State ex rel. Ugicom Ents., Inc. v. Buehrer

[Cite as State ex rel. Ugicom Ents., Inc. v. Buehrer, 2014-Ohio-4942.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
State ex rel. Ugicom Enterprises, Inc., :
Relator, :
v. : No. 13AP-527
Stephen Buehrer, Administrator, : (REGULAR CALENDAR)
Bureau of Workers' Compensation,
:
Respondent.
:
D E C I S I O N
Rendered on November 6, 2014
Zashin & Rich Co., LPA, and Scott Coghlan, for relator.
Michael DeWine, Attorney General, and Kevin J. Reis, for
respondent.
IN MANDAMUS
ON OBJECTIONS TO THE MAGISTRATE'S DECISION
CONNOR, J.
{¶ 1} Relator, Ugicom Enterprises, Inc. ("Ugicom"), brings this original action
seeking a writ of mandamus ordering respondent, Stephen Buehrer, Administrator, Ohio
Bureau of Workers' Compensation ("administrator"), to vacate the order of the
administrator's designee which determined that certain persons were Ugicom employees,
and to order the administrator to issue a new order finding that those persons were
independent contractors, and thus not Ugicom employees, for the purpose of reporting
payroll.
{¶ 2} Pursuant to Civ.R. 53 and Loc.R. 13(M) of the Tenth District Court of
Appeals, this matter was referred to a magistrate, who has now rendered a decision and
recommendation that includes findings of fact and conclusions of law and is appended to
No. 13AP-527 2
this decision. The magistrate concluded that the adjudicating committee of the Ohio
Bureau of Workers' Compensation ("BWC") abused its discretion by utilizing the statutory
test in R.C. 4123.01(A)(1)(c) to conclude that the cable installers were Ugicom employees.
Ugicom has filed objections to the magistrate's decision, and the matter is now before us
for our independent review.
{¶ 3} As reflected in the facts given in the magistrate's decision, Ugicom is an
Ohio corporation engaged in the business of laying outside cable lines exclusively for
another company, Time Warner Cable ("Time Warner"). Ugicom operates as a web-based
virtual office. Ugicom receives batches of jobs from Time Warner, Ugicom places those
jobs onto Ugicom's website, and Ugicom cable installers view the available jobs on their
home computers. Once a Ugicom worker completes a posted job, they note their
completion of the job on the Ugicom website. The Ugicom cable installers are paid per job
they complete and each job is coded and carries a standardized rate of pay. Ugicom
workers are responsible for paying their own taxes and insurance. Ugicom believes that its
cable installers are independent contractors, and each Ugicom cable installer must review
and sign a contract titled "Ugicom Enterprises Independent Contractor Agreement."
Pursuant to the agreement, the Ugicom cable installers agree to only perform outside
cable installation for Ugicom and Time Warner.
{¶ 4} BWC Premium Auditor, Mary Jo Eyink, conducted an audit of Ugicom on
October 20, 2009. Joel Wilson, CPA, prepared a statement on October 20, 2009 for
Auditor Eyink. Wilson noted in his statement that "[t]he conducting of business with
independent contractors as subcontractors is common for the TV cable installation
business." (Stipulated Record, hereinafter "Stip.R.," 77.) Wilson stated that "[i]n between
the start and finish of the job" the Ugicom cable installers have "total independence to
complete the job according to specifications without supervision." (Stip.R. 78.)
{¶ 5} On December 10, 2009, Auditor Eyink issued a schedule of audit findings,
covering half-year periods from January 2004 through December 2008. Auditor Eyink
determined that the Ugicom cable installers were Ugicom employees, not independent
contractors, and revised the audit findings accordingly. (Stip.R. 8.) The reclassification
resulted in Ugicom owing $346,817.55 in workers' compensation premiums retroactively
to the BWC. Ugicom protested the audit findings. Auditor Eyink denied Ugicom's protest,
No. 13AP-527 3
noting that the Ugicom cable installers were employees pursuant to the factor test in R.C.
4123.01(A)(1)(c).
{¶ 6} On April 20, 2010, Ugicom filed an application for an adjudication hearing
before the BWC's three-member adjudicating committee. Ugicom supported its
application with a letter explaining why the cable installers were independent contractors,
as well as the independent contractor agreement, the affidavit of Ugicom cable installer,
Roger Sengendo, statements from another Ugicom cable installer and Ugicom's president,
and several BWC certificates of premium payments from various Ugicom cable installers.
{¶ 7} In the letter, Ugicom asserted that the BWC's reliance on the factor test in
R.C. 4123.01(A)(1)(c) was misplaced, as that statute concerned only construction
contracts. Ugicom noted that the correct test was the common law right to control test.
Ugicom contended that cable installers were independent contractors under the common
law test, as they "control[led] the manner and means of performing the cable tv
installation," decided "how many installations, if any, they [would] perform on any
particular day," and decided "when and how many hours per day they [would] work."
(Stip.R. 17.) Ugicom stated that the cable installers used their own trucks to go to the job
sites, and used their own tools and equipment at the job site. Ugicom noted that in rare
instances for large jobs, the cable installers could rent large excavating equipment from
Ugicom, and Ugicom would deduct an equipment fee from the cable installer's pay.
Ugicom also noted that, although it required its workers "to only perform outside
installation of cable lines for Time Warner Cable," the "Contractors [were] free to work for
other companies who install outside lines." (Stip.R. 18.)
{¶ 8} On August 26, 2010, the adjudicating committee held a hearing on the
matter. Although the adjudicating committee heard testimony and received evidence at
the hearing, the hearing was not recorded or otherwise made a part of the administrative
record. In the adjudicating committee's order, mailed to the parties on October 7, 2010,
the committee noted that "[b]ased upon the information submitted," including the
independent contractor agreement and Ugicom's insurance information, "and the
testimony elicited at the hearing," it was the decision of the adjudicating committee to
deny Ugicom's protest. The committee stated that "[i]n making this determination, the
Committee finds that the requirement in Ohio Revised Code § 4123.01(A)(1)(c) is
No. 13AP-527 4
satisfied, with ten or more criteria that support a finding that the workers are employees."
(Stip.R. 2.)
{¶ 9} Ugicom appealed the adjudicating committee's order to the administrator's
designee. On September 30, 2011, the administrator's designee mailed his order to the
parties. The order adopted the adjudicating committee's statement of facts and affirmed
the adjudicating committee's decision, findings, and rationale.
{¶ 10} The magistrate concluded that the administrator abused his discretion by
applying the test set forth in R.C. 4123.01(A)(1)(c) instead of the common law right to
control test to determine whether the Ugicom cable installers were employees or
independent contractors. The magistrate found support for his determination in
Archibald v. Gold Key, Inc., 5th Dist. No. 2002CA00118, 2002-Ohio-5761. Archibald
concerned a television cable installer who worked for Gold Key, Inc., performing cable
installation for Time Warner. Archibald pointed to the test in R.C. 4123.01(A)(1)(c) to
demonstrate that he was an employee of Gold Key, and the court stated that, as "this case
does not involve a construction employment issue," R.C. 4123.01(A)(1)(c) was
inapplicable as Gold Key did "not meet the definition of [a construction contract in] R.C.
4123.79(C)(2)." Id. at ¶ 19. The magistrate recommended that we issue the writ of
mandamus.
{¶ 11} The administrator presents the following objections to the magistrate's
decision:
[I.] The Magistrate erred when he found that the
Administrator "abused his discretion by applying the test set
forth at R.C. 4123.01(A)(1)(c) rather than the traditional
common law test."
