Eastway v. Eisenga

362 N.W.2d 684, 420 Mich. 410

• Court: Michigan Supreme Court
• Decided: January 17, 1985
• Docket: Docket Nos. 71532, 71533. (Calendar No. 9)
• Status: Published

Opinions

Brickley, J.

In this case we must decide whether MCL 418.115; MSA 17.237(115) violates the Equal Protection Clauses of the state or federal constitutions¹ by partially excluding plaintiffs employer from coverage under the Worker’s Disability Compensation Act and thereby denying plaintiff the ability to make a claim for disability benefits.

Plaintiff first worked for defendant in 1967. During the next few years plaintiff intermittently worked for defendant, mainly during haying and potato seasons.² In the spring of 1969, plaintiff worked a couple of Saturday afternoons cultivating fields for defendant. In June of the same year plaintiff worked 2 to 3 days per week, 5 to 7 hours per day for defendant while working part time for another employer. Throughout that summer plaintiff worked 4 to 5 hours per week for defendant while also holding other jobs. In late August or early September, plaintiff began working full time for a Mr. Johnson. While still working for Johnson, plaintiff worked one day for defendant during potato season. On that day, September 30, 1969, plaintiff, then age 18, was injured.

The injury occurred when the plaintiff was caught in a self-loading wagon. As a result of the accident, plaintiff is a quadriplegic confined to a wheelchair. Plaintiff was eligible for lifetime medical benefits which have been supplied and are not at issue in this appeal. MCL 418.115(e); MSA 17.237(115)(e)._

Defendant’s two sons also worked for him. The elder, Bruce, owned his own farm in 1969, but still worked 10 to 20 hours per week for defendant and was paid a salary. The other son, Nelson, lived on defendant’s farm and worked there full time for a salary. When Nelson was away for five months in the National Guard, a neighbor worked 3 to 4 hours per day for defendant.

Two haying seasons occurred each year on defendant’s farm. During the first, defendant hired 4 to 5 full time employees for a 2 to 3 week period. Later in the year defendant would hire the same number of full time employees for approximately one week. During potato season defendant hired 8 to 10 people who worked approximately 20 hours per week for 2 to 2-1/2 weeks.

In 1977, the hearing referee awarded disability benefits on the basis of his understanding that Gallegos v Glaser Crandell Co, 388 Mich 654; 202 NW2d 786 (1972), held that the agricultural exclusion in § 115 was unconstitutional. The WCAB affirmed the referee in 1981, but substituted the board’s own narrative findings. Each member interpreted Gallegos differently, but all concurred in affirming the award of benefits.

The Court of Appeals denied defendant’s application for leave to appeal. Judge Cynak voted to grant the application. This Court subsequently remanded the case to the Court of Appeals for consideration as on leave granted. GCR 1963, 853.2(4); 413 Mich 872 (1982).

The Court of Appeals, in an unpublished opinion per curiam, decided April 1, 1983 (Docket Nos. 63830, 63831), affirmed the decision of the WCAB. The Court interpreted Gallegos to mean that "all distinctions between private and agricultural employers violate the equal protection clause of the Fourteenth Amendment.” The Court struck the words, "other than agricultural employers” from MCL 418.115(a), (b); MSA 17.237(115)(a), (b). It found that plaintiff was injured during a period in which the defendant regularly employed three or more employees at one time.³ Thus, it determined that at the time of the injury defendant was an employer subject to the act under § 115(a) as modified. The defendant and the Attorney General, appearing on behalf of the Second Injury Fund, applied for leave to appeal to this Court. We granted leave to appeal, 418 Mich 881 (1983), and now reverse.

The statute at issue in this case, MCL 418.115; MSA 17.237(115), provides:

"Sec. 115. This act shall apply to:

"(a) All private employers, other than agricultural employers, who regularly employ 3 or more employees at 1 time.

"(b) All private employers, other than agricultural employers, who regularly employ less than 3 employees if at least 1 of them has been regularly employed by that same employer for 35 or more hours per week for 13 weeks or longer during the preceding 52 weeks.

