CHARLIE JEFFREYS v. THE UNINSURED EMPLOYER‘S FUND, ET AL.
Record No. 171467
Supreme Court of Virginia
FEBRUARY 14, 2019
JUSTICE D. ARTHUR KELSEY
PRESENT: All the Justices
FROM THE COURT OF APPEALS OF VIRGINIA
Charlie Jeffreys was injured while renovating a historic school building. The Virginia Workers’ Compensation Commission denied his claim for benefits against a church and a historical society, which Jeffreys had alleged were his statutory employers. The Court of Appeals affirmed. On appeal to us, Jeffreys argues that the Court of Appeals erred in affirming the Commission‘s decision not to award him benefits. We disagree.
I.
A.
By statute, determinations of the Commission “shall be conclusive and binding as to all questions of fact.”
B.
The Harvey Colored School (“the School“) is a small building where African-American students in Pittsylvania County were educated from approximately the 1880s to the mid-1900s. About 15 former students and interested individuals, led by Annie Mosby, formed the Harvey School Historical Society (“the Historical Society“)1 “to restore the school to its original condition” and to register it as a historical site. 2 J.A. at 804. The Historical Society operated as a non-profit organization. Its mission was “to purchase, restore, preserve, and maintain the Harvey Colored School as a historical site.” Id. at 801-02. Mosby lived in California and directed the Historical Society‘s activities from there.
In 2012, Mosby entered into an agreement with William Johnson, an unlicensed contractor, to relocate and renovate the school. Having no construction experience, Mosby relied entirely on Johnson to plan and perform the renovation. While she was briefly present on site at the beginning of the project, Mosby lived in California and did not exercise any control over Johnson or over any aspect of his working conditions. Johnson initially worked with one other individual on the job, but he later asked Mosby for permission to hire Jeffreys as well. Mosby agreed. Johnson was the “boss” on the job, id. at 522, 700, and exclusively managed Jeffreys on the worksite. Johnson kept records of Jeffreys‘s work hours and reported them to Mosby for payment. Mosby never met Jeffreys and did not know his name prior to his injury.
While working for Johnson, Jeffreys was badly injured when a beam fell from the roof of the school building and struck him on the neck. He filed a claim for workers’ compensation benefits against Mosby, the Church, and the Historical Society — but not against Johnson. Because none of the defendants had workers’ compensation insurance, the Uninsured Employer‘s Fund (“UEF“) was also made a party. Jeffreys argued that Mosby, the Church, and the Historical Society were his direct employers and thus owed him compensation. In the alternative, Jeffreys contended, each defendant was his statutory employer pursuant to
A deputy commissioner agreed that Jeffreys was the direct employee of the Historical Society as well as Mosby, who was acting as the Historical Society‘s “agent,” and that the Historical Society was in turn “a part of the Church, making the Church an employer of” Jeffreys as well. 2 J.A. at 879-81. The deputy commissioner entered an award against the Church. The full Commission disagreed in part, holding that Mosby was not Jeffreys‘s direct employer because she had lacked any meaningful control over his work or over how he performed it. However, the Commission affirmed the deputy commissioner‘s award against the Church because no party had appealed that decision.
The Court of Appeals affirmed the Commission‘s finding that Mosby was not Jeffreys‘s direct employer, reversed the Commission‘s finding that the UEF had waived its argument regarding the Church and the Historical Society, and remanded the case for further factfinding. See Uninsured Emp‘r‘s Fund v. Jeffreys, Record No. 1676-15-3, 2016 WL 1637823, at *6 (Va. Ct. App. Apr. 26, 2016) (unpublished). On remand, the Commission held that “there was insufficient evidence to conclude the Historical Society and the Church were the claimant‘s employer.” 2 J.A. at 1034. Neither had exercised any control over Jeffreys. Instead, Johnson had “recruited” Jeffreys, had told Jeffreys “what to do each day, [had] kept track of his hours and [had been] the ‘boss’ on the project.” Id. at 1035. Moreover, the Commission added, “Johnson was not an employee of Mosby either.” Id. Johnson “was free to adopt the methods he needed to accomplish the result” and to decide “what materials were needed.” Id. Johnson was, at most, “an independent contractor,” id. at 1036, and thus, Jeffreys, who worked under Johnson, could not have been a direct employee of any of the individual defendants.
Having held that none of the three individual defendants were Jeffreys‘s direct employer, the Commission turned to the statutory-employer argument. “There is no evidence the Church and Historical Society were in the construction business,” the Commission stated, “[h]ence there is no statutory employer situation at issue here.” Id. Jeffreys appealed
II.
On appeal to us, Jeffreys contends that the Court of Appeals and the Commission erroneously held that the Church and the Historical Society were not his statutory employers. We disagree.
A.
The Workers’ Compensation Act requires an employment relationship of some kind to exist between a claimant and the party allegedly liable for compensation. The usual scenario is a true employer-employee relationship in which the employer controls the employee‘s jobsite conditions, employment tasks, and working hours. In 1991, however, the General Assembly enacted
A. When any person (referred to in this section as “owner“) undertakes to perform or execute any work which is a part of his trade, business or occupation and contracts with any other person (referred to in this section as “subcontractor“) for the execution or performance by or under such subcontractor of the whole or any part of the work undertaken by such owner, the owner shall be liable to pay to any worker employed in the work any compensation under this title which he would have been liable to pay if the worker had been immediately employed by him.
