The test of whether a person or business is liable for workers’ compensation benefits as the employer of a claimant is not a matter of terminology, oral or written, but of the realities of the work performed; control of the claimant is a factor, as is payment of wages, hiring and firing, and the responsibility for the maintenance of discipline, but the test of economic reality views these elements as a whole, assigning primacy to no single one.
COURT OF APPEALS HOLDING: The test to determine whether an employee-employer relationship exists for purposes of the Worker’s Compensation Act is the “economic reality test”, and the factors used to apply the test are whether: (1) the employer will incur liability if the relationship terminates at will; (2) the work performed is an integral part of the employer’s business; (3) the employee primarily depends upon the wages for living expenses; (4) the employee furnishes equipment and material; (5) the employee holds himself out to the public as able to perform certain tasks; (6) the work involved is customarily performed by an independent contractor. Along with (7) the factors of control, payment of wages, maintenance of discipline, and the right to engage or discharge employees; and (8) weighing those factors which will most favorably effectuate the purposes of the Act.
COURT OF APPEALS HOLDING: The court remanded because the Appeal Board incorrectly applied the “right to control test” rather than the statutory test. Also, the Board failed to make an explicit finding of whether the drivers followed a pattern of operation established by the employer and were controlled by employer in the performance of their work.
COURT OF APPEALS HOLDING: The economic reality test is to be used in unemployment compensation cases dealing with whether a person is an employee or independent contractor.
Nordman v Calhoun Digest no. 17.10 Section 42 Cite as: Nordman v Calhoun, 332 Mich 460 (1952). Appeal pending: No Claimant: Ardath Calhoun Employer: Charles E. Nordman d/b/a Top Notch Soda Bar Docket no.: BO 2905 12445 Date of decision: March 6, 1952 View/download the full decision SUPREME COURT HOLDING: Mr. Date Scofield was an employee under the… Read More »