[II.] The Magistrate erred when he failed to recognize that
the Administrator's findings satisfy the common law test.
[III.] The Magistrate erred in relying on the decision of
Archibald v. [G]old Key Inc., 5th Dist. No. 2002CA00118,
2002-Ohio-5761.
{¶ 12} Pursuant to Civ.R. 53(D)(4)(d), we undertake an independent review of
the objected matters "to ascertain that the magistrate has properly determined the
factual issues and appropriately applied the law." A relator seeking a writ of mandamus
No. 13AP-527 5
must establish: " '(1) a clear legal right to the relief prayed for, (2) a clear legal duty upon
respondent to perform the act requested, and (3) that relator has no plain and adequate
remedy in the ordinary course of the law.' " Kinsey v. Bd. of Trustees of the Police &
Firemen's Disability & Pension Fund of Ohio, 49 Ohio St.3d 224, 225 (1990), quoting
State ex rel. Consol. Rail Corp. v. Gorman, 70 Ohio St.2d 274, 275 (1982). "A clear legal
right exists where the [administrator] abuses its discretion by entering an order which is
not supported by 'some evidence.' " Id. For ease of discussion, we will address the
objections out-of-order.
{¶ 13} In his third objection, the administrator asserts that the magistrate erred in
relying on Archibald, because the Archibald court "made no finding that the listed factors
[from R.C. 4123.01(A)(1)(c)] could not be considered in non-construction cases to
determine the issue of control in non-construction matters." (Objections, 11-12.) However,
Archibald was a non-construction case, and the court held that R.C. 4123.01(A)(1)(c)
could not be used in that action to determine employee status. The magistrate relied on
Archibald for that purpose, and we find no error in the magistrate's reliance on Archibald.
{¶ 14} R.C. 4123.01(A) defines the term "employee" for the workers' compensation
statutes. R.C. 4123.01(A)(1)(a) and (b) define an employee as a person "in the service of"
either the state, a person, or a private corporation. R.C. 4123.01(A)(1)(c), however, states
that "[e]very person who performs labor or provides services pursuant to a construction
contract" is an employee "if at least ten of the following criteria apply," and the statute
lists twenty different criteria. See R.C. 4123.01(A)(1)(c). R.C. 4123.79(C)(2) defines a
construction contract as "any oral or written agreement involving any activity in
connection with the erection, alteration, repair, replacement, renovation, installation, or
demolition of any building, structure, highway, or bridge." The instant case does not
concern a construction contract, as that term is defined in R.C. 4123.79(C)(2), and
accordingly the factor test in R.C. 4123.01(A)(1)(c) is inapplicable in the instant action.
{¶ 15} Based on the foregoing, the administrator's third objection is overruled.
{¶ 16} In his first and second objections, the administrator asserts that the
magistrate erred in finding that the adjudicating committee had applied the R.C.
4123.01(A)(1)(c) test, and not the common law test. The administrator asserts that "the
No. 13AP-527 6
Committee did not apply the statutory test, but merely referred to some of the factors
listed in that statute to determine the matter of control." (Objections, 8.)
{¶ 17} The administrator's contention that the committee did not apply R.C.
4123.01(A)(1)(c) is refuted by the plain language of the committee's decision. The
committee expressly found that "the requirement in Ohio Revised Code § 4123.01(A)(1)(c)
is satisfied, with ten or more criteria that support a finding that the workers are
employees," and the committee listed the twelve R.C. 4123.01(A)(1)(c) factors it found
were satisfied. (Stip.R. 2.) The committee did state that, "[a]lthough this [was] not a
construction contract the same principles can be applied when determining who has
control." (Stip.R. 2.) Despite that caveat, the committee did not simply use the principles
from R.C. 4123.01(A)(1)(c) to determine the issue of control; rather, the committee
expressly applied the R.C. 4123.01(A)(1)(c) test, found more than ten of the statutory
factors satisfied, and on that basis determined that the Ugicom cable installers were
employees.
{¶ 18} Under the common law, in order to determine whether a party is an
employee or an independent contractor, the central question is "who had the right to
control the manner or means of doing the work[?]" Bostic v. Conner, 37 Ohio St.3d 144(1988), paragraph one of the syllabus. See also Gillum v. Indus. Comm., 141 Ohio St. 373(1943), paragraph two of the syllabus (noting that "if the employer reserves the right to
control the manner or means of doing the work, the relation created is that of master and
servant," however, "if the manner or means of doing the work or job is left to one who is
responsible to the employer only for the result, an independent contractor relationship is
thereby created"). To resolve this inquiry, courts must examine the individual facts of the
case and consider a "number of factors, none of which are dispositive by themselves."
Hartings v. Xu, 3d Dist. No. 10-13-11, 2014-Ohio-1794, ¶ 62, citing Bostic at 146. See also
Gillum at 375 (noting that "[e]ach case must depend on its own facts, and ordinarily no
one feature of the relation is determinative, but all must be considered together"). The
factors to be considered in this determination include, but are not limited to, "such indicia
as who controls the details and quality of the work; who controls the hours worked; who
selects the materials, tools and personnel used; who selects the routes travelled; the
No. 13AP-527 7
length of employment; the type of business; the method of payment; and any pertinent
agreements or contracts." Bostic at 146.
{¶ 19} The administrator asserts that the magistrate "erroneously concluded that
the [R.C. 4123.01(A)(1)(c)] factors may not be applied or considered if the work is non-
construction type work," and asserts that the R.C. 4123.01(A)(1)(c) test can be applied or
considered in non-construction type cases because "the type of work being performed
should not make an appreciable difference." (Objections, 9.) We disagree. If the General
Assembly had intended for the twenty factor test to apply to or be considered in non-
construction type cases, the legislature would not have limited the application of R.C.
4123.01(A)(1)(c) solely to construction contracts. The General Assembly purposefully set
out a specific test for construction contract cases, while leaving the common law right to
control test in tact for all other types of working relationships. See Hartings at ¶ 50
(noting that "the legislature only intended to redefine employees as it relates to
construction contracts in workers' compensation cases when it enacted R.C.
4123.01(A)(1)(c)," and accordingly R.C. 4123.01(A)(1)(c) did not supersede the "common
law test set out in Bostic"); Slauter v. Klink, 2d Dist. No. 18150 (Aug. 18, 2000) (noting
that, by enacting R.C. 4123.01(A)(1)(c), the legislature intended to "substitute a statutory
test for the traditional common law standard" for construction contract cases, but "the
traditional common law test would still be used to evaluate employment relationships that
fit within other parts of R.C. 4123.01(A)(1)").
{¶ 20} As R.C. 4123.01(A)(1)(c) expressly and unambiguously limits the factor test
therein to construction contracts, we are not at liberty to expand the application of R.C.
4123.01(A)(1)(c) to other types of cases. See Vought Industries, Inc. v. Tracy, 72 Ohio
St.3d 261, 265-66 (1995), quoting State ex rel. Foster v. Evatt, 144 Ohio St. 65 (1944),
paragraph eight of the syllabus (noting that " '[t]here is no authority under any rule of
statutory construction to add to, enlarge, supply, expand, extend, or improve the
provisions of the statute to meet a situation not provided for,' " as a court's "obligation is
to apply the statute as written"). Moreover, in contrast to the common law test, which
instructs courts to examine the individual facts of the case, R.C. 4123.01(A)(1)(c) sets forth
a formula to determine whether someone laboring under a construction contract is an
employee or an independent contractor. The R.C. 4123.01(A)(1)(c) test thus makes certain
No. 13AP-527 8
factors dispositive of the employment issue, and prevents the trier of fact from
considering all of the individual facts of the case, as it must under the common law test.
