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S.C.: Court Sets Out Four Factors for Determining Employment Relationship

By Susan R. Heylman   1/27/2014
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A nurse who was injured in an operating room fall was an employee of the hospital—not an independent contractor—and eligible for workers’ compensation benefits under the common-law analysis of an employment relationship, the South Carolina Supreme Court ruled.

The nurse, a certified nurse anesthetist, had a contract with a staffing agency that in turn had a staffing contract with the hospital. Through the agency, the hospital hired the nurse. While helping anesthetize a patient in an operating room, the nurse fell and was injured. She filed workers’ compensation claims against the staffing agency and the hospital. 

The Workers’ Compensation Commission found that the nurse had an employment relationship with the hospital and ordered the hospital to pay her workers’ compensation benefits. The court of appeals, however, found that the nurse was an independent contractor.

The supreme court reversed.

Four Factors

Under the settled law in South Carolina, the determination of whether a claimant is an employee or independent contractor focuses on the issue of control—specifically whether the purported employer had the right to control the claimant in the performance of his or her work. The determination requires an analysis of the work relationship as a whole using four factors: 1) direct evidence of the right or exercise of control; 2) the furnishing of equipment; 3) the method of payment; and 4) the right to fire.

Right or exercise of control. There was direct evidence of the hospital’s control of the nurse: the hospital’s hiring documents referred to the nurse performing her duties as a temporary employee; the hospital provided her with a new-employee packet, which stated that she was an at-will employee; the hospital controlled who she reported to each day and how she carried out her duties; and the hospital—under the staffing agreement—had sole discretion to determine whether her performance was satisfactory.

The court rejected the hospital’s argument that its control of the nurse’s activities was due only to its need to comply with government regulations, finding that its control over the nurse transcended mere regulatory compliance.

“While the law does impose certain requirements on one serving as a medical professional in a hospital, the facts clearly demonstrate that [the hospital] had the right to exercise more control than required by law, and actually did exercise such control,” the court said.

Furnishing of equipment. The hospital’s furnishing of equipment for the nurse to use while on the job—including medical equipment, hospital supplies, and sterile clothing—favored the finding of an employment relationship.

Method of payment. The nurse was paid on an hourly basis by the staffing agency, which also provided her a per diem, malpractice insurance coverage, a rental car, and housing while she worked at the hospital. The hospital did not give the nurse insurance, vacation days, sick days, or a retirement plan. Based on this evidence, the court found that the method of payment factor pointed to an independent contractor relationship, not an employment relationship.

Right to fire. The hospital had the right to determine whether the nurse’s performance was satisfactory and the right to fire her, which supported the finding of an employment relationship.

The court concluded that the preponderance of the evidence of the four factors supported a finding of an employment relationship between the nurse and the hospital. It remanded the case for a determination of whether the nurse’s fall was idiopathic in nature or was compensable.   

Shatto v. McLeod Regional Medical Center, S.C., No. 27341 (Dec. 18, 2013).

Susan R. Heylman, J.D., is a freelance legal writer and editor based in the Washington, D.C., area. 

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