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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Kang v. Mullins (5/11/2018) sp-7245

Kang v. Mullins (5/11/2018) sp-7245

          Notice:   This opinion is subject to correction before publication in the P                    ACIFIC  REPORTER.  

          Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  


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                      THE SUPREME COURT OF THE STATE OF ALASKA                                      

YONG  KANG,  d/b/a  LEE'S                                       )  

MASSAGE,                                                        )  

                                                                          Supreme  Court  No.  S-16560  



                                                               )          Alaska Workers' Compensation  


                                                                )         Appeals CommissionNos. 15-023/16-001  

                     v.                                         )  


                                                                )         O P I N I O N  


ALEXANDER MULLINS and                                           )  


STATE OF ALASKA, WORKERS'                                                                                   

                                                                )         No. 7245 - May 11, 2018  


COMPENSATION BENEFITS                                          )  


GUARANTY FUND,                                                  )  


                                Appellees.                      )  




                     Appeal from the Alaska Workers' Compensation Appeals  



                     Appearances:   J. John Franich, Franich Law Office, LLC,  


                     Fairbanks,  for  Appellant.                    No  appearance  by  Appellee  


                     Alexander  Mullins.                 Notice  of  nonparticipation  filed  by  


                     Siobhan McIntyre, Assistant Attorney General, Anchorage,  


                     and   Jahna   Lindemuth,   Attorney   General,   Juneau,   for  


                     Appellee State of Alaska, Workers' Compensation Benefits  


                     Guaranty Fund.  


                     Before:  Stowers, Chief Justice, Winfree, Maassen, Bolger,  


                     and Carney, Justices.  


                     MAASSEN, Justice.  

----------------------- Page 2-----------------------


                    A woman who runs a business in the home she rents from her son asked a  


neighbor for help with major home repairs in exchange for a used pickup truck.  The  


neighbor injured his wrist while working on the house.  A few days later the two had a  


dispute and terminated their arrangement, the woman paying her neighbor $500 for his  



                    The neighbor later sought medical treatment for his wrist; he also filed a  


report  of  injury  and  a  workers'  compensation  claim  with  the  Alaska  Workers'  


Compensation Board.  The woman denied liability on several grounds, but the Board  


decided, after a hearing, that the woman was her neighbor's employer for purposes of the  


Alaska Workers' Compensation Act.   The woman appealed to the Alaska Workers'  


Compensation Appeals Commission, which affirmed the Board's decisions.  We hold,  


however, that the evidence did not support a finding that the woman was her neighbor's  


employer, and we therefore reverse the Commission's decision.  




          A.        Factual Background  


                    Yong Kang lived in North Pole and rented a house from her son Benjamin.  


She once owned the house, but she sold it to Benjamin about nine months before the  


events underlying this dispute, because, as she explained, she was getting old and did not  


know how much longer she would be around. Kang lived in the house with her business  


partner, Chong Sik Kim. The two operated a massage business in the house called Lee's  


Massage, and both had business licenses under that name.  


                    Alexander Mullins lived nearby.  He met Kang when he bought his house  


in 2004, and the two of them became friends.  Mullins estimated that in the 10 or 11  


years preceding this dispute he had helped Kang with work on the house about 15 times.  


                                                             -2-                                                        7245

----------------------- Page 3-----------------------

He testified that she had always taken care of him, and he frequently stopped by her  


house to check on her on the way to or from his mailbox.  In early 2015, when Mullins  


was retrieving his mail, Kang approached him and asked if he could help repair her roof.  


After some discussion, Mullins agreed.  


                    The  repair  job  began  in  May,  when  Mullins  arranged  for  several  


acquaintances to help tear off the old roof. Mullins himself had a full-time job as a small  


engine mechanic, which continued throughout the time he worked on the house.  Kang  


paid all the workers directly.  At some point it became apparent that the roof was not the  


only problem with the house; it also needed to be leveled, and Mullins agreed to do that  


work too.  According to Mullins, he injured his wrist during the leveling while using a  


hydraulic jack, though he did not immediately tell Kang about the injury.  


                    Soon afterwards, the two had a dispute about a used pickup truck that,  


according to Mullins, Kang had promised him as part of the payment for his work.  The  


parties ended their working relationship with an agreement signed on May 17, 2015, by  


which  Mullins accepted $500 "for all services & work on the roof of the massage  


parlor."  This was the end of Mullins's participation in the repair project.  