{¶ 21} In requesting the instant writ of mandamus, Ugicom requested both that we
vacate the orders of the adjudicating committee and the administrator's designee, and
that we issue an order determining that the Ugicom cable installers are independent
contractors. "Whether someone is an employee or an independent contractor is ordinarily
an issue to be decided by the trier of fact." Bostic at paragraph one of the syllabus. Where
the "evidence is not in conflict or the facts are admitted, the question of whether a person
is an employee or an independent contractor is a matter of law to be decided by the
court." Id. at 146. However, the issue becomes a jury question if "the claimant offers some
evidence that he was an employee rather then an independent contractor," Id. at 146-47,
or if "sufficient evidence has been submitted to allow reasonable minds to come to
different conclusions on the issue." Brown v. CDS Transport, Inc., 10th Dist. No. 10AP-
46, 2010-Ohio-4606, ¶ 10.
{¶ 22} We are unable to resolve the independent contractor issue as a matter of
law, as the contradictions between the adjudicating committee's conclusions of law and
the record evidence make it apparent that certain facts are in dispute. Moreover, because
the committee did not make findings of fact in its decision and did not identify evidence to
support many of its legal conclusions, we are unable to discern the basis for many of the
committee's legal conclusions.
{¶ 23} For example, the committee found that "[t]he employees of UGICOM must
comply with the manner and methods of UGICOM in performing their work." (Stip.R. 2.)
The committee cited no evidence to support this statement. See Ohio Adm.Code 4123-14-
06(E) (stating that the adjudicating committee, in its decisions, must "state the evidence
upon which the decision was based and the reasons for the committee's actions").
Although the committee stated that its decision was generally supported by the testimony
and evidence submitted at the hearing, because the hearing was not recorded and the
committee did not make findings of fact reflecting the evidence presented at the hearing,
we do not know what evidence the committee relied on from the hearing. Sengendo
averred in his affidavit, which was attached to Ugicom's April 20, 2010 letter, that he
"independently complete[s] the jobs" he performs for Ugicom, that he controls "when and
No. 13AP-527 9
how [he] perform[s] a particular job," and that "Ugicom does not exercise any control
over [his] day-to-day activities." (Stip.R. 27-28.) In its letter to the adjudicating
committee, Ugicom stated that the cable installers, utilizing their own "skills and
expertise, decide how to install the cable lines." (Stip.R. 17.) Accordingly, the record
evidence does not demonstrate that Ugicom controlled the manner and method of which
the cable installers worked.
{¶ 24} The committee also stated in its decision that "[t]here was testimony at
hearing that [the Ugicom cable installer's] jobs are assigned by computer," that they must
"check their computer daily for their daily assignments," and that the "hours of work are
established by UGICOM." (Stip.R. 3.) The independent contractor agreement states that
"[t]here are no designated normal Business hours," but also states that the cable installers
"shall offer services until job-call is completed" and "shall be responsible for tasks
assigned by the Company on a day to day basis." (Stip.R. 24.) Sengendo averred that
Ugicom "posts the available jobs on its website," that he was "free to choose any available
job or not to perform any jobs on a given day," and that he decides "on the number of jobs
[he] will perform and the particular jobs [he] will perform in any given day." (Stip.R. 27-
28.) Accordingly, it is unclear whether the Ugicom cable installers have jobs assigned to
them each day which they must complete, or whether they are free to choose to work any
job or no job as Sengendo averred. See Walters v. Americab, Inc., 118 Ohio App.3d 180,
183 (8th Dist.1997) (noting that the "[t]he overriding factor" in determining the right to
control issue is whether the worker "had total control over the days and hours he
worked"); Soloman v. Dayton Window & Door Co., L.L.C., 196 Ohio App.3d 16, 2011-
Ohio-6182, ¶ 16 (2d Dist.) (noting that "[t]elling a hired person that he must work
from this hour to this hour shows control over that person," but "[s]etting a deadline for
the completion of a job does not show the same level of control").
{¶ 25} The committee also concluded that the Ugicom "employee is required to
follow the order of work set by UGICOM in the installation of cable lines." (Stip.R. 3.) The
committee cites no evidence to support this statement and, in contrast, Sengendo averred
that he controls when and how he performs a particular job and that Ugicom exerts no
control over his day-to-day activities. Similarly, in its letter to the adjudicating committee,
Ugicom stated that it "does not dictate how the installation occurs." (Stip.R. 17.) The
No. 13AP-527 10
committee also concluded that the fact that the Ugicom worker was "paid weekly"
demonstrated an employment relationship. (Stip.R. 3.) While the record evidence does
indicate that the Ugicom cable installers were paid weekly, they were not paid based on
the hours they worked. Rather, Ugicom paid the cable installers per job they completed, a
fact which indicates an independent contractor relationship. See Gillum at 375.
{¶ 26} The magistrate correctly determined that the adjudicating committee
abused its discretion by applying the R.C. 4123.01(A)(1)(c) test herein and by failing to
apply the common law right to control test. As the facts appear to be in dispute, we are
unable to apply the right to control test and determine the employment status of the cable
installers as a matter of law.
{¶ 27} Based on the foregoing, we overrule the administrator's first and second
objections to the magistrate's decision.
{¶ 28} Following independent review, pursuant to Civ.R. 53, we find the magistrate
has properly determined the pertinent facts and applied the salient law to them.
Accordingly, we adopt the magistrate's decision as our own, including the findings of fact
and conclusions of law contained therein. In accordance with the magistrate's decision,
we grant the requested writ of mandamus and command the administrator to vacate and
set aside the orders from the administrator's designee and the adjudicating committee
mailed to the parties on September 30, 2011 and October 7, 2010, respectively. We order
the administrator to issue a new order which adjudicates Ugicom's protest, and which is
supported by evidence from the record and consistent with this decision.
Objections overruled;
writ of mandamus granted.
SADLER, P.J. and TYACK, J., concur.
_________________
No. 13AP-527 11
APPENDIX
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
State ex rel. Ugicom Enterprises, Inc., :
Relator, :
v. : No. 13AP-527
Stephen Buehrer, Administrator, : (REGULAR CALENDAR)
Bureau of Workers' Compensation,
:
Respondent.
:
MAGISTRATE'S DECISION
Rendered on July 29, 2014
Zashin & Rich Co., LPA, and Scott Coghlan, for relator.
Michael DeWine, Attorney General, and Kevin J. Reis, for
respondent.
IN MANDAMUS
{¶ 29} In this original action, relator, Ugicom Enterprises, Inc. ("Ugicom" or
"relator"), requests a writ of mandamus ordering respondent, Administrator, Ohio Bureau
of Workers' Compensation ("administrator" or "respondent") to vacate the July 19, 2011
order of his administrator's designee that determines that certain persons were Ugicom
employees rather than independent contractors as claimed by relator, and to enter an
order finding that those persons were not Ugicom employees for the purpose of reporting
payroll.
No. 13AP-527 12
{¶ 30} In the event this court upholds the decision of the administrator's designee,
relator requests a writ ordering respondent to apply Ohio Adm.Code 4123-17-17(C)
limiting retroactive premium adjustment to a period starting 24 months prior to the date
the bureau of workers' compensation ("bureau") sent notice to relator of its intent to
audit.
{¶ 31} Also, relator requests a writ ordering respondent to reclassify those persons
determined not to be independent contractors to manual code 7600 rather than manual
code 6325.
