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Gaede v. Saunders (8/30/2002) sp-5617
Gaede v. Saunders (8/30/2002) sp-5617
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
MICHAEL GAEDE, )
) Supreme Court No. S-10113
Appellant, )
) Superior Court No.
v. ) 1JU-00-1025 CI
)
MIKE and KATE SAUNDERS, ) O P I N I O N
)
Appellees. ) [No. 5617 - August 30,
2002]
)
Appeal from the Superior Court of the State
of Alaska, First Judicial District, Juneau,
Larry R. Weeks, Judge.
Appearances: Paul M. Hoffman, Robertson,
Monagle & Eastaugh, P.C., for Appellant.
Paul H. Grant, Philip M. Pallenberg,
Batchelor, Pallenberg & Associates, Juneau,
for Appellees.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
MATTHEWS, Justice.
Mike and Kate Saunders hired workers to build an
addition to their home. One of the workers, Michael Gaede, fell
from a ladder and was injured. Gaede's claim for workers'
compensation benefits was denied by the Workers' Compensation
Board on the ground that Gaede was not an employee within the
meaning of the Workers' Compensation Act. The superior court
affirmed, as do we.
Under the Workers' Compensation Act employees are
entitled to recover workers' compensation benefits from their
employers in the event of their work-related disability or death.1
But not all persons who are employees within the usual meaning of
that term are employees covered by the act. The act defines an
employee as "an employee employed by an employer as defined in
[AS 23.30.395(13)]."2 An "employer," in turn, is defined as "the
state or its political subdivision or a person employing one or
more persons in connection with a business or industry . . . ."3
The act thus excludes private common law employees who are
employed other than "in connection with a business or industry."
In Kroll v. Reeser we recognized that the "business or
industry" language is meant to convey that not every person
working in the service of another is a covered employee.4 In
Kroll a property owner was building a four-plex. He intended to
occupy one of the units and rent out the other three. A worker
on this project was injured.5 The board ruled that the worker
was covered by the act, holding that "every person in the service
of another under contract" was an employee.6 We concluded that
this interpretation was too broad in that it failed "to give
proper weight to the statutory limitation to employment
relationships `in connection with a business or industry.' "7 We
stated:
In Larson's terms, the policy question is
whether Kroll's construction activity, either
by itself or as an element of his rental
activities, was a profit-making enterprise
which ought to bear the costs of injuries
incurred in the business, or was the
construction activity simply a cost-cutting
shortcut in what was basically a consumptive
and not a productive role played by Kroll.[8]
We remanded the case to the board to determine whether Kroll was
an employer in light of the "business or industry" limitation.
In Nickels v. Napolilli we addressed the question
whether a farm which was not the owners' primary source of income
was a "business" within the meaning of AS 23.30.395(13).9 We
upheld the superior court's conclusion that the farm was a
business. Thus the farm owners were "employers" within the
meaning of the act and the farm worker was an "employee."10 We
again recognized "Professor Larson's distinction between
consumptive activities which should not bear the burden of
workers' compensation insurance, and productive business
activities, which should."11 We also observed that "[a] business,
unlike a homeowner, can pass the cost of workers' compensation
insurance on to the consumers of the business's service or
product."12
Here, there was no "business or industry" aspect to the
Saunders' building project. They were not enlarging their house
with a view toward producing goods or services for others.
Instead, their role with respect to the house addition was
consumptive, for the house was intended to be used only as their
family residence. Thus the project on which Gaede was working
when he was injured was not "in connection with a business or
industry." The Saunders were therefore not employers under the
act, and Gaede was not an employee covered by the act.13
The judgment of the superior court is AFFIRMED.
_______________________________
1See AS 23.30.010 ("Compensation is payable under this chapter in
respect of disability or death of an employee.").
2AS 23.30.395(12).
3AS 23.30.395(13).
4655 P.2d 753 (Alaska 1982).
5Id. at 754-55.
6Id. at 757.
7Id.
8Id. (emphasis in original).
929 P.3d 242, 252-53 (Alaska 2001).
10Id. at 253.
11Id.
12Id.
13The result we reach is consistent with the result reached in
most jurisdictions with respect to householders' activities. See
4 A. Larson, Workers' Compensation Law 50.21 (1999): "The
courts have consistently held that compensation acts do not apply
in such instances. The examples that can be drawn from decided
cases cover a range as varied as the hypothetical cases just
suggested: a carpenter helping to build or remodel the
employer's own residence . . . ."
