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Under the New Jersey Workers’ Compensation Act, the independent contractor defense is seldom successful, but one area where the defense is still viable is in the horse racing industry as seen in the recent decision of Perry v. Robert Horowitz Stable, A-3845-12T2 (App. Div. December 9, 2014). 

Randolph Perry was a licensed horse owner and trainer and agreed to train horses for Robert Horowitz Stable (hereinafter “Horowitz”) at the Meadowlands Race Track.  In January 2004, he slipped on a patch of ice and was seriously injured.  He filed  a workers’ compensation claim against Horowitz.  He also recovered a substantial third party suit against the Meadowlands Race Track.  In the workers’ compensation trial, Perry argued that under both the control test and the relative nature of the work test, the court must find employment. 

Perry argued that Horowitz controlled his duties sufficient to render him an employee.  He said that Horowitz would specify how many miles the horses would run, how to care for the horses’ feet, and how much the horses were to be fed.  In response, Horowitz argued that the stable did not have an ongoing training relationship with Perry.  While Horowitz did provide instructions related to the amount of miles to jog the horses and how to care for their feet, Horowitz countered that Perry had discretion to control other aspects of training.

Horowitz further contended that it did not furnish any equipment or stalls, nor provide Perry with food to feed the horses.  Horowitz said that the stable did not specify the type of food needed.  Rather, Perry would buy the food himself.  Horowitz further argued that Perry disregarded his instructions on how much food to provide and in fact provided less food because of Perry’s view that horses should not eat as much food as Horowitz required.  

Perry maintained that he was substantially dependent on Horowitz under the relative nature of the work test.  However, it was noted in the record that Perry worked with many different owners for income over his 40-year career

The Judge of Compensation found for Perry on employment, but the Appellate Division reversed.  The court noted that Perry did not receive a W-2 or 1099 from any of the owners for whom he trained horses.  He was not paid a specific wage, and there were no deductions or withholdings from Perry’s pay.  It said,  “This is indicative of an independent contractor.”  The court also relied on the fact that Perry rented stalls directly from the Meadowlands Racetrack where he performed his work.  It said this too was consistent with being an independent contractor because it shows Perry carried on his own business.  The court felt that Perry used his own methods to run his business. 

There was one specific item of testimony that the court focused on in its opinion in favor of independent contractor status.  At trial Perry testified, “If I needed the money, I would [train the horses] for less.  If I didn’t need it, I would charge more.”  The court suggested that this was proof of an independent business, not employee status.  For much the same reasons, the court also found that Perry was not an employee of the New Jersey Horse Racing Injury Compensation Board. 

This decision could clearly have gone either way.  The Appellate Division focused on the facts that tended to show Perry was running his own business together with the absence of a W-2 or 1099, but there were clearly some elements of control that favored Perry’s argument on employment.  The Appellate Division decision does not disclose how much money Perry earned from Horowitz as opposed to other trainers, nor how many days he trained horses for Horowitz.   What is more clear is that a jockey would have a much stronger argument for employment than a horse trainer would because of the predominance in New Jersey of the relative nature of the work test.  

Similar to the decision which was discussed on our blawg on November 7, 2014, the Court of Civil Appeals again held in Ex Parte Lost River Oilfield Services, LLC, that out-of-state injuries will only be compensated by Alabama’s Act when specific conditions are met. Jurisdiction will not exist over a claim for workers’ compensation benefits for employment which is principally located in another state unless the employee shows that the workers’ compensation laws of that state are not applicable to the employer. Kenneth Bailey, an Alabama resident, filed a Complaint for workers’ compensation benefits under the Alabama Workers’ Compensation Act in Mobile County, Alabama, for an injury he suffered while working for Lost River Oilfield Services in Texas. In his Complaint, Bailey specifically cited Ala. Code § 25-5-35(d)(2), which provides that employees are entitled to benefits under the Act for injuries sustained out-of-state when the employee was working under a contract of hire made in Alabama in employment not localized in any state. Bailey provided evidence indicating that steps were taken in Alabama which led to the employment contract with Lost River. He did not, however, provide evidence that the employment was not localized in any state or that the employer was not subject to the workers’ compensation laws of Texas. Lost River filed a motion to dismiss for lack of jurisdiction and submitted affidavit testimony providing that Lost River did not do business in Alabama and did not think it could be sued in Alabama simply because an employee they hired to work in another state was originally from Alabama. The trial court denied Lost River’s motion to dismiss, so Lost River petitioned the Court of Civil Appeals for a writ of mandamus directing the trial court to dismiss the action for lack of subject matter jurisdiction. The Appeals Court considered evidence indicating that, at the time of the alleged injury, Bailey worked at Lost River’s place of business in Texas, that he lived in a residence provided by Lost River at the work site, that Bailey’s work days began and ended at the site, and that the injury itself occurred on the site. There was no indication that Bailey ever worked in Alabama for Lost River or that he was working anywhere other than Texas at the time of his alleged injury. Aside from arguing that the events leading up to his contract of employment with Lost River occurred while he was in Alabama, Bailey failed to offer any evidence showing that his employment was not localized in Texas. The Court therefore found that Bailey’s employment was principally localized in Texas, and, as a result, Ala. Code § 25-5-35(d)(2) was not applicable. The Court also noted that Bailey presented no evidence, and did not even raise the issue, as to whether or not the workers’ compensation laws of Texas would apply to his injury. For these reasons, the Court of Appeals granted Lost River’s petition and directed the trial court to dismiss the action for lack of subject matter jurisdiction. __________________________________ About the Author This blog post was written by Trey Cotney, Esq. of Fish Nelson & Holden LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in workers’ compensation matters. Fish Nelson & Holden is a member of The National Workers’ Compensation Network (NWCDN). If you have any questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at tcotney@fishnelson.com or any firm member at 205-332-3430.