Kern v. Steele County

OTIS, Justice. Respondents Ralph and Shirley Kern and their farm liability insurer, Minnesota Mutual Fire and Casualty (Minnesota Mutual), brought a declaratory judgment action seeking a determination that the Kerns, as foster parents, were employees of Steele County, thus obligating Steele County’s liability insurer, Western Casualty and Surety Company (Western), to defend and indemnify the Kerns in an action arising out of an injury to a foster child while placed in the Kerns’ farm home. Western appeals from the district court’s order of summary judgment which held, in relevant part, that the Kerns were employees of Steele County while acting as foster parents. We reverse. Ralph and Shirley Kern were foster parents participating in the foster home child care program administered by the Steele County Department of Social Services. 1 The Kerns were issued a license by the State Department of Public Welfare permitting them to provide foster care in their farm home for as many as four children. While acting as foster parents the Kerns received a fixed monthly stipend from the Steele County Department of Social Services to cover the expenses of foster children, such as food and clothing. The Kerns’ farm home was also monitored on an approximately monthly basis by a Steele County social worker who had authority to remove a foster child at will. In May 1975, Christine Born, a minor child, was placed with the Kerns’ as a foster child. In August 1975, Christine Born was injured when she consumed some varnish remover in the Kerns’ farm home. Christine’s natural mother, Corrine Reynolds, brought suit against the Kerns. The Kerns and their farm liability insurer, Minnesota Mutual, tendered defense of the suit to Steele County and its insurer, Western. The tender was refused. After the refusal of tender, the Kerns and Minnesota Mutual brought this declaratory judgment action seeking a determination that the Kerns, in their capacity as foster parents, were employees of Steele County within the meaning of a liability policy issued by Western covering Steele County and “any employee.” 2 The district court determined that the Kerns were employees of Steele County while acting in their capacity as foster parents. We disagree. 3 We are, of course, guided by principles of agency law in resolving whether the Kerns, *189 as foster parents, were employees of Steele County. In Iverson v. Independent School District No. 547, 257 N.W.2d 572 (Minn.1977), we reiterated the five factors we consider in determining the existence of an employment relationship: (1) The right of the employer to control the manner and means of performance of the work; (2) The mode of payment; (3) Furnishing of material or tools; (4) Control of the premises where the work is to be performed; and (5) Right of discharge. Id. at 573 . Accord, Wangen v. City of Fountain, 255 N.W.2d 813, 815 (Minn.1977); Guhlke v. Roberts Truck Lines, 268 Minn. 141, 143 , 128 N.W.2d 324, 326 (1964). In this case, we think a consideration of these five factors does not provide a basis for finding an employment relationship. First, monthly visits to the Kerns’ farm home by a county social worker do not indicate a right to control the manner in which the work was performed. Under similar facts in Huber v. Hennepin County Welfare Board, 249 Minn. 561 , 83 N.W.2d 511 (1957), we stated that periodic investigations “[do] not show such control as ordinarily would establish a relationship of master and servant.” Id. at 567 , 83 N.W.2d at 515 . See also Speaks, Inc. v. Jensen, 309 Minn. 48 , 243 N.W.2d 142 (1976). Second, payment of a fixed monthly stipend rather than hourly compensation is more indicative of an independent contract relationship than an employment relationship. See Wangen v. City of Fountain, 255 N.W.2d 813, 815 (Minn.1977). Third, the Kerns provided their own premises as room and board for Christine Born. Fourth, periodic visits to the Kerns’ farm home does not suggest that Steele County had control of the premises. Fifth, while the right to remove Christine Born from the Kerns’ farm home at will perhaps suggests a de facto right of discharge, this consideration alone is not conclusive, see Geerdes v. J. R. Watkins Co., 258 Minn. 254, 262 , 103 N.W.2d 641, 646 (1960) (citation omitted), and alone cannot overcome the weight of the four prior factors. We hold, therefore, that the Kerns, in their capacity as foster parents, were not employees of Steele County. Reversed. . While the foster care program is administered on the local level by the various county welfare boards, the program nevertheless operates at all times under the supervision of and in accordance with the rules and regulations of the state commissioner of public welfare. See Minn.Stat. § 393.07, subd. 1 (1980). . Western’s liability policy with Steele County provides in relevant part: It is agreed that the “Persons Insured” provision is amended to include any employee of the named insured while acting within the scope of his duties as such * * * (a) It is further agreed and understood that all coverages provided by the policy and its endorsements will apply to any employee of the named insured. .This case would have never arisen if Christine Born had been injured after the effective date of Minn.Stat. § 245.814 (1980). That statute provides: The commissioner of public welfare shall within the appropriation provided purchase and provide insurance to foster parents to cover their liability for: (1) injuries or property damage caused or sustained by foster children in their home.