                    A few weeks later, on June 1, 2015, Mullins went to the emergency room  


complaining of pain in his wrist. He filed a report of injury with the Board the following  


day reporting the date of injury as May 19, 2015, and naming "Lee's Oriental Massage"  


as his employer.  Lee's Massage controverted benefits, denying that Mullins was its  


"employee" as that term is defined in the Alaska Workers' Compensation Act.  It also  

contended that it was not an "employer" as defined in the Act.  


                                                               -3-                                                        7245

----------------------- Page 4-----------------------

                 B.              Board And Commission Proceedings                                  

                                 Because   neither   Kang   nor   Lee's   Massage   had   workers'   compensation  


coverage,  the Workers' Compensation Benefits Guaranty Fund became a party to the  


claim.  The Board held a hearing in late August 2015.  Mullins represented himself;  


Kang was represented by counsel; and the Fund's adjuster represented the Fund and  


cross-examined some witnesses.  


                                 There was conflicting evidence about how the arrangement for Mullins's  


work came about, who controlled the work and the hiring, who provided tools, how the  


injury happened, and what provoked the dispute that ended Mullins's work.  Mullins  



described the work as "doing [Kang] a favor as a friend trying to help her out."                                                                                                                      When  


the Board chair asked him why he thought he was an employee of Lee's Massage, he  


answered, "Well, if . . . I came down and asked you to help me build a garage, . . . I guess  


that you would be my employee." He added, "[E]ven if I only hired you for the day, I'm  


still  your  boss  for  the  day,  period."                                                          But  on  cross-examination  he  disavowed  an  


employment relationship with Kang, saying that, both at the time of the hearing and  


when the parties first discussed the job, he did not "identify" himself as an employee and  


adding, "I never signed no paperwork from [Kang].  I never filled out an application for  


her.  I never filled out a W-2 [sic] for her."  

                 1               Lee's Massage was not required to have coverage under the Act as long as                                                                                                        

it had no employees, because only an employer as defined in the Act is required to secure                                                                                                             

payment of compensation for its employees. AS 23.30.045(a), .395(20). "A person who                                                                                                                        

is a sole proprietor, or a member of a partnership, may elect coverage as an employee                                                                                                         

under [the Act]"; if the person elects coverage as an employee, she is not entitled to the                                                                                                                    

presumption of compensability and "bears the burden of proof of the validity of the                                                                                                                           

claim."   AS 23.30.239(a)-(c).   

                 2               Kang agreed with this characterization of the arrangement.  


                                                                                                       -4-                                                                                               7245

----------------------- Page 5-----------------------

                                  The Board decided first that Yong Kang d/b/a Lee's Massage had entered                                                                                              

into an employment contract with Mullins.                                                                    It then applied its regulatory "nature of the                                                       


work" test                                                                                                                                                                                                       

                             to the facts and decided that Mullins was not an independent contractor but  


an employee of Lee's Massage, though characterizing this decision as "a relatively close  


call."  The Board concluded that Mullins's injury arose out of and in the course of his  



employment with Lee's Massage.                                                           In what it labeled an interlocutory order, the Board  


required "Yong Kang d/b/a Lee's Massage . . . to pay directly to Claimant and his  


medical providers any and all benefits to which he is currently entitled under the Act  


unless and until Lee's controverts his right to benefits for reasons other than those  


addressed in this decision and order."  It reserved jurisdiction "to resolve any disputes  


over specific benefits" but did not order that any specific benefits be paid.  


                                 Lee's Massage filed an appeal with the Commission in September but did  



not immediately seek a stay.                                              The Commission, seeing that the Board's order purported  


to be interlocutory, issued a short decision determining that the Board decision was in  

                 3                8 Alaska Administrative Code (AAC) 45.890 (2011).                                                                                            This regulation   

encompasses   elements   of   "the   relative-nature-of-the-work   test,"   id.,   which   we   first  

adopted in                 Searfus v. N. Gas Co.                                  , 472 P.2d 966, 969 (Alaska 1970).                                                        In  Searfus  we set  

out factors Larson's treatise considered relevant in determining status as an employee                                                                                                          

under    the    Act.      Id.    (citing    1A    ARTHUR                                                             LARSON,                    THE           LAW             OF        WORKMEN'S  

COMPENSATION   43.52 (1967));                                                     see also Ostrem v. Alaska Workmen's Comp. Bd.                                                                            , 511   

P.2d 1061, 1063 (Alaska 1973) (discussing application of test to distinguish independent                                                                                                  

contractors from employees).                

