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Ohio court upholds finding that cable installers were misclassified

Ohio independent

A divided Ohio Supreme Court on Tuesday upheld a determination that a cable installation provider misclassified its workers as independent contractors.

Ugicom Enterprises Inc. contracts with Time Warner Cable to provide installation of cable lines for its customers, according to State ex rel. Ugicom Enterprises Inc., filed in Columbus.

Ugicom uses installers it designates as independent contractors, many operating as sole proprietorships or single-member LLCs. Some also choose to obtain their own workers compensation coverage, and furnish their own trucks, tools and equipment. TWC or Ugicom furnishes the cable as well as some other materials, including connection boxes. Ugicom provides no employment-related benefits and withholds no taxes.

In May 2009, the Bureau of Workers’ Compensation audited Ugicom, determining that the company underreported payroll because the installers were employees, and issued an invoice to Ugicom indicating a balance due of $346,817.55.

Ugicom objected, but the BWC's adjudicating committee upheld the auditor’s findings, as did the BWC administrator’s designee. The BWC continued to audit Ugicom for subsequent years and issued an invoice in September 2012 for $471,369.95.

Ugicom sought relief, and the Court of Appeals for the 10th District of Ohio issued a writ directing the BWC to vacate the designee’s order, rehear the matter and apply the right-to-control test to determine the status of the installers. The Court of Appeals for the 10th District of Ohio recommended that a writ be denied.

The Ohio Supreme Court said employment status is determined by a “right-to-control test” and that there is some evidence “that the installers were not independent of Ugicom.”

Ugicom also had an ongoing relationship with the installers, who had each agreed they would not provide services to any competitor, the court wrote, adding that BWC did not abuse its discretion in determining that the installers were Ugicom’s employees.

Two justices dissented, arguing that work at the installation job sites was related to the regular business of Ugicom, but it was a labor-management company that was in the business of posting available jobs, adding that the installers’ ability to decline jobs was “a powerful indicator of a lack of control by Ugicom,” and there was generally “a lack of supervision by Ugicom over the work performed by the installers.”

WorkCompCentral is a sister publication of Business Insurance. More stories here.