Trustee's gratuitous services undermine employment claim

In South Carolina, the services of elected co-operative trustees are generally considered gratuitous. Therefore, the trustee is not an employee for purposes of workers' compensation benefits.

Case name: Shuler v. Tri-County Electric Co-Op, Inc., No. 26731 (S.C. 10/12/09).

Ruling: The South Carolina Supreme Court affirmed the denial of workers' compensation benefits to a trustee of an electric co-op board, concluding he was not an employee under the Workers' Compensation Act.

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What it means: In South Carolina, the services of elected co-operative trustees are generally considered gratuitous. Therefore, the trustee is not an employee for purposes of workers' compensation benefits.

Summary: A member of the board of trustees of an electric co-operative was injured in a car accident traveling to an authorized conference. He filed a claim for workers' compensation benefits, alleging he was an employee of the co-op when he was injured. The South Carolina's Workers' Compensation Act defines an employee as a "person engaged in an employment under any appointment, contract of hire, or apprenticeship." The trustee argued he was an employee under a contract of hire with the co-op. The court disagreed, stating an employee under a contract of hire has a right to payment for his services. The co-op's bylaws stated payment was discretionary and would not be paid to trustees except for time spent on specific business and not as compensation for general services.

The Supreme Court noted the trustee performed his duties without receiving compensation for his services. It noted that although he may have received reimbursement for expenses and other benefits, these payments were given at the discretion of the board, and the trustee had no right to demand such payment. Thus, he was not an employee because his services were offered gratuitously.

The trustee also argued his election to the board constituted an appointment by the board's membership. The court noted that the distinction between an appointment and an election was clear and that the cooperative act specifically stated that "members of the board shall be elected by ballot." The court held the trustee was elected rather than appointed and was therefore not an employee of the co-op.

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November 19, 2009

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