                 4                TheBoard explained thediscrepancy in the date ofinjury and Mullins's last  


day of work by finding that Mullins was "a 'poor historian,' meaning he confuses dates,  


but is otherwise credible."  


                 5               Its first stay request was made more than two months after the first Board  



                                                                                                         -5-                                                                                                7245

----------------------- Page 6-----------------------

fact final and inviting Mullins or the Fund to seek dismissal of the appeal if either wanted                                                                                                                                                                                                                               

to.   Neither did.                                               

                                                     The Board held a second hearing on December 3 after Mullins complained                                                                                                                                                                               

that Lee's Massage had not paid him or his medical providers.                                                                                                                                                                                                       The Board issued a                                                            

 supplemental order declaring Lee's Massage in default of its order only with respect to                                                                                                                                                                                                                                                        

temporary total disability (TTD) benefits because Mullins had not submitted his medical                                                                                                                                                                                                                                  

bills correctly.                                            Lee's Massage filed a second notice of appeal and a second motion for                                                                                                                                                                                                           

a stay, and the Commission consolidated the cases and issued a partial stay.                                                                                                                                                                                                                                  The Fund   

paid TTD benefits to Mullins and authorized some medical care as well.                                                                                                                                                                                                                                     The Fund   

participated in the Commission appeal but only briefed issues related to the                                                                                                                                                                                                                      supplemental  


                                                     Before the Commission, Lee's Massage contended that Mullins was not                                                                                                                                                                                                                  

working for Kang or Lee's Massage "in connection with a business or industry" as that                                                                                                                                                                                                                                                    


phrase is used in the Act,                                                                                                                                                                                                                                                                                                                   

                                                                                                              focusing on a distinction we have made - in reliance on  



Larson's treatise - between "productive" and "consumptive" activities.                                                                                                                                                                                                                                 Its argument  


related to the default order was that Lee's Massage was not Mullins's employer. Mullins  


did not file a brief.  

                           6                         See  AS23.30.395(20) (defining                                                                                              employer  as including"apersonemploying                                                                                       

one or more persons in connection with a business or industry coming within the scope                                                                                                                                                                                                                                            

of [the Act]").             

                           7                         Kroll v. Reeser, 655 P.2d 753, 757 (Alaska 1982) (citing 1C A                                                                                                                                                                                                           RTHUR  


LARSON, THE LAW OF WORKMEN'S COMPENSATION  50.21, at 9-10 to 9-71 & nn.4-5                                                                                                                                                                                                         


(1980));  see also Gaede v. Saunders                                                                                                           , 53 P.3d 1126, 1127 (Alaska 2002) (quoting                                                                                                                                     Kroll,  

655 P.2d at 757).                              

                                                                                                                                                                       -6-                                                                                                                                                           7245

----------------------- Page 7-----------------------

                       The Commission affirmed the Board's decision.                                        It discussed in detail one          


of the cases Lee's Massage relied on,                            Kroll v. Reeser            ,                                         

                                                                                               noting Kroll 's factual similarity  


to this case:  both involving construction work on a residence that was used to generate  


income. The Commission interpreted Kroll to mean that "when an individual is injured  


while performing work under such a contract, whether the contract should be considered  


to  be  'in  connection  with  a  business  or  industry'  depends  on  the  totality  of  the  


circumstances, and not merely on the degree to which the structure is used for business  


purposes."             The  Commission  looked  at  the  way  "maintenance  work  on  business  


premises" is discussed in Larson's treatise and decided that "the activities at issue in this  


case go well beyond routine maintenance or repair."  It observed that the project "might  


be characterized as a real estate improvement project rather than as maintenance or repair  


ancillary to Ms. Kang's massage parlor business." It noted the lack of evidence "that the  


roof  leaks  that were the genesis of the project affected the business portion of the  


premises at all, much less that Ms. Kang had a business purpose for undertaking a major  


renovation of the structure."  


