Court attempts to achieve consistency after Supreme Court ruling; holds independent contractor cannot sue his "employer"

In a recent case, the Republican majority of Michigan's Supreme Court ruled that a man who was injured by defective equipment mounted on a lawn company's truck could not collect workers compensation benefits from the company because he did some lawn work for another customer "on the side."  The high court rejected Michigan's long-time "economic reality" test for determining whether a worker is an "employee."    This week, the Court of Appeals ruled against another injured man, applying the same statutory test employed by the Supreme Court.

Timothy Hodnett sued Alro Steel Corporation when steel fell off another truck and struck him while he was loading his truck.  Hodnett clearly was not "employed" by Alro, in the historical sense:  Alco did not control his actions, paid a series of intermediaries for his trucking services, did not deduct taxes from what he ultimately received, and imposed few of the strictures that are typically considered factors in assessing "employment."  Nevertheless, the Court of Appeals judges noted that under the Michigan Supreme Court's analysis in Auto Owners v. All Star Lawn Specialists, if Hodnett wasn't deemed an "employee" he would be denied any remedy for his injuries:  he would be ineligible for workers compensation, but also denied the right to sue the negligent actor who caused his injury.

Applying the "All Star" test to the instant case, the Court deemed the Supreme Court to have eschewed the "economic reality" test in favor of a three-pronged application of the applicable statute:  if the work performed is "in service" of the employer-entity, the worker is deemed an "employee" if he does not maintain a separate business, does not hold himself out to the public as rendering this service and is not, himself an "employer."  Hodnett met none of these exceptions, but was acting in Alro's service; ergo he is an "employee" of Alro under Michigan law, and cannot sue Alro.

On the basis of this analysis, the Court held that Hodnett could not sue Alro or its employees who dropped steel on him.  His sole remedy was to seek medical benefits and partial wages under the workers compensation act.  Hopefully, his lawyers preserved that claim by alternatively seeking workers compensation within  the time limits applicable to a case that arose several years ago--and before the Supreme Court reversed its utilization of the "economic reality" test.