Findings of Fact:
{¶ 32} 1. Ugicom is an Ohio corporation that contracted with Time Warner Cable
("TWC") to provide outside installation of cable lines to TWC customers. Michael
Kibuuka is the president of Ugicom.
{¶ 33} 2. Ugicom uses "contractors" to perform the installation of cable lines to
TWC customers.
{¶ 34} 3. By letter sent May 13, 2009, bureau premium auditor Mary Jo Eyink
informed relator that its account had been selected for audit. The letter further advised:
During the audit appointment, a person that is
knowledgeable of the business operations and your financial
records that are requested on the next page should be
available. Also, a visual rating inspection (walking tour) of
the operational facilities may need to be done.
{¶ 35} 4. On October 20, 2009, a bureau auditor conducted an onsite audit
covering the period January 1, 2004 to June 30, 2009.
{¶ 36} 5. Apparently, at Ugicom's request, Joel Wilson, CPA, prepared a two-page
letter or written statement dated October 20, 2009 that is addressed to auditor Eyink.
The Wilson statement provides:
There were no payrolls for years 2004, 2005 and 2006.
Amounts reported to Ohio BWC were for the President's
draw.
***
Attached is a copy of the Contract of Services Agreement
required to be read and signed by all independent
No. 13AP-527 13
contractors. The conducting of business with independent
contractors as subcontractors is common for the TV cable
installation business.
Independent subcontractors own mostly the mini walk-
behind vibrator plow. Whereas, Ugicom Enterprises, Inc.
owns the bigger sit-on plow machines for seldom bigger jobs.
The sit-on plow's high cost would be an extreme burden to
the independent subcontractors. Ugicom rents the bigger sit-
on plow to the subcontractor at a reduced rate.
Concerning duties of the President: The President is the
main liaison between Time Warner Cable and Ugicom
Enterprises Inc. The President has performed the marketing,
sales and executive communications. On a daily basis, the
President gets the batches of jobs from the Time Warner
Cable website and puts the jobs on the Ugicom Enterprises
Inc. website and then assigns specific jobs to each individual
subcontractor's web page. Each subcontractor pulls the jobs
from their web page and independently performs the job.
Once the job is complete, the subcontractor returns to
Ugicom's website and keys in all pertinent information to
demonstrate that the job is closed out. The President, then
transfers the closed out job information back to the Time
Warner Cable site.
Concerning duties of Daily Manager: The Daily Manager's
role is to assure that the jobs are finished and on time. The
Daily Manager performs some office coordinations and
clears disputes with Time Warner.
Clarification of Operations and Operations of the
Subcontra[c]tors: Except for the manual and physical cable
installation of the subcontractors and some office
coordination, the business runs as web-based virtual offices
with all jobs communicated by websites.
Time Warner has a website that it provides batches of jobs to
Ugicom (through Ugicom's window on Time Warner's
website).
Ugicom has a 21st century web-based system for distributing
jobs to independent subcontractors to start jobs. Ugicom
organizes the jobs and downloads the jobs to each
subcontractor's customized web page. Ugicom's web-based
system also provides the means for the subcontractor to
No. 13AP-527 14
close the job once the job is finished (by the subcontractor
keying information into the subcontractor's web page). In
between the start and finish of the job, the subcontractor has
total independence to complete the job according to
specifications without supervision.
On a daily basis, the subcontractor goes to his website before
day every morning, prints the jobs to be performed with
addresses and specifications. The subcontractor provides his
own transportation, tools and equipment to complete the
job. In the evening, the subcontractor goes back to the
website and closes the job.
All work is underground. All work is itemized with codes,
descriptions and standardized related pay. Description
examples include wire under sidewalk, wire under driveway,
wire under flower bed and many others. Each of the previous
descriptions have related codes and pay. Therefore, when a
subcontractor closes out a job, the subcontractor will know
their pay to be received immediately.
Additional Points about Virtual Web-based System:
 Communications are by website and email
 Everyone is required to have their own laptop, cell
phone, tools and equipment (except for rare huge jobs
requiring large and expensive equipment)
 Can literally work from anywhere
 Some subcontractors have not been seen for two years
{¶ 37} 6. On December 10, 2009, auditor Eyink issued a schedule of audit findings
covering ten half-year periods beginning with the period January 1, 2004 through June
30, 2004. For each of the ten half-year periods, the schedule indicated the payroll
reported aside the payroll found.
{¶ 38} The payroll reported and the payroll found for each of the ten half-year
periods are as follows:
Audit Period Payroll Reported Payroll Found
1/1/2004 to $18,000 $95,212
6/30/2004
7/1/2004 to $19,800 $97,012
12/31/2004
No. 13AP-527 15
1/1/2005 to $12,480 $174,172
6/30/2005
7/1/2005 to $9,120 $174,172
12/31/2005
1/1/2006 to $2,400 $454,038
6/30/2006
7/1/2006 to $6,336 $454,438
12/31/2006
1/1/2007 to $19,039 $623,882
6/30/2007
7/1/2007 to $25,385 $630,207
12/31/2007
1/1/2008 to $25,385 $619,844
6/30/2008
7/1/2008 to $63,119 $657,579
12/31/2008
{¶ 39} 7. By letter dated December 10, 2009, auditor Eyink informed relator:
Upon review of the audit, it was determined that Manual
6325 Cable laying by specialist contractors using automatic
equipment - more accurately describes your operations. As a
result, M-6325 was added effective 1-1-04. Audit findings
have been revised accordingly.
{¶ 40} 8. On February 19, 2010, Michael Kibuuka signed a two-page unsworn
statement that was sent to the bureau's audit department. The statement reads:
[Three] As the President, I am the main liaison between the
Company and Time Warner Cable. I receive a salary for my
services. I receive a W-2 at the end of each year. Ugicom pays
workers' compensation coverage for me.
[Four] Ugicom contracts with Independent Contractors
("Contractors") to install the cable lines. Ugicom pays the
Contractors based on the jobs they perform.
No. 13AP-527 16
[Five] On a daily basis, Ugicom downloads its work orders
from TWC's website for the Greater Cincinnati and Dayton
areas. These jobs, in turn, are placed on Ugicom's website,
www.ugicom.com, for the Contractors to select at their
discretion. All work is itemized with codes and descriptions
to allow the Contractor to understand the type of job that is
required (i.e., wire under sidewalk, wire under flower bed,
wire under driveway). Each Contractor is responsible for
selecting the jobs the Contractor wishes to perform and
thereafter independently performing the job. Ugicom does
not control the manner in which the Contractors select or
perform their jobs. Once the Contractor completes the job,
he or she keys into Ugicom's website the pertinent job
information and closes out this particular job. Ugicom
created its website in 2002.
[Six] On a weekly basis, Ugicom pays the Contractors based
on the number and type of jobs completed during the prior
work week. Ugicom pays per the job that is performed.
Ugicom does not make any deductions. At the end of the
year, the Company issues 1099 forms to its Contractors.
[Seven] The Contractors purchase and own their own
transportation, tools, and equipment necessary to install the
TWC cable lines. The Contractors are responsible for their
own liability insurance. The Contractors pay for their own
gas, transportation costs, and cell phones. Ugicom does not
provide any financing for the purchase of the above items.
[Eight] The Contractors have a sticker on their
transportation which states "Ugicom Enterprises Inc. —
Contractor for Time Warner Cable." The Contractors also
wear a TWC badge which states they are a contractor for
Time Warner Cable. The Contractors occasionally wear a
highly visible construction vest that is labeled "Cable TV"
and "Contractor for Time Warner Cable." Ugicom does not
issue or require uniforms for the Contractors.