"(c) All public employers, irrespective of the number of persons employed.

"(d) All agricultural employers of 3 or more regular employees paid hourly wages or salaries, and not paid on a piecework basis, who are employed 35 or more hours per week by that same employer for 13 or more consecutive weeks during the preceding 52 weeks. Coverage shall apply only to such regularly employed employees. The average weekly wage for such an employee shall be deemed to be the weeks worked in agricultural employment divided into the total wages which the employee has earned from all agricultural occupations during the 12 calendar months immediately preceding the injury, and no other definition pertaining to average weekly wage shall be applicable.

"(e) All agricultural employers of 1 or more employees who are employed 35 or more hours per week by that same employer for 5 or more consecutive weeks shall provide for such employees in accordance with rules established by the director, medical and hospital coverage as set forth in section 315 for all personal injuries arising out of and in the course of employment suffered by such employees not otherwise covered by this act. The provision of such medical and hospital coverage shall not affect any rights of recovery that an employee would otherwise have against an agricultural employer and such right of recovery shall be subject to any defense the agricultural employer might otherwise have. Section 141 shall not apply to cases, other than medical and hospital coverages provided herein, arising under this subdivision nor shall it apply to actions, brought against an agricultural employer who is not voluntarily or otherwise subject to this act. No person shall be considered an employee of an agricultural employer if the person is a spouse, child or other member of the employer’s family, as defined in subdivision (b) of section 353 residing in the home or on the premises of the agricultural employer.

"All other agricultural employers not included in subdivisions (d) and (e) shall be exempt from the provisions of this act.”

In Gallegos, the plaintiffs also challenged the constitutionality of § 115(d). There the plaintiffs were migrant workers employed to harvest cucumbers. They were compensated on a piecework basis and were injured during their employment. The WCAB denied each plaintiff’s claim for benefits on the authority of the piecework exclusion and correctly ruled that it did not have the authority to decide the constitutional question.

The Court of Appeals granted plaintiffs’ application for leave to appeal and subsequently affirmed the decision of the WCAB. Gallegos v Glaser Crandell Co, 34 Mich App 489; 192 NW2d 52 (1971). The Court stated the issue before it as follows:

"The precise question then is whether the creation of classes within the act, thereby allowing for coverage to permanent salaried or wage-earning [farm] laborers while denying coverage to temporary piecework laborers (such as migrant workers) is such unreasonable and arbitrary discrimination as to deny the latter equal protection of the laws guaranteed by the [state and federal constitutions].” 34 Mich App 491-492.

After deciding that the plaintiffs’ rights to travel were not violated, the Court further held that "it cannot be said that the legislative decision to amend the act so as to include certain farm laborers while continuing to exclude others was arbitrary or totally without reason.” Id., p 497. Finally, the Gallegos Court of Appeals stated: "In upholding the constitutionality of [§ 115(d)(3)] i.e., the exclusion of piecework farm laborers, we in no way imply approval of the [legislative treatment of migrant workers].” Id., p 498.

This Court granted leave to appeal in Gallegos and "the arguments of appellants and appellee [each] posit[ed] the issue as piecework.” (Williams, J., concurring in part and dissenting in part, 388 Mich 676.) Specifically, in Gallegos the "[pjlaintiffs argue[d] that the exclusion from workmen’s compensation benefits of those agricultural workers who are paid on a piecework basis * * * denies those workers the equal protection of the laws.” (T. G. Kavanagh, J., concurring in result, id., p 670.)

The majority in Gallegos held that "the provisions of § 115(d) * * * violate[d] the plaintiffs’ rights to equal protection” under the state and federal constitutions. Id., p 659. Notwithstanding the narrow issue before the Court, the bulk of the majority opinion discussed the different treatment given agricultural employers and nonagricultural employers under § 115 generally. The majority stated that its "difficulty [was] with the classification of agricultural employers” because "[agricultural employers * * * are accorded a special treatment and classification of their employees not accorded any other private or public employer.” It thus held: "[s]uch treatment is impermissible, clearly discriminatory, and has no rational basis.” Id., p 668. Plaintiff in the case at bar argues that "[t]his language demonstrates beyond dispute that the Gallegos Court moved to strike down all distinctions based on the classification of agricultural employers.” Plaintiff concludes that Gallegos means that agricultural employers "must provide coverage to the same extent and under the same circumstances as non-agricultural employers.”

