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Do contract delivery drivers qualify for workers' compensation?

Recently, the Colorado Supreme Court ruled on whether or not delivery drivers could receive workers' compensation while being injured on the job. In the case, Western Logistics Inc., Diligent Deliver Systems v. Industrial Claims Appeal Office of the State of Colorado, sought to clarify the employment status of the delivery drivers who were performing services for the organization in order to determine whether they were qualified to receive worker's compensation in the state.

Case background

The case ultimately deals with the Colorado Employment Security Act, or CESA, which states that a worker is considered an independent contractor as long as they are free to perform the service required as they see fit without control from the employer.

the Court of Appeals had upheld a lower court's decision that the delivery drivers were considered employees of Western Logistics Inc., Diligent Delivery Systems. The decision was based on:

  • The delivery drivers were not performing their services for another client in the same field at the same time
  • The delivery drivers were under the control and direction of the petitioner

After the Court of Appeals decision, the petitioner proceeded to take the case to the Colorado Supreme Court. 

Facts considered by the Colorado Supreme Court

The Colorado Supreme Court took into consideration the following facts and proceedings in order to make a decision on the case:

  • The Court noted that Western Logistics Inc. Diligent Delivery Systems was a delivery business that focused on distributing automotive parts. In order to distribute its products, the petitioner coordinates and schedules its deliveries by hiring drivers from a large pool of candidates. 
  • The drivers who ultimately complete the deliveries for the petitioner are required to utilize their own vehicle and they also must purchase their own insurance.
  • For tax purposes, the petitioner classifies these workers as independent contractors. Individual drivers who agreed to perform services for the petitioner signed an agreement in which they designated themselves also as independent contractors.
  • An audit of the company was performed in 2009 by the Department of Labor and Employment, Division of Insurance. During this audit, the department determined that the petitioner should classify approximately 220 drivers as employees rather than independent contractors. This also required the petitioner to pay unemployment tax premiums on all of the wages that had been paid to the delivery drivers. 
  • After this determination was made, the petitioner requested a hearing with ICAO. The panel affirmed the decision by the Department of Labor and Employment, Division of Insurance, citing the fact that there was evidence that the delivery drivers were employees despite the fact that the drivers signed agreements that designated their employment status as independent contractors. The main evidence they noted was that the drivers were not simultaneously performing similar services for other clients. 
  • When brought to the Court of Appeals, the court confirmed the ICAO panel decision. The court said that the petitioner did not prove that the delivery drivers were in a traditionally independent business and that they also did not prove that the drivers were not under the explicit direction of the company. 

Decision and conclusion

The Colorado Supreme Court ultimately decided to remand the case back to the Court of Appeals, as it disagreed with the appellate court's tactics in coming to their decision. The Colorado Supreme Court justices stated that the fact that the delivery drivers were not simultaneously performing similar services for other clients at the time was not enough to designate them as full-time employees of the petitioner. Rather than a single-prong test, the court recommended a multi-prong test in order to determine the employment status of the individual drivers. By remanding the case to the Court of Appeals, the Colorado Supreme Court is asking the ICAO panel to consider the case once again keeping in mind the opinion that was determined by the Colorado Supreme Court.

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