensure requirement suggests that the legislature understood that, without that identification and exemption, employees of contractors would be subject to the licensure requirement because they fall under the general definition of “contractor.”

Although ORS 701.010(8) exempts employees of contractors from having to obtain a license in order to perform contracting activities, it does not change the nature of the activities regulated by ORS 701.035 and ORS 701.055. An employee of a contractor performs the same physical work that a contractor performs. That is to say, the status of the person changes; the nature of the work remains the same.

ORS 656.027 provides that petitioner is a nonsubject worker if he performs activities subject to the licensing statute. However, the statute does not state that petitioner is a subject worker if he is exempt from licensure, which is what the majority would have us hold. The statute’s focus is on the nature of the activity and not the status of the petitioner. That petitioner is exempt from licensure and therefore does not require a license in this instance does not change the fact that he had a CCB license and that he was engaged in activities that, unless he was exempt under ORS 701.010(8), require a CCB license. The majority strays by removing its focus from the activity performed, namely, working as a contractor, and *168instead focusing on the status of petitioner — a licensed contractor, exempt from licensure in the case at hand.

I turn to Judge Edmonds’s concurrence. He argues that ORS 701.005(2) “contemplates two discrete events.” 196 Or App at 161 (Edmonds, J., concurring). Judge Edmonds argues that the statute not only refers to the work that is performed but that it also requires the person “to arrange, or undertake or offer to undertake, or submit a bid to do the work.” Id. I disagree with Judge Edmonds’s division of ORS 701.005(2) into “two discrete events.” Id. ORS 701.005(2) defines a contractor as a person who engages in one of several activities, including arranging to do construction work or undertaking to do construction work or offering to undertake to do construction work or submitting a bid to do construction work. Any of those actions is by definition the work of a contractor. In this case, petitioner undertook to do construction work for compensation, which makes him a contractor under ORS 701.005(2).

If a person is a sole proprietor, has a CCB license, and is engaged in the work of a contractor as defined in ORS 701.005, that person is “conclusively presumed” to be an independent contractor and a nonsubject worker. Petitioner is a sole proprietor, has a CCB license, and was engaged in construction work, which is part of the definition of a contractor’s work. He is, therefore, conclusively presumed to be a nonsubject worker.

The term “conclusively presumed” is not statutorily defined in the workers’ compensation statutes. Under PGE v. Bureau of Labor and Industries, 317 Or 606, 610-12, 859 P2d 1143 (1993), we seek to discern the legislature’s intent. In doing so, we give words of common usage their plain, natural, and ordinary meaning by consulting dictionaries. Id. at 611. The term used here,’’conclusively presumed,” is not necessarily a term of common usage and has a special meaning in the law. “Conclusive presumption” is defined as “[a] presumption that cannot be overcome by any additional evidence or argument * * *. —Also termed absolute presumption; irrebuttable presumption; mandatory presumption * * Black’s at 1204 (italics in original).

Judge Edmonds contends that, under Little Donkey Enterprises, Inc. v. SAIF, 118 Or App 54, 58, 845 P2d 1298, *169modified on other grounds on recons, 121 Or App 643, 856 P2d 323 (1993), “a person may function simultaneously as the sole proprietor of one business (an independent contractor) and as an employee of another business for purposes of the worker’s compensation law.” 196 Or App at 162 (Edmonds, J., concurring). In Little Donkey Enterprises, Inc., we stated that “[t]here is no indication that, with respect to their relationships with petitioner, the [petitioners] functioned in any of the capacities excluded from coverage under ORS 656.027(7), (8), or (9).” 118 Or App at 58. Here, Judge Edmonds contends that, because petitioner did not need his CCB license for the work he performed at the time of the injury, he was not involved in activities subject to the license. Perhaps Judge Edmonds’s analysis is correct under ORS 656.027(7) (1989). However, in 1995, after Little Donkey Enterprises, Inc., was decided, the legislature significantly amended ORS 656.027(7) to its present form. See Or Laws 1995, ch 216, § 3. The current statute includes a conclusive presumption that sole proprietors who have CCB licenses and are engaged in the activities for which they are licensed are independent contractors. See ORS 656.027(7)(b) (“Any sole proprietor registered under ORS 671.525 or licensed under ORS 701.035 and involved in activities subject thereto is conclusively presumed to be an independent contractor.” (Emphasis added.)). Thus, the analysis in Little Donkey Enterprises, Inc., is no longer controlling.

Because petitioner is a sole proprietor who has a CCB license and was engaged in the work of a contractor, he is conclusively presumed to be an independent contractor. Accordingly, petitioner is a nonsubject worker under ORS 656.027.

I respectfully dissent.

Schuman, J., joins in this dissent.

ORS 670.600 also provides the definition for “independent contractor” found in ORS 656.005(31), the definition section of the Workers’ Compensation Act.

The majority notes that the work of the nature mentioned in ORS 701.035(4) is relevant only to a decision of the board that a person is an independent contractor. 196 Or App at 158. In fact, the statute provides that the board’s determination that a person is an independent contractor under ORS 670.600 is relevant to a determination of whether a person is an independent contractor only when the person is performing work of the nature described in ORS 701.055 and ORS 701.060. Here, petitioner was performing such work.

ORS 701.035(4) would apply if someone holds a CCB license and also works as a bouncer for a bar and gets injured at the bar. We would then be required to determine if the bouncer was working as an independent contractor. In that situation, the fact that the board had determined that the bouncer was an independent con*166tractor for purposes of CCB licensing would not affect whether the bouncer was an independent contractor for the purposes of serving as a bouncer.

It is important to note that our conclusion that petitioner’s construction work is work as a contractor under ORS 701.005 does not require all construction workers to hold a contractor’s license. Although ORS 701.055 states that “[a] person may not undertake, offer to undertake or submit a bid to do work as a contractor unless that person has a current, valid license issued by the [CCB],” ORS 701.010(8) exempts from the requirement of licensure “[a] person who performs work subject to this chapter as an employee of a contractor.”