Jensen Tech Services v. Labor Commission
2022 UT App 18
| Utah Ct. App. | 2022Background
- Herrera, an IT technician, signed an "independent contractor" agreement with Jensen to receive job-specific dispatches; he provided many jobs through Jensen’s portal and sometimes worked near Jensen employees.
- The Agreement labeled Herrera an independent contractor, required payment by job (often), included a noncompete-like clause, required Herrera to provide his own taxes/insurance and be responsible for any subcontractors, and Jensen issued Herrera a 1099.
- Jensen supplied some items for jobs (phone line, cables/consumables, a laptop); Herrera supplied transportation, hand tools, ladder, phone/camera, and performed work unsupervised.
- Herrera fell from a ladder on a Jensen work order, was injured, and sought workers’ compensation; an ALJ initially found he was an independent contractor and denied benefits.
- The Utah Labor Commission reversed, concluding Herrera was an employee based primarily on (1) the Agreement’s noncompete/ambiguity and (2) Jensen’s right to approve final work; the Commission awarded benefits.
- The Court of Appeals set aside the Commission’s decision and remanded, holding the Commission failed to apply the full statutory right-to-control test and misapplied the significance of approving the final product.
Issues
| Issue | Plaintiff's Argument (Jensen) | Defendant's Argument (Herrera / Commission) | Held |
|---|---|---|---|
| 1) Overall classification: employee vs. independent contractor for workers’ comp | Commission misapplied law and failed to fully apply the right-to-control test; decision should be set aside | Herrera was an employee: performed same work as Jensen, worked effectively full-time for Jensen at times, Jensen could require corrections, Agreement ambiguous and construed against Jensen | Court set aside Commission decision and remanded for full application of the right-to-control factors; did not decide classification on the record |
| 2) Does the Agreement’s noncompete and ambiguity establish a right to control? | Commission improperly relied on ambiguity and noncompete to find employer control; entire agreement must be weighed | The noncompete/ambiguity limits Herrera’s competition and supports employee status | Court: noncompete is relevant but not dispositive; Commission must analyze the Agreement as a whole and balance all provisions |
| 3) Does the right to hire/fire or to subcontract weigh toward employee status? | Jensen contends limited employer control over hiring does not convert Herrera to an employee | Herrera’s Agreement imposed responsibilities for subcontractors and could be read to restrict hiring, supporting employee status | Court: Commission failed to analyze Herrera’s ability to hire subcontractors; on remand it must consider this factor (ability to substitute/hire others weighs toward independent contractor) |
| 4) Method of payment & furnishing of equipment — do these factors indicate employment? | Jensen argues mixed facts (paid by job often, 1099 issued) and provision of some equipment do not demonstrate employee status | Commission emphasized Jensen-supplied cable/laptop and weekly payments as indicia of control and employment | Court: Commission did not adequately apply caselaw to mixed payment/equipment facts; must analyze how part-time provision of materials and mixed payment methods weigh under governing cases |
Key Cases Cited
- Utah Home Fire Ins. Co. v. Manning, 985 P.2d 243 (Utah 1999) (adopts and explains the right‑to‑control factors for employee classification)
- Harry L. Young & Sons, Inc. v. Ashton, 538 P.2d 316 (Utah 1975) (factors considered together; employer control and supervision support employee status)
- Averett v. Grange, 909 P.2d 246 (Utah 1995) (extensive direction over what, when, how, and where work is performed supports employee finding)
- Osman Home Improvement v. Industrial Comm’n, 958 P.2d 240 (Utah Ct. App. 1998) (employer provision of all materials supports employee status)
- Pinter Constr. Co. v. Frisby, 678 P.2d 305 (Utah 1984) (employer control over materials and procurement is relevant to control analysis)
- Oliver v. Labor Comm’n, 318 P.3d 777 (Utah Ct. App. 2013) (court may set aside agency decision when legal standard is misapplied)