Christine Nicole Falconite v. Shed Wise, LLC.

Court of Appeals of Kentucky·Decided June 6, 2025·No. 2024-CA-1145·Unpublished

Opinion

RENDERED: JUNE 6, 2025; 10:00 A.M.

NOT TO BE PUBLISHED

Commonwealth of Kentucky

Court of Appeals

NO. 2024-CA-1145-WC

CHRISTINE NICOLE FALCONITE APPELLANT

PETITION FOR REVIEW OF A DECISION v. OF THE WORKERS’ COMPENSATION BOARD ACTION NO. WC-23-00878

SHED WISE, LLC.; HONORABLE GREG HARVEY, ADMINISTRATIVE LAW JUDGE; UNINSURED EMPLOYERS’ FUND; AND WORKERS’ COMPENSATION BOARD APPELLEES

OPINION

AFFIRMING

** ** ** ** **

BEFORE: THOMPSON, CHIEF JUDGE; CALDWELL AND L. JONES, JUDGES.

CALDWELL, JUDGE: Christine Nicole Falconite (“Falconite”) petitions for review of a Workers’ Compensation Board opinion affirming the dismissal of her

claim upon a determination that Falconite was an independent contractor. We affirm.

FACTS

Falconite worked for Shed Wise, LLC (“Shed Wise”) for several months starting in December 2021. While taking photographs of sheds as part of her work for Shed Wise in late September 2022, Falconite was struck by a car and suffered significant injuries. As noted by the Administrative Law Judge (“ALJ”), “the central question” of this case is whether Falconite was a Shed Wise employee or an independent contractor when the injury occurred. (ALJ Opinion and Order (“ALJ decision”), page 13.)

Certain basic facts about Falconite’s work arrangement at Shed Wise appear undisputed. Falconite did not have to work set hours at Shed Wise and she could come and go as she pleased. Her work consisted of a mix of sales, clerical work, paying bills, and marketing. She had authority to write checks (including her own paychecks). She also took photographs for and operated Shed Wise’s social media accounts and website. She was issued a company cell phone and a company credit card with her name on it. She used a company computer at the office. However, she also bought an iPad (tablet) with her personal funds which she used to take photographs for Shed Wise.

Falconite was initially paid $400 per week, which was later increased to $500 per week. She also earned a five percent (5%) commission for any sales she made. Rather than a W-2, she received a 1099 from Shed Wise for tax years 2021 and 2022.

In addition to working for Shed Wise, Falconite worked as a restaurant server. She also did some social media projects for other businesses owned and/or operated by two relatives of the owner of Shed Wise, Brent Arnold (“Arnold”).

Despite these largely undisputed facts, Arnold and Falconite testified to having different understandings of whether Falconite was an employee of Shed Wise or an independent contractor.

Falconite testified to thinking she was an employee, partly based on her recollection of Arnold’s talking about putting her on the payroll after the first of the year. (Falconite only worked for Shed Wise for about a month during tax year 2021; she worked for Shed Wise for several months in tax year 2022.) She thought being on the payroll connoted being an employee. Falconite viewed her position at Shed Wise as being primarily an office manager and she testified to working 30 to 35 hours per week for Shed Wise.

In contrast, Arnold testified to hiring her primarily for social media work and viewing her as an independent contractor. He testified he thought she

worked 20 to 25 hours a week for Shed Wise. He stated Shed Wise was a small venture not yet earning a profit and testified to perceiving no sufficient need or money to hire an employee. Arnold also testified to hiring Falconite to allow her to earn money without a rigid work schedule by hopefully increasing sales through social media marketing.

Falconite acknowledged she received 1099 earning statements rather than W-2s for the work she performed at Shed Wise. She explained she used 1099s issued by Shed Wise to file her taxes rather than W-2s simply because “you can’t enter in a W-2 that you don’t have.” (ALJ decision, page 7.) She also indicated she had some understanding of the difference between employees and independent contractors, noting she prepared advertisements for Shed Wise to seek independent contractors to perform other work.

Both Falconite and Arnold discussed the fact that she wrote her own paychecks in their testimony. Falconite testified to writing her checks for less than the agreed-upon payment amounts since she thought taxes were being withheld. Arnold admitted being aware of her writing her checks for less than the full agreed-upon amount, but he testified to assuming that was something she chose to do for tax purposes. (Apparently no tax withholdings were held in a separate account or paid to tax collection agencies during the period Falconite worked for Shed Wise, however.) Falconite and Arnold did not discuss the reductions in pay

amount until after Falconite was struck by the car in September 2022. Arnold continued to pay Falconite through November 2022.

In December 2022, Falconite asked Arnold for the money withheld from her checks totaling about $3,000. He agreed to pay her that sum over several payments so she would get the full amount he had agreed to pay. Shed Wise then issued her a 1099 rather than a W-2 for tax year 2022.

In early September 2023, Falconite filed a workers’ compensation claim against Shed Wise. Shed Wise did not have workers’ compensation insurance, so the Uninsured Employers’ Fund (“UEF”) was later joined as a party. Shed Wise offered as an exhibit an Affidavit of Exemption signed by Arnold in April 2022, stating that no workers’ compensation insurance was necessary because Shed Wise had no employees.

The case was later bifurcated to allow the ALJ to first resolve whether Falconite was an employee covered by the Workers’ Compensation Act or an independent contractor. After hearing proof, the ALJ determined Falconite was an independent contractor and dismissed her claim. Acknowledging that Falconite was economically dependent on her work at Shed Wise, the ALJ still concluded she was an independent contractor based on other factors including lack of control over how Falconite performed her work and Falconite’s having special social media skills. (The ALJ acknowledged Falconite’s social media skills were

developed through hands-on personal experience rather than specialized training, however.)

Falconite filed a motion for reconsideration, which the ALJ denied.

Next, Falconite appealed to the Board. The Board issued an opinion affirming the ALJ’s decision (“Board opinion”) by a 2-1 vote.

Falconite petitioned this Court for review of the Board opinion. Shed Wise and UEF filed responses to her petition for review. Further facts will be set forth as necessary in our analysis.

ANALYSIS

Standard of Review

When the Court of Appeals reviews a Workers’ Compensation Board opinion resolving an appeal of an ALJ decision, this Court does not “correct the Board” unless “the Court perceives the Board has overlooked or misconstrued controlling statutes or precedent, or committed an error in assessing the evidence so flagrant as to cause gross injustice.” Western Baptist Hosp. v. Kelly, 827 S.W.2d 685, 687-88 (Ky. 1992). Next, we discuss relevant binding precedent to guide us as we consider Falconite’s arguments for reversal.

Binding Precedent Sets Forth a Six-Part Test for Determining if a Worker is an Independent Contractor or an Employee

Kentucky law generally recognizes that employers are responsible for providing workers’ compensation coverage for their employees but not for

independent contractors performing work for them. See Hubbard v. Henry, 231 S.W.3d 124, 128-29 (Ky. 2007) (“An individual who performs service as an independent contractor in the course of an employer’s trade, business, profession, or occupation has effectively elected not to be covered.”).1 Recent binding precedent from our Supreme Court sets forth a six-

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Christine Nicole Falconite v. Shed Wise, LLC., (Ky. Ct. App. 2025).

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Related

Hubbard v. Henry
231 S.W.3d 124 (Kentucky Supreme Court, 2007)
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Chambers v. Wooten's IGA Foodliner
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Western Baptist Hospital v. Kelly
827 S.W.2d 685 (Kentucky Supreme Court, 1992)
Miller v. Go Hire Employment Development, Inc.
473 S.W.3d 621 (Court of Appeals of Kentucky, 2015)