Owner-Operators Leased to a Common Carrier not Subject to Alabama Workers Compensation Act
On October 16, 2015, the Alabama Court of Civil Appeals released its opinion in Jenkins v. American Transport, Inc., reversing the trial court’s order granting summary judgment in favor of American Transport, based on the trial court’s finding that American Transport was not Jenkins employer and that Jenkins’ injury was not subject to Alabama’s workers’ compensation laws.
Jenkins was a truck driver who leased his truck to American Transport. The parties entered into an agreement in Dothan, Alabama, which provided that Jenkins would use the truck to haul freight for American Transport throughout the United States. The agreement explicitly stated that Jenkins was an independent contractor and not an employee. The agreement provided that either party could terminate the relationship by giving thirty (30) days written notice, and that American Transport could terminate the agreement if Jenkins violated established service standards, any laws, any terms and/or conditions of the agreement, or transported any cargo for any company other than American Transport. The agreement further provided that American Transport would compensate Jenkins by paying him a percentage of the gross revenue of each load; that Jenkins was responsible for providing his own workers’ compensation insurance; that Jenkins assumed full responsibility for all loads; that Jenkins had the right to accept or reject loads offered to him by American Transport; and that American Transport had no right to control or attempt to control the manner or means by which Jenkins performed under the agreement.
Jenkins was later injured while hauling a load from Colorado to Minnesota. He sued American Transport for workers’ compensation benefits, and American Transport filed a Motion for Summary Judgment. In its Motion, American Transport asserted that it was not Jenkins employer, and that even if it were his employer, Alabama law would not apply because Jenkins’ employment was not principally localized in the state. The trial court granted American Transport’s Motion for Summary Judgment, and Jenkins appealed.
The Court of Appeals pointed out that Jenkins’ designation as an independent contractor alone was not determinative of whether he was entitled to workers’ compensation benefits. The Court of Appeals found sufficient evidence in the record to establish that American Transport retained a right to control, and even exercised the right to control, Jenkins’ work. Based on this, the Court found that there were genuine issues of material facts as to whether Jenkins was an employer or independent contractor, and that summary judgment was therefore improper. Additionally, the Court found that while Jenkins’ employment was not principally located in any state, there was sufficient evidence in the record to establish that if Jenkins was an employee, his contract for hire was made in Alabama.
Most notably however, the Court of Appeals pointed out that American Transport failed to argue that it could not be deemed Jenkins’ employer pursuant to §25-5-1(4). That section provides that “In no event shall a common carrier be deemed the employer of an owner/operator or a leased operator.” The Court pointed out that if American Transport had asserted this defense, there may have been no need to determine whether American Transport retained a right of control over Jenkins, because American Transport would have been exempt from the provisions of the Alabama Workers’ Compensation Act.
MY TWO CENTS
Generally, when the putative employer retains a right to control the agencies and means of the work being performed, the parties will be subject to the Act. However, § 25-5-1(4) provides an absolute exemption for common carriers who employ leased owner-operators. The employee bears the burden of proof in workers’ compensation, and that burden even applies to establishing that he/she is an employee. However, since American Transport moved for summary judgment, it had the burden of proving that it was exempt pursuant to § 25-5-1(4).
ABOUT THE AUTHOR
This article was written by Charley M. Drummond, Esq. of Fish Nelson & Holden, LLC. Fish Nelson & Holden is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related liability matters. Drummond and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields. If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at firstname.lastname@example.org or (205) 332-3414.