                       The Commission nonetheless concluded that  the Board was correct in  


determining  that  Mullins  was  an  employee  of  Kang  and  Lee's  Massage.                                                                  The  


Commission noted Lee's Massage's argument that "[i]f anyone employed Mullins in  


connection with a business or industry (rental property), it was Benjamin Kang, not  


Yong Kang."  But the Commission did not consider this relevant to the question on  


appeal, because it was not being asked to choose between Kang and her son as Mullins's  


employer.  The Commission characterized "the issue [as] whether the employment was  


in connection with a business or industry." The Commission recognized the anomaly in  

            8          655 P.2d 753.  


                                                                        -7-                                                                       7245  

----------------------- Page 8-----------------------

this case that "the putative employer, Yong Kang, hired an individual to perform major                                                                                                                                                  

construction work on a structure she did not own and which she apparently had no legal                                                                                                                                                     

obligation to maintain."                                               It construed the evidence as showing that Kang was acting in                                                  

some type of agency relationship on behalf of her son and decided that because the son                                                                                                                                                         

was aware Mullins was going to work on the house and "acquiesced in" that plan, the                                                                                                                                                             

work was done in connection with a business or industry.                                                                                                               It then affirmed the Board's                               

decision that Yong Kang d/b/a/ Lee's Massage was Mullins's employer under the Act.                                                                                                                                                                          

                                      Kang appeals.                              Neither Mullins nor the Fund participated in this appeal.                                                                                                             

III.               STANDARDS OF REVIEW                                       

                                      In    an    appeal    from    the    Alaska                                                                Workers'    Compensation    Appeals  


Commission, we review the Commission's decision rather than the Board's.                                                                                                                                                    "Whether  


 [a claimant] is appropriately considered an 'employee' for purposes of the workers'  



compensation statute is a mixed question of law and fact."                                                                                                                  "We independently review  


theCommission's conclusionthatsubstantial evidenceintherecordsupports theBoard's  



factual findings by independently reviewing the record and the Board's findings."                                                                                                                                                              We  


reviewde novo"thelegal determination ofwhether the[]facts[about employment status]  



amount to employment under the statute." 

                   9                  Humphrey  v.  Lowe's  Home  Improvement  Warehouse,  Inc.,  337  P.3d  1174,  

 1178  (Alaska  2014).  

                   10                 Nickels  v.  Napolilli,  29  P.3d  242,  247  (Alaska  2001).  

                   11                 Humphrey,  337  P.3d  at   1178.  

                   12                 Nickels,  29  P.3d  at  247.  

                                                                                                                        -8-                                                                                                                7245

----------------------- Page 9-----------------------


           It  Was  Error  To  Conclude  That  Yong  Kang  d/b/a  Lee's  Massage  Was  


           Mullins's Employer Under The Act.  


                      The only  issue Kang  has raised  on appeal is whether  Mullins  was  an  


"employee" of Lee's Massage as that term is defined in the Act. This is a mixed question  


of law and fact, and Kang asserts that the facts are "undisputed," which we take to mean  


that she no longer disputes them. Whether those facts "amount to employment under the  


statute" is a purely legal issue.13  



                      The Act requires employers to provide workers' compensation coverage  



for their employees,                 but not all workers are covered by the Act.  The Act explicitly  


exemptsfromcoverage people whowork in somecasualemployment relationships, such  


as part-time baby-sitters, "harvest help and similar part-time or transient help," and some  


sports officials, to name a few.                                                                                                                

                                                       But the definition of "employer" in the Act is broad:  


"the state or its political subdivision or a person employing one or more persons in  


connection with a business or industry coming within the scope of this chapter and  



carried on in this state."                   The definition of "employee" is also broad:  "an employee  



employed by an employer as defined in [AS 23.30.395(20)]." 

           13         Id.  

           14         AS 23.30.075.   

           15         AS 23.30.230.  


           16         AS 23.30.395(20).   



                      AS 23.30.395(19).  

                                                                     -9-                                                              7245

----------------------- Page 10-----------------------

                        Kang   discusses   three   of   our   decisions   that   in   her  view   show   the  

                                                                         18                                     19                                     20  

Commission's error:                    Gaede v. Saunders                ,                                                                                   

                                                                             Nickels v. Napolilli,                  and Kroll v. Reeser.  