Clearly, it was not necessary for the majority in Gallegos to decide whether it is permissible for the Legislature to distinguish between the two types of employers in order to decide whether employees paid by the piece and those paid by wages may be treated differently. Nonetheless, the majority did so hold. We now find that because Gallegos was decided on issues not necessary to the resolution of the case and without a lower court record or briefing on the broader issue of distinctions between employers, it is now necessary to undertake a further analysis of that issue. Our inquiry, then, is whether the Legislature may exempt from the WDCA certain agricultural employers without violating plaintiff’s right to equal protection of the law.

The standard of review for social and economic legislation generally is applicable to evaluate provisions of the workers’ compensation act in question here. Johnson v Harnischfeger Corp, 414 Mich ; 323 NW2d 912 (1982). This legislation is primarily social and economic, involving property rights, not fundamental rights, and is so subjected to review under the traditional equal protection test. The burden is on the person challenging the classification to show that it is without reasonable justification. The statute will be set aside only if there is not any set of facts which can reasonably be conceived to justify it. McAvoy v HB Sherman Co, 401 Mich 419, 453; 258 NW2d 414 (1977). Where the legislative judgment is drawn in question by an equal protection challenge, a court’s inquiry must be restricted to the issue whether any state of facts either known or which could reasonably be assumed affords support for it. Thus, we must uphold the validity of § 115 unless plaintiff bears his burden of showing that the classification therein is arbitrary and does not bear a rational relation to the object of the legislation. Johnson, supra, p 113.

Michigan’s first workers’ compensation statute was 1912 (1st Ex Sess) PA 10. Under the act, farm laborers, domestic servants and casual workers were treated differently than all other employees. 1912 (1st Ex Sess) PA 10, § 2. In 1943, farm laborers were expressly excluded from coverage under the workmen’s compensation act. 1943 PA 245, § 2a.⁴ In 1965, the Legislature revised much of the workmen’s compensation act, including the section which has since evolved into § 115. 1965 PA 44, § 2a. The 1965 version of the agricultural exclusion is essentially similar to § 115 with respect to the provisions at issue in this litigation. The legislative intent as to 1965 PA 44, § 2a, is accordingly relevant to a determination of the purposes and object of the current partial agricultural exclusion.

Prior to the 1965 revision, a concurrent resolution was adopted by the House of Representatives and Senate authorizing a joint special interim committee to investigate and study the entire structure of the workmen’s compensation system in Michigan. The committee report stated the following with respect to agricultural employees:

"The Committee received substantial testimony, both pro and con, with respect to covering additional labor by the Act. At the present time both agricultural and domestic servant labor can be covered on a voluntary basis. Reports indicate that the total year-round farm labor force in the State of Michigan, including family help and hired labor, is approximately 149,500 persons. This figure, however, includes farmers themselves, farm wives, sons, daughters, and other relatives. It appears that the aggregate number of full time hired farm workers is between three and five thousand persons. The Committee heard testimony alleging that the costs would be prohibitive to bring all agricultural, workers within the Compensation Act. However, there is a strong argument for bringing permanent agricultural employees and domestic servants under the purview of the compensation law. It is the recommendation of the Committee that consideration be given to additional coverage for these groups.” 1965 Journal of the House, pp 77-78. (Emphasis added.)

Thus, it appears that the Legislature exempted certain smaller agricultural employers from WDCA coverage because it believed that coverage would create an undue-economic burden on them. The Legislature further intended to bring larger agricultural employers and their permanent full time employees under coverage. All other private employers are covered if they regularly employ three or more employees at one time or if they have regularly employed one person for 35 or more hours a week for 13 weeks or longer during the preceding 52 weeks. § 115(a), (b). We are required to uphold the validity of § 115 if the employer classifications are rationally related to the purpose of preventing undue hardship to agricultural employers by exempting them from the WDCA in certain circumstances.