[Nine] The Company has entered into a contract relationship
with Fred Kibuuka to manage and maintain Ugicom's
website. He posts the TWC jobs onto Ugicom's website for
selection by the Independent Contractors. The Company
issues Fred Kibuuka a 1099 at the end of the year for his
services. Fred Kibuuka is not an employee of Ugicom as it
does not control the manner in which he manages and
maintains the website.
No. 13AP-527 17
[Ten] Ugicom requires its Contractors to obtain their own
workers' compensation coverage through the State of Ohio.
The Company has implemented a system on its website in
which the Contractors are required to confirm their workers'
compensation coverage. Without this confirmation of
workers' compensation coverage, the Contractor is unable to
access Ugicom's website and obtain new jobs.
[Eleven] Ugicom communicates with its Contractors via their
website and telephone communications. The Company rarely
meets in person with the Contractors.
[Twelve] TWC requires its subcontractors to use its material
(i.e. cable lines) for the outside installation. Accordingly,
Ugicom places an order with TWC on a weekly basis for the
materials that are necessary for the jobs. One of the
Contractors arranges on his own to pick up this material
from TWC's warehouse and distributes it to the other
Contractors. Ugicom is not involved with this distribution
process.
[Thirteen] As part of its contract with TWC, Ugicom has
agreed not to work for other cable companies in the
installation of outside cable lines. In order to maintain this
non-compete relationship with TWC, Ugicom requires its
Contractors to only perform outside installation of cable
lines for Ugicom and TWC. These Contractors are free to
work for other companies who install outside lines (i.e. the
telephone company, the gas and electric company) as long as
it does not involve cable line installation. The prohibition is
only for cable lines.
[Fourteen] I have asked the Contractors to sign Independent
Contractor Agreement memorializing this relationship. See
agreement attached as Exhibit 1.
{¶ 41} 9. Earlier, on February 18, 2010, Roger Sengendo, a Ugicom "contractor,"
executed an affidavit, stating:
[One] I am an Independent Contractor ("Contractor") for
Ugicom Enterprises Inc. ("Ugicom"). I have worked as a
Contractor for Ugicom for approximately three years.
[Two] Previously, I was an independent cable installer with
another company in Texas.
No. 13AP-527 18
[Three] In addition to contracting with Ugicom, I also am a
retailer on the internet.
[Four] For Ugicom, I install outside cable lines for Time
Warner Cable ("TWC"). I feed the lines from the main
outside cable box to apartments, homes, and businesses for
TWC customers.
[Five] I use my own equipment and tools to dig underground
to install the cable lines. Depending on the job, I bore under
sidewalks, under driveways, or through flower beds. I have
purchased the equipment and tools on my own.
[Six] Ugicom pays me based on the number of jobs I perform
each week. Each job is priced differently based on the type of
job. At the end of the year, Ugicom issues me a 1099 tax
form. Ugicom does not deduct for any taxes.
[Seven] As a Contractor, I pay my own taxes (self
employment, etc.) and carry my own insurance, including
Ohio workers' compensation insurance.
[Eight] Ugicom utilizes a website to communicate to its
Contractors about available jobs. I primarily utilize this
website to communicate with Ugicom. The Company posts
the available jobs on its website. I am free to choose any
available job or not to perform any jobs on a given day. I
control when and how I perform a particular job. Based on
my prior experiences, I know how to install outside cable
lines.
[Nine] Each day, I log into Ugicom's website via my home
computer and select the particular jobs I want to perform. I
thereafter independently complete the jobs. After I complete
the jobs, I log into the website and indicate my completion of
the jobs. On average, I complete ten jobs per day, depending
on the weather.
[Ten] I have performed jobs through the Greater Cincinnati
and Dayton areas.
[Eleven] I use my own van to travel to the job sites. I pay for
my own travel costs (gas, insurance, etc.). I also have my own
cell phone. For identification purposes, I have a sticker on
No. 13AP-527 19
my van which reads: "Ugicom Enterprises Inc. — Contractor
for Time Warner Cable."
[Twelve] I have obtained my own workers' compensation
coverage through the State of Ohio. * * * I contacted the
BWC office via the phone and obtained my coverage through
the bureau's website.
[Thirteen] I do not wear a uniform. For identification
purposes, I wear a badge stating "Contractor — Time Warner
Cable." I also wear a brightly colored construction vest which
reads "Cable TV" and "Contractor for Time Warner Cable."
[Fourteen] On occasion, as needed, I communicate with one
of TWC's technicians for advice if I have a technical problem
with a job.
[Fifteen] At times, I work with other Contractors on a job if I
am really busy or if it is [a] large job. I directly coordinate
with the Contractor if I need the assistance.
[Sixteen] I do not consider myself an employee of Ugicom.
Ugicom does not exercise any control over my day-to-day
activities. I decide on the number of jobs I will perform and
the particular jobs I will perform in any given day. I work
independently and am self-employed.
{¶ 42} 10. On February 18, 2010, Michael Lwanga, a Ugicom "contractor"
executed an affidavit that reads similar to the Sengendo affidavit.
{¶ 43} 11. The record contains a multipage document captioned "Ugicom
Enterprises Independent Contractor Agreement." This pre-printed agreement was
obviously drafted by Ugicom and offered to its contractors for signature. The agreement
of record is pre-printed by Ugicom for the signature of Michael Lwanga. The Lwanga
agreement contains eleven enumerated paragraphs, nine of which are set forth below:
Whereas the Company desires [to] retain the services of the
Independent Contractor to install Cable technology in
the Company's area of business operations the
Independent Contractor represents itself as competent and
qualified to accomplish the specific requirements of this
contract to the satisfaction of the Company therefore this
contract is entered into under the following terms and
conditions:
No. 13AP-527 20
[One] The Contractor agrees to perform the services
described in the attached "Scope of Services" contained in
Schedule 1 to this Contract.
[Two] Terms of Contract: The term of this contract is one
year effective September 1, 2009 ending August 31, 2010.
Notwithstanding the agreement term, the Company may
terminate this Agreement for non-performance of services,
breach of the company policies without notice and without
regard to the Agreement term. Parties by mutual agreement
may renew the agreement term unless either party gives the
other party two weeks' notice of intent of non-renewal of the
Agreement.
[Three] Payment:
A. Amount of Payment: Each cable installation shall carry a
unique service code(s) in Schedule 2 to this Agreement. The
Company shall pay the contractor once a week by direct
deposit upon logging the contractor's services. The Company
shall compensate the Contractor for the services in
accordance with the payment rates set in Schedule 2 to this
Agreement. These rates are subject to change at any time
without notice by the Company.
B. Mode and Manner of Payment: The Company will make
out payment to The Independent Contractor, on the first
business day of every month to the address in the recitals to
this Contract.
C. Third Party Billables: Contractor will submit to the
Company any payments made for purchases from third
parties for items not covered in this contract. This section
covers items costing more than $100.00 (One hundred
dollars and zero cents only). Any such purchases will only be
made with the prior express consent of the Company. Third
party receivables will be payable no more than 30 days after
being invoiced by Contractor.
***
[Four] Termination: Either party may terminate the contract
without cause by giving 60 days written notice to the other
party. All outstanding dues must be paid upon effective date
of termination.
No. 13AP-527 21
[Five] Breach of Contract: If Contractor fails to fulfill his/her
obligations, The Company may terminate this contract by
giving 30 days written notice to the Contractor of intent to
terminate the contract. The Company must give Contractor a
reasonable period to remedy any alleged breach prior to the
lapse of the thirty day period. Contractor may terminate
contract by giving 10 days written notice for non-payment of
bills due, as specified in Schedule 1 to this Contract.
