Injured worker can seek benefits under auto cover: Michigan high court

Injured workers in Michigan are employees of a company, rather than independent contractors, only if they meet three criteria under Michigan's workers compensation law, the Michigan Supreme Court has ruled.

The ruling last week stemmed from a suit brought by Joseph Derry, who was injured while vacuuming leaves for Sterling Heights, Michigan-based All Star Lawn Specialists Plus Inc., court records show.

All Star had commercial general liability insurance, commercial no-fault automobile insurance and workers comp insurance with Auto-Owners Insurance Co. at the time of Mr. Derry's accident.

Mr. Derry sued All Star and one of the company's owners alleging negligence for failing to properly secure the leaf vacuum to a company truck, causing it to fall and strike him. He also sued Auto-Owners for no-fault benefits under the auto insurance policy.

Auto-Owners sought a ruling that Mr. Derry was an employee of All Star, and that workers comp was the exclusive remedy for his injuries, according to court records. But Mr. Derry argued that he was an independent contractor who marketed his services to the public, and that he was entitled to coverage under Auto-Owners' liability and no-fault policies.

A Macomb County, Michigan, circuit judge agreed that Mr. Derry was an independent contractor at the time of his accident, and ruled that he was entitled to coverage under Auto-Owners' general liability and no-fault policies, records show.

Auto-Owners appealed, and a special panel of the Michigan Court of Appeals found in December 2013 that Mr. Derry was an employee of All Star at the time of his accident, and that workers comp was the exclusive remedy for his injuries. Mr. Derry then appealed.

In its 6-1 decision on Nov. 25, the Michigan Supreme Court ruled that Mr. Derry was an independent contractor and could seek benefits under Auto-Owners' commercial liability and no-fault policies.

Michigan's workers comp law says workers are employees of a company if they do not maintain a separate business in relation to the work they're performing, if they do not offer that service to the public and if they are not an employer to other workers, the high court said in its ruling.

If a worker fails to meet one of those three criteria, they should be considered an independent contractor, the state high court said.

Additionally, the Michigan Court of Appeals improperly interpreted the state's law because it found that workers must fail to meet all three criteria before they can be considered independent contractors, the high court ruled.

“Each criterion of (the statute) must be satisfied for an individual to be considered an employee; conversely, failure to satisfy any one of the three criteria will exclude an individual from employee status,” the Michigan Supreme Court ruled in remanding the case to Macomb County.

The Court of Appeals ruling showed that Mr. Derry does not employ other workers, and therefore did not meet one of the three criteria.