She contends that she was merely a consumer of Mullins's construction activity for  


several reasons:  she was a tenant; she had a massage business rather than the type of  


business for which major building repairs are productive activities, such as real estate,  


construction,  or  property  development;  and  the  building  was  used  not  just  for  her  


business but as her residence as well.  As Kang puts it, her business "derived no profit  


from Mullins's work on Benjamin Kang's building."   Because her connection with  


Mullins's work could only be consumptive and not productive, she concludes that she  


was not Mullins's employer as we have construed the Act. We agree with her argument.  


                        In Kroll we considered who, for purposes of the Act, was the employer of  


a worker injured during construction of a four-plex that was intended both to house the  



owner's family and to provide him with rental income from the other units.                                                             The owner  


had engaged the services of a contractor licensed in another state, who happened to be  



in Alaska for the summer, as well as "one or two other people."                                                      The contractor's son  


was  injured  while  working  on  the  four-plex  and  sought  workers'  compensation  



                    The Board decided that the property owner rather than the general contractor  

            18          53 P.3d 1126 (Alaska 2002).             



                        29 P.3d 242 (Alaska 2001).  

            20          655 P.2d 753 (Alaska 1982).             

            21         Id. at 754.  


            22         Id.  at 754-55.   



                       Id. at 755.  

                                                                         -10-                                                                    7245

----------------------- Page 11-----------------------


was the employer.                                We reversed the Board, concluding that it had relied too heavily on                                                                                         

the contract between the owner and the general contractor, and we required that the                                                                                                                       

Board consider "the totality of all the relevant circumstances" in determining which of                                                                                                                      

the two possible employers should be considered the employer for purposes of the Act.                                                                                                                          25  


                                But in Kroll we also required the Board on remand to consider a more basic  


question:  whether the owner should be considered an employer at all in light of the  



argument that he was a consumer of services rather than a producer of goods.                                                                                                                  We held  


that  the Board  had  applied  a definition  of employer  that was too broad  because  it  


"fail[ed] to give proper weight to the statutory limitation to employment relationships"  



in  the  Act.                          We  noted  that  the  "policy  question  [was]  whether  [the  owner'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." 


                                 The Board in this case began its analysis by considering whether there was  


a contract of hire between Mullins and Lee's Massage.   Mullins had the burden of  



proving the existence of such a contract.                                                              The Board determined that Kang d/b/a Lee's  

                24              Id.  

                25              Id.  at 756.               Here the Commission applied this rule to a different issue -                                                                                     

whether the work was in connection with a business or industry.                                                                                                

                26              Id.  at  756-57.  

                27              Id.  at  757.  

                28              Id.  (footnote  omitted)  (first  citing   1C  LARSON,  supra  note  7,    50.24;  and  

then  citing  id.    50.21,  at  9-70  to  9-71  &  nn.4-5).   

                29              See   City   of   Seward   v.   Wisdom,   413   P.2d   931,   935-36   (Alaska   1966)

(holding    that    claimant,    decedent's    wife,    "failed    to    prove    that    a    contract    of


                                                                                                    -11-                                                                                              7245

----------------------- Page 12-----------------------

Massage and Mullins entered into a contract of hire, but it did not consider the capacity                                                                                                          

in which Kang was acting at that time or later, following their dispute, when she paid him                                                                                                                    

$500.   The Commission suggested that she might have been acting as her son's agent,                                                                                                                               30  


but it considered the possible agency irrelevant to the question on appeal, which it  


identified as "whether [Mullins's] employment was in connection with a business or  


industry."  (Emphasis added.)  But the answer to the abstract question the Commission  


posed is not sufficient to determine that the particular business the Board ordered to pay  


workers' compensation benefits - Lee's Massage - was Mullins's employer.  


                                 The evidence the Board accepted showed that Kang and Mullins reached  


an agreement about repairing the building, but it does not show the role Kang played in  



that  process.                             She  had  different  roles  that  the  Board  and  Commission  did  not  


distinguish.  She was a businesswoman, operating Lee's Massage in a partnership, but  


she rented the building - which served as both her residence and her place of business  


- from her son.  She was Mullins's neighbor and, at least when these events began, his  



employment . . . existed" at the time of worker's death).  