[Six] Confidentiality: All business related information
including personal information, trade secrets, information
labeled "For official use only", received during the course of
business shall remain confidential and proprietary. No
disclosure shall be made to third parties of this information
without the express consent of the owner of such
information.
[Seven] Indemnification: The independent contractor shall
obtain liability insurance indemnifying and holding the
Company harmless against all liability set forth to cover the
following risks: all . The independent contractor
shall carry the following minimum limits two million .
Ugicom shall be listed as the additional insured. The
Independent contractor shall maintain this coverage at all
times and failure to maintain coverage shall be grounds for
termination of employment. In consideration thereof, the
Company shall advance the Contractor such payment as are
required to obtain the coverage immediately upon the
signing of this Agreement. This advance shall be recoverable
from the Contractor's net pay. This policy shall insure the
Contractor against any claims for errors, omissions or
general liability for actions done in the ordinary course of
performance of duties under this Contract.
[Eight] Governing Law: This contract shall be governed by
the laws of the State of Ohio and applicable federal law. All
disputes under this Contract shall be subject to mandatory
arbitration under the laws of the State. The venue for
arbitration under this contract shall be in the city of
Cincinnati in the State of Ohio. The arbitrator's ruling shall
be final as to liability. Each party will bear its own costs.
[Nine] Mandatory Arbitration: Any disputes under this
contract save for non-payment of services shall be subjected
to mandatory arbitration under the Commercial Arbitration
No. 13AP-527 22
Rules of the American Arbitration Association in force at the
time of lodging of a claim for arbitration. Arbitrator's award
including an order for costs shall be final and non-appealable
in a court of law.
{¶ 44} 12. By letter dated April 1, 2010, auditor Eyink informed Ugicom:
Your complaint received on 3/9/2010 protesting audit
findings for the period from 1-1-04 through 6-30-09 has
undergone a departmental review. Regrettably, the BWC has
denied your request and the audit findings have been
affirmed.
The requirements for being an independent contractor are
found in Ohio Revised Code Section 4123.01. BWC uses a
factor test to determine employee/employer relationships.
Because the following conditions apply: 1) a non compete
clause, 2) requires notice to the other party for termination
of the contract or non renewal of the contract, 3) requires the
[Independent Contractor] to be responsible for tasks
assigned by company on a day to day basis within a two hour
response time to assignments, 4) risk supplies at its expense,
supplies that are needed by the [Independent Contractor] to
perform such services, 5) risk provides appropriate
protection and security for equipment stored by the
[Independent Contractor] at its warehouse[,] 6) the risk
provides larger equipment needed for larger jobs, 7) the
[Independent Contractor]'s services are integrated into the
regular function of the risk, 8) a continuing relationship
exists between both parties, 9) the [Independent Contractor]
is required to make written reports on the computer each
day showing progress and completion of work, 10) the
[Independent Contractor] is paid on a regular basis for the
work performed, 11) the risk paid relocation and housing
expenses for some of the [Independent Contractor]'s, 12) the
[Independent Contractor]'s were required to show the
company's name on their trucks and to wear badges
reflecting the risk's name, 13) most of the [Independent
Contractor]'s did not obtain Workers compensation
insurance until 2008 and often had lapsed or cancelled
policies, and 14) some of the 1099's indicated the same
address as the risk, had no address or social security
numbers listed. Based on these factors, we have determined
that there was an employee/employer relationship.
No. 13AP-527 23
{¶ 45} 13. On April 2, 2010, the bureau issued an invoice to Ugicom indicating a
balance due in the amount of $346,817.55.
{¶ 46} 14. By letter dated April 20, 2010, addressed to the bureau's adjudicating
committee, Julie M. Bruns, Esq., of the law firm of Frost Brown Todd LLC, responded to
Eyink's April 1, 2010 letter. Bruns extensively argued that the "contractors" at issue are
independent contractors and not Ugicom employees.
{¶ 47} 15. Thereafter, Ugicom completed a bureau form captioned "Application for
Adjudication Hearing." On the form filed with the bureau, Ugicom attached a copy of the
April 20, 2010 Bruns letter.
{¶ 48} 16. Following an August 26, 2010 hearing, the bureau's three-member
adjudicating committee mailed an order on October 7, 2010 that denied Ugicom's protest.
The adjudicating committee order explains:
Background Facts and Issues Presented: BWC audited
the employer from 1/1/2004 to 6/30/2009. The auditor
picked up employees additional earnings as reportable
payroll. The auditor determined that there was payroll that
the employer had failed to report to the Bureau.
The employer protested the findings and requested a hearing
before the Adjudicating Committee.
***
Employer's Position:
The employer's representative stated the technicians and
office management are all independent contractors.
UGICOM installs outside cable lines for Time Warner Cable.
These Independent Contractors use their own tools, trucks
and set their own hours. There is no control exerted by
UGICOM. These Independent Contractors can refuse to do
jobs. When a job is completed by the Independent
Contractors they will invoice UGICOM. These Independent
Contractors provide their own Workers' Compensation
Insurance. When these independent contractors use
UGICOM's tools, there is a fee assessed to them to use the
tools. Kibs Industries does the record keeping for the
company and does customer satisfaction work. The owner
assigns work by computer not directly with the independent
contractors. The owner rarely needs to contact the
No. 13AP-527 24
independent contractors. The order of work or the tools
needed to complete the jobs are determined by the
independent contractor. The length of time it takes to
complete a job is determined by their independent
contractors. The independent contractors are not trained by
UGICOM. They are experienced cable line installers. The
independent contractors pay for their own truck, fuel and car
insurance. Cell phones are paid for by the independent
contractors. Time Warner does require labeling of the trucks.
The independent contractors are required to wear Time
Warner Cable badges that state Tech: UGICOM Time
Warner Cable. Kibs Industries does provide customer
services and bookkeeping services for UGICOM. However,
there is no direction given by UGICOM to Kibs.
Bureau's Position:
BWC's representatives stated that a letter dated 10-20-09
from the employer indicates that the president does
marketing, sales and regional communications. He then
posts jobs to a web site and "subcontractors" completes [sic]
the jobs. The workers must have a sign on the truck listing
the worker as a UGICOM worker. The workers must also
wear a UGICOM badge on their shirts when dealing with
customers. UGICOM organizes and distributes the jobs to
the subcontractor. The sub contractors must do the jobs
assigned to them each day. The jobs list the customer's
names and addresses. The workers are paid on a weekly
basis via a direct deposit to the subcontractor[']s account.
The workers are required to carry insurance provided by
UGICOM and the insurance is deducted from their pay. The
hours of work are controlled by UGICOM. The subcontractor
must complete all jobs assigned to them that day. The
subcontractors must sign a no compete clause so that they
cannot work for other contractors. Subcontractors are
required to contact customers within two hours of being
assigned a job. The subcontractors cannot suffer a loss for a
job. Supplies, equipments and materials are provided to the
subcontractors for use. Disputes with customers are resolved
by management of UGICOM and the subcontractors are
required to fix the problems per management's instructions.
The employer paid relocations expenses for its
subcontractors. UGICOM claims to only have one employee,
the owner. For part of the audit period even the owner was
paid by 1099. The company has over $2 million dollars of
income without any employees. All these facts show control
No. 13AP-527 25
by UGICOM over these employees and thus the Audit should
be upheld as there is an employer/employee relationship.
