Ohio Supreme Court Case Reinforces the Need to Properly Classify Workers

A 2015 Ohio Supreme Court case serves as a reminder to Ohio’s employers to properly classify their workers as either “employees” or “independent contractors.” In State ex rel. WFAL Constr. v. Buehrer, the Court determined that WFAL Construction improperly classified workers as independent contractors. As a result, WFAL owed back workers’ compensation premiums due to its failure to report payroll for the improperly classified workers.

In 2009, WFAL entered into a construction contract with another company, Ohio Fresh Eggs, to repair weather-damaged barns in Ohio. It used workers to perform these repairs. The Ohio Workers’ Compensation Act provides that every worker who performs labor or provides services pursuant to a construction contract is an employee for the purposes of worker’s compensation, if the individual meets at least 10 of the 20 listed criteria. WFAL maintained that its workers for this project were independent contractors.

An Ohio Bureau of Workers Compensation (BWC) audit determined there was an employer-employee relationship between WFAL and the workers, as WFAL’s workers met 15 of the enumerated statutory criteria. Importantly, workers were required to comply with instructions from either the owner or an onsite lead carpenter regarding the manner or method of performing services, their services were integrated into WFAL’s regular functioning, i.e., “WFAL was given a work order, which the people were supposed to follow in order to get the barn ready for the next project.” Also, WFAL workers performed the work personally, were paid by the employer for the specific number of hours worked on a weekly basis, and so forth.

Despite WFAL’s filed protest of the audit, the court upheld the BWC’s findings. The Supreme Court determined that WFAL directed and controlled the work performed, the workers’ services were integrated into the regular functioning of WFAL, and that WFAL paid for a specific number of hours worked on a weekly basis, among other findings. As a result, WFAL as an employer was required to pay workers’ compensation premiums with respect to the workers.

WFAL Construction is an important reminder that from the outset, employers should very carefully evaluate whether their workers qualify as either employees or independent contractors, in order to avoid liability and/or monetary consequences down the road.