                 30              Like the employer-employee relationship, the determination of an agency                                                                                              

relationship has both factual and legal elements.                                                                       See Foster v. Cross                             , 650 P.2d 406, 408                    

(Alaska 1982) ("While the questions of what constitutes agency and whether evidence  


is competent to show it are questions of law, the evaluation of the evidence and the                                                                                                                

decision on whether an agency relationship exists is for the factfinder."). The Board did                                                                                                                       

not consider or make findings about this theory.  


                 31              The same person can have more than one role in workers' compensation  


cases.  See, e.g., Sauve v. Winfree, 907 P.2d 7, 13 (Alaska 1995) (holding that exclusive  


remedy  provision  did  not  bar  negligence  action  against  coworkers  who  were  also  



                                                                                                       -12-                                                                                                7245

----------------------- Page 13-----------------------

friend.   She had owned the building in the past and had received help from Mullins on                                                                                                                                                                                                              

earlier repair projects, evidently while she was the owner.                                                                                                                      

                                              But the unrebutted evidence also showed that Kang's son Benjamin owned                                                                                                                                                                  

the building as of September 2014, before Kang approached Mullins about the roof                                                                                                                                                                                                             

repair,   and   that   she   paid   Benjamin   rent.     She   was   therefore   a   tenant,   and,   as   the  

Commission observed, nothing in the record suggests that she or her business had any                                                                                                                                                

obligation   to   maintain   the   premises   to   the   extent   of making                                                                                                                                                  the   major   repairs   that  

underlie this case.                                                 No evidence was elicited at the hearing about the nature of the                                                                                                                                                              

tenancy between Kang and her business and Benjamin Kang.                                                                                                                                                                  A tenant generally is a                                                       


consumer of rental services, not a producer of those services.                                                                                                                                                                                                                            

                                                                                                                                                                                                                             In the absence of proof  


that Lee's Massage had a legal obligation to arrange and pay for major repairs on  


premises it rented from Benjamin Kang, Mullins did not meet his burden of proving that  


he entered into an employment contract with Lee's Massage - the entity he identified  

                                                        33                                                                                                                                                                                                                               34  


as his employer.                                                 As a tenant, Kang, like the homeowners in Gaede v. Saunders,   had  


a  consumptive  role  with  respect  to  the  building  repairs.                                                                                                                                                     And  unlike  the  putative  


employers in Gaede, she did not even own the home Mullins worked on.  

                       32                     A residential landlord has a duty to "make all repairs and do whatever is                                                                                                                                  

necessary    to    put    and    keep    the    premises    in    a    fit    and    habitable    condition."   

AS 34.03.100(a)(1).                                                     A landlord and the tenant of "a one-                                                                                           or two-family residence" can                                                              

"agreein writing thatthe tenant performspecified                                                                                                                         repairs, maintenancetasks, alterations,                                                       

and remodeling."                                               AS 34.03.100(c).                                                 A commercial lease may assign to the tenant the                                                                                                                   

duty to make repairs to the leased premises.                                                                                                             See Berrey v. Jeffcoat                                                        , 785 P.2d 20, 22-23                             

(Alaska 1990) (discussing repair provisions of commercial lease). No written agreement                                                                                                                                                                                   

or lease is in the record.                                                           

                       33                      In fact, Mullins described the repair job as "doing [Kang] a favor as a friend  


trying to help her out."  


                       34                      53 P.3d 1126, 1126 (Alaska 2002).  


                                                                                                                                                -13-                                                                                                                                        7245

----------------------- Page 14-----------------------

                          Here the Board and Commission essentially repeated the Board's mistake                                                         

in  Kroll : they in effect interpreted the phrase "in connection with a business or industry"                                                         


in  the   definition   of   "employer"                                                                                                                      

                                                                      to  mean  that  "all  business  or  industry  is  to  be  



considered  as  covered  by  the  Act."                                       The  Board  and  Commission  appear  to  have  


concluded that because Kang discussed the roof repair with Mullins and had a business  


that occupied part of the affected building, the labor associated with that contract was in  


connection with the service provided by her business, Lee's Massage, even though the  


benefit she received was in her role as a consumer of real estate rental services.  


