DETERMINING THE EMPLOYER IN A COMPLICATED CONSTRUCTION ARRANGEMENT

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In some cases the issue is whether an injured worker is an employee or an independent contractor.

In other circumstances it is clear the injured worker is an employee, but it can be difficult to figure out who is the employer.  The Iowa Workers’ Compensation Commissioner filed an Appeal Decision on March 4, 2019 in the case of Cerda v. The R & A Construction LLC and Rafael Alvarez and Riverport Insurance Co., involving a construction injury in which there were five possible employers.

Under Iowa law there are six factors that are examined to determine whether an employer-employee relationship exists:

  1. The right to hire a worker.
  2. Responsibility for payment of wages.
  3. The right to discharge or terminate the relationship.
  4. The right to control the work.
  5. The identity of the employer as the authority in charge of the work or for whose benefits it is performed.
  6. The overriding issue is the intention of the parties.

The Claimant was injured on a roofing job on August 27, 2013.  A piece of wood broke and the worker fell to the ground and struck his head.  The Claimant suffered a massive head injury and his first hospitalization lasted a month.  After the initial hospitalization the Claimant had several more surgeries. The doctors found that the Claimant had problems with his balance and vision, and the Claimant should avoid driving, operating heavy equipment, heavy lifting and heights.

The five potential employers in the case were:

  1. R & A Construction, LLC .
  2. Rafael Alvarez in his individual capacity.
  3. Rene Cardona who was the crew leader.
  4. McGee Construction.
  5. Michael Taylor.

The history and relationship between the five potential employers was disputed, but the general situation appeared to be as follows:

  1. The Claimant began doing roofing work in about 2003. Prior to 2011 the Claimant had worked with Rene Cardona on a number of projects.  Starting in 2011 Rene Cardona was in charge of the crew.  Throughout 2011, 2012, and up until the accident on August 27, 2013 the Claimant was part of Rene Cardona’s crew that performed roofing work throughout the Midwest.  During these years the Rene Cardona crew did obtain some jobs through R & A Construction, but many other jobs through a wide circle of contacts.  On the jobs that came through Rafael Alvarez, Mr. Alvarez would pay Rene Cardona when the job was done.  Cardona would first pay himself for the use of his vehicle and tools that he provided to the crew.  Mr. Cardona then paid the Claimant and others in cash.  Mr. Cardona decided how much each person on the crew would be paid.  He paid more to his skilled workers and less to unskilled workers.

 

  1. The Claimant had never heard of R & A Construction. The Claimant’s understanding was that Rafael Alvarez was the employer.

 

  1. R & A Construction was a roofing subcontractor for general contractor McGee Construction.

 

  1. When the Claimant fell he was working on a roof of a home that was being built by McGee Construction.

 

  1. After R & A Construction obtained roofing contracts from McGee Construction, R & A Construction then in turn contracted for Michael Taylor to perform the roofing work.

 

  1. There was no evidence that Michael Taylor had any real role in the project. He did not hire laborers.  He did not give any directions or instructions to anyone on the job site.  The Commissioner eventually concluded that Mr. Taylor was a “pass through entity.”

 

  1. The Claimant did meet Michael Taylor once. The Claimant testified that he did not believe that Mr. Taylor knew anything about roofing.

 

  1. Alvarez gave some instructions to Mr. Cardona on how the roofing jobs should be done.

 

  1. R & A Construction, LLC did not have any signed contracts or subcontracts with Rene Cardona.

 

  1. McGee Construction provided the roofing materials on the job for which the Claimant was injured.

The Commissioner noted that there was some questionable business practices by many of the potential employers.  However, the Commissioner also found that under the facts of the case showed that Rene Cardona was the actual employer of the Claimant.  Unfortunately for the Claimant Mr. Cardona did not have any workers’ compensation insurance or assets that could pay for the Claimant’s extensive medical bills and his ongoing disability.

In every job, and especially in the construction industry, you need to make sure that your potential employer has workers’ compensation insurance.