We hold that the classifications drawn by the statute are rationally related to the permissible goal of recognizing the economic uniqueness of Michigan’s agricultural employers.

The Legislature could have reasonably concluded that agricultural employers needed to be protected from the additional overhead of workers’ compensation insurance premiums.⁵ The Legislature could have further decided that an excessive administrative burden on small agricultural employers would result if WDCA coverage were required. The casual and often familial nature of agricultural employment might make it administratively onerous for small agricultural employers to determine which employee should be covered. For example, small farmers often trade labor between themselves, friends, neighbors, and family. Requiring the small farmer to keep records on and insure each casual or temporary employee could effect a serious drain on time and resources.

The wisdom of this policy of partial agricultural exclusion is not before us, nor is the question whether a similar exclusion should have also been given to other small businesses. It is settled that legislation will not fall merely because the Legislature does not address all evils at one time. O’Donnell v State Farm Mutual Automobile Ins Co, 404 Mich 524, 542; 273 NW2d 829 (1979).

The lawmakers could also consider the fact that farmers, unlike those in other sectors of the economy, ordinarily have no power to raise their prices to absorb the additional overhead costs occasioned by premium costs of workers’ compensation insurance. Ross v Ross, 308 NW2d 50, 53 (Iowa, 1981).

Since the plaintiff has failed to show that a separate classification for agricultural employers in § 115 bears no rational relationship to a legitimate legislative goal, we hold that the challenged classification is constitutionally sound and does not violate plaintiff’s right to equal protection of the law.

Any portions of. Gallegos inconsistent with this opinion are hereby overruled.

Turning to the statute as applied to the instant case, we find that the facts are undisputed. The defendant did not have three or more regular employees who had worked 35 or more hours per week for 13 consecutive weeks prior to the accident. § 115(d). The last sentence of § 115 provides in part: "All other agricultural employers not included in [§ 115(d), (e)] shall be exempt from the provisions of [the WDCA].” Hence, except as the parties have agreed with respect to medical benefits under § 115(e), the defendant was exempt from coverage under the WDCA at the time of the injury, thereby rendering the plaintiff ineligible for benefits.

Reversed and remanded.

No costs as a public question is involved.

Williams, C.J., and Ryan, Cavanagh, and Boyle, JJ., concurred with Brickley, J.

Clerk’s Note: The following opinion was filed December 28, 1984, but was revised after the signing of the majority opinion._

1 Const 1963, art 1, § 2; US Const, Am XIV. The plaintiff merely argues that Gallegos v Glaser Crandell Co, 388 Mich 654; 202 NW2d 786 (1972), applies to this case. Defendant, however, argues that Gallegos does not apply or, alternately, that the classification included here is constitutionally permissible. The Court of Appeals based its holding on the Fourteenth Amendment to the United States Constitution. Our conclusion is the same under either.

2 The first haying season begins near the end of June and lasts 2 to 2-1/2 weeks. The second haying season occurs in late August and lasts approximately one week. Potato season starts at the end of September and continues for 2 to 2-1/2 weeks.

3 In light of our holding, we find it unnecessary to decide whether defendant regularly employed three or more employees at one time within the meaning of § 115(a) at the time of plaintiffs injury.

4 Under 1943 PA 245, § 2a, employers of farm laborers could voluntarily bring their employees under the workmen’s compensation act by-purchasing a valid compensation insurance policy for their benefit.

5 The argument that this separate classification of agricultural employers is necessarily a deprivation of the employee’s rights is debatable in view of the fact that the workers’ compensation system involves a tradeoff of the employees relinquishing their common-law tort remedies in favor of the lesser burden of establishing a valid claim for benefits. Agricultural employees not covered by the WDCA, of course, retain the common-law right to sue their employer.