                          Setting aside Kang's status as a tenant, we conclude that the Commission  


also  failed  to  properly  consider  whether  the evidence showed  that the repair  work  


furthered the business of Lee's Massage. In Nickels v. Napolilli we reviewed a superior  


court's determinationthat awoman withan unconventional work arrangementon asmall  

farm was an employee for purposes of the Act.37  The woman was injured doing work  



related to the farm business.                                   The farm owners contended that the injury was not  


covered by the Act because the farm was not their principal source of income but rather  


"a lifestyle choice" that "ought not bear the costs of injuries in furtherance of" their  



farming activities.                    But the farm did sell "animals, eggs, hay, farm equipment, and farm  


implements,"  and  the  owners  "list[ed]  the  business  in  the  phone  book  and  a  farm  

             35           AS 23.30.395(20).   

             36           Kroll v. Reeser, 655 P.2d 753, 757 (Alaska 1982) (emphasis in original).  


             37           29 P.3d 242, 245-46 (Alaska 2001).  


             38           Id.  

             39           Id.  at 253.   

                                                                                -14-                                                                          7245

----------------------- Page 15-----------------------


products directory."                     We upheld the superior court's determination that the worker was                                                

injured performing "a regular part of the regular work" of the farm                                                     business and held that            


the injury was covered by the Act because the work furthered that business.                                                                             Our  


analysis in Nickels was consistent with the way the American workers' compensation  


system is funded:  according to Larson's treatise, "the consumer of a particular product  


ultimately pays the cost of compensation protection for the workers engaged in its  




                         In Kroll, in our remand related to the basic question of the owner's status  


as an employer, we identified  


                         the policy question [as] whether [the owner'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  rol[e]  



                         played by [the owner]. 


Nothing in the present case suggests that Mullins was injured performing work that was  


part of Kang's business.  Mullins was not, as Kang points out, injured performing a  


massage. Nor was the injury related to the business's day-to-day maintenance activities,  

            40          Id.  at  245.  

            41          Id.  at  253.  

            42           1 ARTHUR   LARSON   ET   AL.,   LARSON 'S   WORKERS'   COMPENSATION   LAW,  

   1.04[2]  (Matthew  Bender  rev.  ed.  2015).   

            43          Kroll v   .  Reeser,  655  P.2d  753,  757 (Alaska   1982)  (emphasis i  n  original)  

(footnote  omitted).  

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like sweeping or cleaning.                                                The Commission correctly observed that "this type of                                                                                  

project   might   be   characterized   as   a   real   estate   improvement   project   rather   than   as  

maintenance or repair ancillary to [the] massage parlor business."                                                                                                            But there is no                  

evidence that Lee's Massage was engaged in the construction or real estate business or                                                                                                                           

that Kang was engaged in any other "profit-making enterprise which ought to bear the                                                                                                                          

costs of injuries" related to the major building repairs to her son's building.                                                                                                           45  

V.               CONCLUSION  



                                 We REVERSE the Commission's decision. 

                 44              Whether the services are part of the potential employer's usual business is                                                                                                      

one    of    the    factors    in    applying    the    regulatory    relative-nature-of-the-work    test.   

8 AAC 45.890(2).                               The Board resolved this issue in favor of Lee's Massage.                                                                                        

                 45              The Commission speculated that Kang may have acted as an agent for  


Benjamin in contracting with Mullins. But Mullins provided no evidence to support that  


theory, and in any event Benjamin was not a party to the proceedings and would have  


to receive notice and opportunity to be heard before a factual determination could be  


made about whether his construction activity was sufficient to establish his status as an  


employer for purposes of the Act.  Our remand in Kroll  suggests that construction or  


ownership of a building for purposes of renting out some units is not alone sufficient to  

                                                                                                                                                                                   ARSON ET AL                     .,  

determine employer status as a matter of law. 655 P.3d at 757; see also 6 L 


supra note 42,  72.02[4] (setting out cases related to rental businesses and status as  


                 46              Kang also contends that the Commission erred in affirming the Board's  


default order.  We agree with her that the issue "is controlled by the first issue in the  


case."              Because  we  hold  that  Yong  Kang  d/b/a  Lee's  Massage  was  not  Mullins's  


employer under the Act, the default order must also be reversed.  


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