B. When any person (referred to in this section as “contractor“) contracts to perform or execute any work for another person which work or undertaking is not a part of the trade, business or occupation of such other person and contracts with any other person (referred to in this section as “subcontractor“) for the execution or performance by or under the subcontractor of the whole or any part of the work undertaken by such contractor, then the contractor shall be liable to pay to any worker employed in the work any compensation under this title which he would have been liable to pay if that worker had been immediately employed by him.
C. When the subcontractor in turn contracts with still another person (also referred to as “subcontractor“) for the performance or execution by or under such last subcontractor of the whole or any part of the work undertaken by the first subcontractor, then the liability of the owner or contractor shall be the same as the liability imposed by subsections A and B of this section.
Subsection A addresses the scenario in which “any person” contracts with an independent contractor to perform work within the “trade, business or occupation” of that “any person.”
Subsection B involves a three-tiered scenario: A “person” hires a contractor to perform work outside the scope of that person‘s “trade, business or occupation.”
The Act makes clear, however, that these scenarios are exceptions to the general rule that “nothing in [the Act] shall be construed to make the employees of any independent contractor the employees of the person or corporation employing or contracting with such independent contractor.”
B.
Before focusing on the specific provisions governing this case, we must address Jeffreys‘s overarching assertion that the Workers’ Compensation Act should receive “a liberal construction and application of the law in favor of the worker” in order to “accomplish the purpose of the Legislature in enacting our Workers’ Compensation statute,” Appellant‘s Br. at 7, 28-29. We frequently apply this simple principle6 but guard against doing so simplistically.7
Jeffreys contends that he lost his claim for compensation benefits because the Court of Appeals and the Commission had failed to interpret
Rightly applied, the liberal-construction principle means only that an interpretation of the Workers’ Compensation Act should take into account the humane, beneficent purposes embedded in the legislative quid pro quo. That interpretative preset does not “permit a liberal construction to change the meaning of the statutory language or the purpose of the Act,” American Furniture Co. v. Doane, 230 Va. 39, 42 (1985), or “authorize the amendment, alteration, or extension of its provisions,” Van Geuder v. Commonwealth, 192 Va. 548, 553 (1951) (citation omitted). Nor does the principle “go to the extent of requiring that every claim asserted should be allowed,” id. (citation omitted),10 or permit the Act to be “converted into a form of health insurance,” Doane, 230 Va. at 42.11 Instead, the Act should be liberally interpreted consistent with its text and its underlying quid-pro-quo purpose to benefit all workers.
C.
1.
The contest in this case involves the application of subsection A of
The starting point in the analysis is “identifying ‘the nature of the particular owner‘” or contractor, which often requires us to distinguish between a “governmental entity or public utility” on the one hand and “a private entity” on the other. Id. at 195 (quoting Nichols v. VVKR, Inc., 241 Va. 516, 521 (1991)). A private entity, unlike a governmental entity or a public utility, has broad discretion to choose its activities and, thus, to define its own unique nature. See Henderson, 233 Va. at 383. “Whereas a private business entity is essentially self-defining in terms of its trade, business, or occupation, a public utility has duties, obligations, and responsibilities imposed upon it by statute, regulation, or other means.” Id.
When addressing private entities, we generally apply the normal-work test to subsection A of
whether the subcontractor‘s activity is useful, necessary, or even absolutely indispensable to the statutory employer‘s business, since, after all, this could be said of practically any repair, construction or transportation service. The test . . . is whether this indispensable activity is, in that business, normally carried on through employees rather than independent contractors.
Shell Oil Co., 212 Va. at 722 (emphasis in original) (citation omitted). This test serves as a “corollary guide, sometimes useful but not indispensable, in applying the literal language of the statutes to the facts in a particular case.” Rodriguez, 287 Va. at 196 (citation omitted).
One recurring problem in applying this statute is how to treat a company with no employees. We have stated that a construction company whose trade, business, or occupation is obviously construction cannot disclaim statutory-employer status simply by hiring no employees and subcontracting all of its construction projects to others. See id. at 194; Henderson, 233 Va. at 381. But we have also explained that merely because a private entity has no employees and relies solely on independent contractors does not mean that everything that the contractors do constitutes the trade, business, or occupation of the entity, even though it oversees the contractors to ensure that the work is “done properly.” See Rodriguez, 287 Va. at 197-98.
In Rodriguez, a developer was engaged in the business of developing an industrial warehouse park. Having no employees of its own, the developer hired a contractor to construct the warehouses. We observed that “[t]he development of the property, including the construction of the warehouses, was obviously essential” to the developer‘s business plan. Id. at 197. That fact, however, did not necessarily mean that warehouse construction was part of the developer‘s trade, business, or occupation. “While many activities may be important or even ‘indispensable’ to the success of a business, those activities do not necessarily constitute the trade, business, or occupation of the owner.” Id. (citation omitted).
