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A Better Partnership
December 01, 2014

MSC reverses special panel of the Court of Appeals and holds that lawn care worker is an independent contractor under the Michigan Worker’s Compensation Act

In Auto-Owners Insurance Co. v. All Star Lawn Specialists Plus, Inc., No. 149036, the Michigan Supreme Court reversed a special panel of the Court of Appeals, which had convened to resolve a conflict on the definition of “employee” under the Michigan Worker’s Compensation Act, MCL 418.161(1)(n). The MSC held that a purported employee will be considered an independent contractor if he or she either maintains a separate business providing the employer’s service, holds himself or herself out as providing the service to the public, or is an employer subject to the Worker’s Compensation Act.
A lawn care worker working for All Star Lawn Specialists Plus was injured when a leaf vacuum fell off of a truck and hit him. He sued All Star’s insurance company, Auto Owners, for no-fault benefits under a no-fault policy covering the truck, and also sued All Star’s co-owner for negligence. Auto Owners later filed a declaratory judgment action, alleging that the plaintiff was an employee, so only worker’s compensation coverage applied to him. The Court of Appeals eventually decided that he was an independent contractor, but noted that it would have decided otherwise if not bound by a prior Michigan Court of Appeals case, Amerisure Ins. Cos. v. Time Auto Transp., Inc., 196 Mich App 569 (1992). A special panel of the Court of Appeals convened, and reversed the Court of Appeals, holding that the worker was an independent contractor was an employee.
The Worker’s Compensation Act defines employee as “Every person performing service in the course of a trade . . . of an employer at the time of the injury, if the person in relation to this service does not maintain a separate business, does not hold himself or herself out to the public to and render service to the public, and is not an employer subject to this act.” The Court of Appeals held that to be considered an independent contractor, the worker must fulfill all three criteria. The Michigan Supreme Court, by contrast, reasoned that the Court of Appeals’ interpretation would render the word “not” meaningless in each criterion. In order to be considered an independent contractor under the Worker’s Compensation Act, a worker need only fulfil one of the three criterion.

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