Findings of Fact and Conclusion of Law:
Based upon the information submitted and the testimony
elicited at the hearing, including Subcontractor Agreements,
and Insurance Information identified by the employer's
representative at hearing it is the decision of the
Adjudicating Committee to DENY the employer's protest.
The Committee is persuaded by the Bureau's evidence, and
finds that the employer has failed to demonstrate that the
workers at issue are independent contractors. In making this
determination, the Committee finds that the requirement in
Ohio Revised Code § 4123.01 (A)(1)(c) is satisfied, with ten or
more criteria that support a finding that the workers are
employees. Although this is not a construction contract the
same principles can be applied when determining who has
control. UGICOM controls the manner and method of which
the employees work. Therefore, it is the order of the
Adjudicating Committee that the workers in question are
UGICOM employees, and required to be included in the
payroll reported to the Bureau.
Specifically, the following factors demonstrate an
employer/employee relationship[:]
[One] The employees of UGICOM must comply with the
manner and methods of UGICOM in performing their work.
[Two] The employees are required to already have particular
knowledge on how to install outdoor cable lines.
[Three] The employees of UGICOM are integrated into the
regular functioning of UGICOM. There would not be a
business without the cable installers as installing outdoor
cable lines is what the business does.
[Four] There is a continuing relationship between UGICOM
and the subcontractors. There was testimony at hearing that
their jobs are assigned by computer. The UGICOM
employees check their computer daily for their daily
assignments. This is due to an ongoing employer/employee
relationship.
No. 13AP-527 26
[Five] Per the employment contract agreement each of
UGICOM's employees must look at their assignments via
computer and respond to the customer service request
within 2 hours[.] The hours of work are established by
UGICOM and all jobs must be completed the day they are
started as there is no set quitting time per their employment
contract.
[Six] Per the employment contract UGICOM employees are
not allowed to install cable lines for any other company other
than UGICOM as a contractor of Time Warner Cable. Time
Warner Cable does require a non-compete clause to be
signed by UGICOM employees which limits UGICOM
employees to installing cable lines for Time Warner Cable
only. One of their employees does work for other companies
in another line of business selling heavy equipment in South
Africa but he admitted during the hearing that in America he
only works for UGICOM.
[Seven] The UGICOM employee is required to follow the
order of work set by UGICOM in the installation of cable
lines.
[Eight] The UGICOM employee is required to notify
UGICOM of the completion of each job for which they have
been assigned to complete that day.
[Nine] The UGICOM employee is paid weekly.
[Ten] Although the UGICOM employees testified that they
do not use UGICOM tools their employment contract
indicates; with prior approval UGICOM employees will be
reimbursed for expenses associated with completing a job.
The employer UGICOM purchases and provides a specific
cable required by Time Warner Cable to their employees for
installation. Time Warner Cable will provide any heavy
equipment needed to UGICOM for digging and installing of
outdoor cable lines.
[Eleven] UGICOM employees testified that they do not
realize a profit or suffer a loss as a result of the services they
perform. UGICOM admitted during the hearing they pay for
mistakes made by their employees.
No. 13AP-527 27
[Twelve] Per the employment contract the workers are
required to carry insurance provided by UGICOM and the
insurance is deducted from their pay.
Per the contract signed by the employees and the Schedule 1
Scope of Services the majority of the contract requirements
and benefits indicate there is an employer/employee
relationship which is contrary to the title of the contract;
Independent Contractor.
The contract provisions are very compelling in finding an
employer/employee relationship exists. Services are to be
offered by the employee until the job call is completed.
Additional equipment purchased by the employee to
complete job pursuant to this contract will be reimbursed by
the employer with prior authorization.
Of particular concern by the Committee is that one employee
who testified he had Workers Compensation Insurance and
that he has had it for the last 10 years he has been employed
with UGICOM actually only took out Workers Compensation
Insurance after the Bureau's Audit of the employer was
initiated as established by the BWC Auditor. Actually almost
all of UGICOM's employees only took out Workers'
Compensation Insurance after the Bureau Audit.
(Emphasis sic.)
{¶ 49} 17. Pursuant to R.C. 4123.291(B), relator administratively appealed the
order of the adjudicating committee to the administrator's designee.
{¶ 50} 18. In support of its appeal, counsel for Ugicom submitted a 22-page brief.
At page seven, the brief submits three issues:
[One] Whether Ugicom's workers are Independent
contractors under Ohio law or;
[Two] Whether the BWC applied the wrong test "the
construction contract test" to conclude that Ugicom's
workers were employees under Ohio Law?
[Three] Whether BWC's properly applied the ten part
construction contract test under § 4123?
No. 13AP-527 28
{¶ 51} 19. Following a July 19, 2011 hearing, the administrator's designee mailed
an order on September 30, 2011 that affirms the order of the adjudicating committee. The
order of the administrator's designee explains:
At issue before the Administrator's Designee was the
employer's protest of audit findings for the period January 1,
2004, to June 30, 2009. Specifically, the employer objected
to the inclusion of payroll for workers the employer
considered independent contractors.
***
The Administrator's Designee adopts the statement of facts
contained in the order of the Adjudicating Committee.
Based on the testimony and other evidence presented at the
hearing, the Administrator's Designee affirms the decision,
findings, and rationale set forth in the order of the
Adjudicating Committee.
{¶ 52} 20. On June 18, 2014, relator, Ugicom Enterprises, Inc., filed this
mandamus action.
Conclusions of Law:
{¶ 53} The main issue is whether respondent abused his discretion in determining
that Ugicom's cable installers were Ugicom employees rather than independent
contractors, and, thus, Ugicom was required to report its cable installer payroll to the
bureau for purposes of determining the appropriate premium for workers' compensation
coverage. Relator contends that respondent abused his discretion by applying the test for
determining whether a person is an employee or independent contractor as set forth at
R.C. 4123.01(A)(1)(c) rather than the traditional common law or "right to control" test.
{¶ 54} Finding that respondent abused his discretion by applying the test set forth
at R.C. 4123.01(A)(1)(c) rather than the traditional common law test, it is the magistrate's
decision that this court issue a writ of mandamus, as more fully explained below.
{¶ 55} R.C. 4123.01(A) defines "employee" as that word is used in the laws
pertaining to the Ohio workers' compensation system.
{¶ 56} Among the definitions provided, R.C. 4123.01(A)(1)(c) currently provides
that employee means:
No. 13AP-527 29
Every person who performs labor or provides services
pursuant to a construction contract, as defined in section
4123.79 of the Revised Code, if at least ten of the following
criteria apply:
(i) The person is required to comply with instructions from
the other contracting party regarding the manner or method
of performing services;
(ii) The person is required by the other contracting party to
have particular training;
(iii) The person's services are integrated into the regular
functioning of the other contracting party;
(iv) The person is required to perform the work personally;
(v) The person is hired, supervised, or paid by the other
contracting party;
(vi) A continuing relationship exists between the person and
the other contracting party that contemplates continuing or
recurring work even if the work is not full time;
(vii) The person's hours of work are established by the other
contracting party;
(viii) The person is required to devote full time to the
business of the other contracting party;
(ix) The person is required to perform the work on the
premises of the other contracting party;
(x) The person is required to follow the order of work set by
the other contracting party;
(xi) The person is required to make oral or written reports of
progress to the other contracting party;
(xii) The person is paid for services on a regular basis such as
hourly, weekly, or monthly;
(xiii) The person's expenses are paid for by the other
contracting party;
No. 13AP-527 30
(xiv) The person's tools and materials are furnished by the
other contracting party;
(xv) The person is provided with the facilities used to
perform services;
(xvi) The person does not realize a profit or suffer a loss as a
result of the services provided;
(xvii) The person is not performing services for a number of
employers at the same time;
(xviii) The person does not make the same services available
to the general public;
(xix) The other contracting party has a right to discharge the
person;
(xx) The person has the right to end the relationship with the
other contracting party without incurring liability pursuant
to an employment contract or agreement.