Put another way, “[t]he test is not whether the owner, by engaging an independent contractor to perform some part of his business, thereby engages in the business of the independent contractor. It is whether the
2.
In this case, Jeffreys had the burden of proving his statutory-employer claim for workers’ compensation benefits from the Church and the Historical Society. See Byrd v. Stonega Coke & Coal Co., 182 Va. 212, 219 (1944) (“[T]he claimant must carry the burden of proving his claim.“). Acting in its factfinding capacity, the Commission reviewed the history of the Historical Society, its informal governance structure, its charitable and nonprofit purposes, its fundraising and community-outreach efforts, its lack of any experience or involvement in the business of construction or renovation, and Mosby‘s role in its activities. Jeffreys failed to persuade the Commission that his reconstruction work on the school building was part of the trade, business, or occupation of the Church or the Historical Society. Discerning no misunderstanding of law on the Commission‘s part, the Court of Appeals held that a rational factfinder could find Jeffreys‘s allegations factually unpersuasive. We agree.
The Court of Appeals began its analysis by “identifying ‘the nature of the particular owner‘” or contractor. Rodriguez, 287 Va. at 195 (citation omitted). Viewing the factual record through the prism of an appeal — which required it to consider the facts in the light most favorable to the Church and the Historical Society as the prevailing parties before the Commission — the Court of Appeals followed the evidence in detail to its inevitable, rational conclusion:
When we review the characteristics of the Historical Society and the activities normally carried out by its members, we conclude that the complete reconstruction of the Harvey School was not a part of the Historical Society‘s “trade, business, or occupation.” While the ultimate goal of the Historical Society was to “restore” the school, the rebuilding project at issue was simply beyond its capabilities.
The Historical Society was not a construction company or a commercial property developer. It was a small, grassroots, nonprofit organization with limited resources. It had approximately fifteen members at the height of its success. None of the evidence presented in this case established, or even implied, that the members of the Historical Society could undertake the construction project at issue.
Similarly, the evidence failed to establish that the members of the Historical Society engaged in construction-related activities on a regular basis. Rather, the members of the Historical Society engaged in fundraising activities and activities designed to encourage community support for their project. Correspondence between Mosby and members of the Historical Society established that the Historical Society intended to hire contractors to dismantle, move, and rebuild the school, and the evidence presented in this case did not imply that members of the Historical Society intended to participate in this project.
We acknowledge that the restoration of the Harvey School necessarily involved certain construction-related activities. The complete reconstruction of the school building, however, fell outside of any routine restoration work. While the Historical Society was formed to “restore” the school, its “trade, business, or occupation” did not include the complete reconstruction of the building.
For these reasons, we conclude that the reconstruction of the Harvey School was not the Historical Society‘s “trade, business, or occupation.” The complete reconstruction of the school was beyond the restoration project envisioned by the Historical Society, and its members were not involved in the reconstruction project or other construction activities. Accordingly,
we conclude that the Commission correctly determined that the Historical Society and the Church were not engaged in the construction business, and we affirm its decision that neither of those parties was Jeffreys‘s statutory employer.
Jeffreys v. Uninsured Emp‘r‘s Fund, Record Nos. 0660-17-3, 0693-17-3, 2017 WL 4363874, at *7-8 (Va. Ct. App. Oct. 3, 2017) (unpublished) (citations omitted).14
When the legal principles properly frame the question, “[d]etermining whether work is part of the trade, business, or occupation of an owner ‘depends upon the facts and circumstances of the particular case,‘” Rodriguez, 287 Va. at 198 (citation omitted). As the Court of Appeals correctly held, the Commission applied the correct legal standard and acted within its factfinding discretion when it concluded that Jeffreys had failed to prove that the Church or its Historical Society were his statutory employers.15
Jeffreys also takes issue with several statements of the Court of Appeals and the Commission to the effect that the Church and the Historical Society were not engaged in construction. See Appellant‘s Br. at 25-27; Reply Br. at 6-7; Oral Argument Audio at 1:18 to 3:11, 30:50 to 31:25. To Jeffreys, these statements suggest that the Commission and the Court of Appeals misunderstood the proper legal standard. We find no merit in this assertion because “we will not fix upon isolated statements of the [Court of Appeals or the Commission] taken out of the full context in which they were made, and use them as a predicate for holding the law has been misapplied,” Yarborough v. Commonwealth, 217 Va. 971, 978 (1977).
III.
We affirm the Court of Appeals, finding no error in its reasoning or in its result.
Affirmed.
Notes
Cinnamon, 238 Va. at 475 n.1 (alterations and citation omitted).purpose to bring within the operation of the Compensation Act all persons engaged in any work that is a part of the trade, business or occupation of the original party who undertakes as owner, or contracts as contractor, to perform that work, and to make liable to every employee engaged in that work every such owner, or contractor, and subcontractor, above such employee. But when the employee reaches an employer in the ascending scale, of whose trade, business or occupation the work being performed by the employee is not a part, then that employer is not liable to that employee for compensation. At that point [Code § 65.2-101] intervenes and the employee‘s right of action at common law is preserved.