{¶ 57} The above definition of "employee" is the current version of a 1996
amendment to R.C. 4123.01 that first became effective on September 17, 1996 and added a
new subsection to the statute. Slauter v. Klink, 2d Dist. No. 18150 (Aug. 18, 2000).
{¶ 58} As referenced in R.C. 4123.01(A)(1)(c)'s definition of "employee," R.C.
4123.79(C)(2) currently provides:
"Construction contract" means any oral or written agreement
involving any activity in connection with the erection,
alteration, repair, replacement, renovation, installation, or
demolition of any building, structure, highway, or bridge.
{¶ 59} Thus, as to cases arising from a construction contract, the statutory test set
forth at R.C. 4123.01(A)(1)(c) is to be applied rather than the traditional common law test.
{¶ 60} In Gillum v. Indus. Comm., 141 Ohio St. 373 (1943), at paragraph two of the
syllabus, the court states:
Whether one is an independent contractor or in service
depends upon the facts of each case. The principal test
applied to determine the character of the arrangement is that
if the employer reserves the right to control the manner or
means of doing the work, the relation created is that of
No. 13AP-527 31
master and servant, while if the manner or means of doing
the work or job is left to one who is responsible to the
employer only for the result, an independent contractor
relationship is thereby created.
{¶ 61} In Bostic v. Connor, 37 Ohio St.3d 144 (1988), at paragraph one of the
syllabus the court states:
Whether someone is an employee or an independent
contractor is ordinarily an issue to be decided by the trier of
fact. The key factual determination is who had the right to
control the manner or means of doing the work. (Gillum v.
Indus. Comm. [1943], 141 Ohio St. 373, 25 O.O. 531, 48
N.E.2d 234, approved and followed.)
{¶ 62} As earlier noted, in its August 26, 2010 order, the adjudicating committee
applied the R.C. 4123.01(A)(1)(c) test for determining whether the Ugicom cable installers
were independent contractors or Ugicom employees. The committee recognized that the
scenario does not involve a construction contract. As the committee put it:
Although this is not a construction contract the same
principles can be applied when determining who has control.
UGICOM controls the manner and method of which the
employees work.
{¶ 63} As earlier noted, the question presented is whether respondent abused his
discretion in applying the R.C. 4123.01(A)(1)(c) test rather than the common law "right to
control" test.
{¶ 64} The question is compellingly answered by the decision of the Fifth District
Court of Appeals in Archibald v. Gold Key Inc., 5th Dist. No. 2002CA00118, 2002-Ohio-
5761.
{¶ 65} Robert Archibald was a television cable installer with Gold Key Inc. ("Gold
Key") dba Network Connectors, performing cable installation for Time Warner, Inc. In
March 1999, while installing cable, Archibald fell from a ladder sustaining serious
injuries.
{¶ 66} Thereafter, Archibald filed a claim for workers' compensation. The
Industrial Commission of Ohio ("commission") denied the claim based upon a finding
that Archibald was an independent contractor and not an employee of Gold Key.
No. 13AP-527 32
{¶ 67} In February 2001, Archibald appealed the denial of his claim to the Stark
County Court of Common Pleas pursuant to R.C. 4123.512. (The Archibald court simply
states that Archibald filed a complaint against Gold Key and the administrator of the Ohio
Bureau of Workers' Compensation.)
{¶ 68} Gold Key and the administrator obtained summary judgment upon the trial
court's finding that Archibald was an independent contractor and not a Gold Key
employee. Archibald appealed the trial court's judgment to the Fifth District Court of
Appeals.
{¶ 69} In one of two assignments of error, Archibald asserted that the trial court
erred in finding he was not an employee of Gold Key and therefore lacked coverage under
workers' compensation. The court of appeals agreed, sustaining the assignment of error
and reversing the trial court judgment.
{¶ 70} Archibald had signed a contract to be an independent contractor of Gold
Key. He had also signed an earlier contract with Gold Key and had provided his own
workers' compensation coverage. However, Archibald had let the workers' compensation
coverage lapse prior to returning to Gold Key and prior to his injury. Despite those facts,
citing Bostic, Archibald argued that Gold Key so controlled the manner and means of
doing the work that there arose an employment relationship.
{¶ 71} In an effort to rebut the written subcontractor agreement, Archibald
pointed to the 20-point test under R.C. 4123.01(A)(1)(c) for determining whether an
individual is an employee. The Archibald court rejected this argument, explaining:
As Gold Key points out, this case does not involve a
construction employment issue and therefore R.C.
4123.01(A)(1)(c) does not apply because Gold Key does not
meet the definition of R.C. 4123.79(C)(2) * * *.
Id. at ¶ 19.
{¶ 72} Concluding that the trial court had erred, the Archibald court explained:
Essentially, the facts are not in dispute. Appellant signed the
independent contractor agreement as a condition of
employment. * * * He was paid per installation, but trained
by Gold Key. * * * He wore a designated uniform, purchased
specialized tools from Gold Key, paid for the use of a Gold
Key truck, received work orders each day from Gold Key at a
No. 13AP-527 33
designated location, collected payment from customers,
returned receipts at the end of each day to Gold Key and was
responsible for notifying Gold Key of when he would not be
reporting to work.
Although it is true a summary judgment motion may be
granted when facts are not in dispute, it is not true when
reasonable minds could come to different conclusions:
"Generally, where the evidence is not in conflict or the facts
are admitted, the question of whether a person is an
employee or an independent contractor is a matter of law to
be decided by the court. See Schickling v. Post Publishing
Co. (1927), 115 Ohio St. 589, 155 N.E. 143, syllabus. However,
the issue becomes a jury question where the claimant offers
some evidence that he was an employee rather than an
independent contractor." Bostic at 146-147, 524 N.E.2d 881.
Because of the different interpretations available to the
numerous undisputed facts, we conclude the question of
whether appellant was an independent contractor or an
employee is a jury issue.
Id. at ¶ 22-25.
{¶ 73} Here, respondent endeavors to distinguish Archibald by pointing out that
Archibald was a right to participate case arising out of a common pleas court action while
the instant original action is a mandamus case challenging a final order of the bureau.
While this distinction exists, respondent fails to explain why this distinction is relevant or
how the distinction diminishes the applicability of the Archibald court's reasoning to the
issue presented here.
{¶ 74} The magistrate finds that Archibald compels the issuance of a writ of
mandamus.
{¶ 75} Accordingly, it is the magistrate's decision that this court issue a writ of
mandamus ordering respondent to vacate the July 19, 2011 order of his administrator's
designee, and, in a manner consistent with this magistrate's decision, enter a new order
that adjudicates relator's protest.
No. 13AP-527 34
/S/ MAGISTRATE
KENNETH W. MACKE
NOTICE TO THE PARTIES
Civ.R. 53(D)(3)(a)(iii) provides that a party shall not assign
as error on appeal the court's adoption of any factual finding
or legal conclusion, whether or not specifically designated as
a finding of fact or conclusion of law under Civ.R.
53(D)(3)(a)(ii), unless the party timely and specifically
objects to that factual finding or legal conclusion as required
by Civ.R. 53(D)(3)(b).