Summary of a Recent
Judicial Development in
Labor

Feedlot Employee Entitled to
Workers' Compensation Benefits

Patricia Farnese
National AgLaw Center Graduate Assistant

In an action brought by an injured feedlot employee seeking to recover workers' compensation benefits, the Nebraska Supreme Court held that the feedlot employee was entitled to workers' compensation coverage because he was not a "farm or ranch laborer" under Neb. Rev. Stat. § 48-106. Larsen v. D B Feedyards, Inc., 648 N.W. 2d 306, 307-12 (Neb. 2002). Two dissenting opinions stated that the employee should be considered a farm or ranch laborer under the statute, thereby exempting the employer from providing workers' compensation benefits. See id. at 312-315.

D B Feedyards was a feedlot wholly owned by Shirley and Rodney Bromm. See id. at 308. When it was incorporated in 1973 it only served as a feedlot for cattle owned by Shirley and Rodney. See id. However, D B Feedyards later began feeding cattle that were owned by other persons and entities, usually housing an average of 5000 head of cattle, over half of which were owned by someone other than D B Feedyards. See id.

Lyle Larsen was hired by D B Feedyards to perform general labor, such as sorting and treating sick cattle. See id. On November 13, 1999, he injured his right thumb while roping a steer. See id. On March 8, 2000, he filed a petition with the Workers' Compensation Court seeking Workers' Compensation benefits for his injury. See Id. D B Feedyards responded by arguing that Larsen was not entitled to protection under § 48-106(2) of the Nebraska Workers' Compensation Act because he was employed as a "farm or ranch laborer." Id. Section 48-106(2) provides, in relevant part, that "'[t]he following are . . . not within the provisions of the Nebraska Workers' Compensation Act: . . . employers farm or ranch laborers . . . .'" Id. (quoting § 48-106(2)).

On January 21, 2001, the Workers' Compensation Court determined that Larsen was entitled to workers' compensation benefits, holding that the farm or ranch laborer exception contained in § 48-106(2) did not apply to Larsen. See id. The Workers' Compensation Court concluded that

the enterprise [D B Feedyards] was engaged in on November 13, 1999 . . . was a commercial enterprise separate and distinct from farming and ranching. The sheer size of [D B Feedyards'] operation shows that it is more in the nature of a commercial enterprise rather than on [sic] old-fashioned farm and ranch operation. Employers operating businesses performing commercial services primarily for others, even though the task performed may commonly occur on a farm or a ranch, do not employ 'farm or ranch laborers' within the meaning of [§ 48-106].

Id.

D B Feedyards appealed that decision to the Nebraska Supreme Court where it was affirmed. See id. at 309. D B Feedyards argued that "it was engaged in the business of farming or ranching, it [was] an excepted employer under § 48-106(2) and that, therefore, its employee Larsen was not covered by the Nebraska Workers' Compensation Act." Id. at 310.

In Leppert v. Parker, 352 N.W.2d 182 (Neb. 1984), a case that involved the Nebraska Workers' Compensation Act, the Nebraska Supreme Court stated that "'[i]t is clear from both the statute and the cases that it is the nature of the employer's business which determines the exemption, and not the work performed by the employee.'" Id. (quoting Leppert, 352 N.W.2d at 182). Based on this statement, the court explained that a case-by-case analysis of the facts was needed to determine if Larsen were entitled to workers' compensation protection in light of § 48-106(2). See id. The court stated that

although the task the employee is performing at the time of the injury is relevant to the inquiry, . . . the fact that the injury occurred on the farm or ranch and the fact that the work itself could be characterized as farm or ranch labor does not control whether the employee is covered.

Id. (citing Leppert, 352 N.W.2d at 182 and Campos v. Tomoim 122 N.W.2d 473 (1963)).

Furthermore, the court stated that the farming exception, which was enacted in 1913, and the ranching exception, which was enacted in 1945, do not reflect the realities of modern agriculture. See id. The court explained that increases in farm size and in "mechanization, specialization and scientific advancement" have, in some circumstances, "created a type and kind of regular commercial business, separate and distinct from farming and ranching." Id. at 310-311. The court noted, however, that it was possible for an employer to be engaged in several businesses at the same time, including one that would qualify as an agricultural operation and another which would not. See id. at 311.

Consequently, the court declined to extend the exception contained in § 48-106(2) to D B Feedyards. See id. The court concluded that Larsen was entitled to workers' compensation benefits because the "tasks Larsen was performing when and where he was injured in this case were for the benefit of a separate commercial business conducted by D B Feedyards, which consists of feeding the cattle of the customers of D B Feedyards." Id. at 311-312.

There were two dissenting opinions in this case. See id. 312-15. The first dissent accepted the majority's description of the applicable law but rejected its conclusion that the ownership of the cattle gave rise to two separate and distinct enterprises and that the applicability of the exemption rested on whose steer was being roped when Larsen was injured. See id. at 312. This dissent stated that in order for there to be two separate enterprises, the two activities must exhibit a "discernible separation." Id. It also stated that no "meaningful distinction" could be drawn between the two enterprises in this case because

the record in this case demonstrates that D B Feedyards conducts a single, integrated operation in which its land is cultivated for the production of agricultural crops which are then used on D B Feedyards' premises to feed animals for livestock production, including animals owned by D B Feedyards and animals owned by others.

Id.

It added that "the essential nature and character of the enterprise operated by D B feedyards is the same regardless of whether the revenue is generated by the sale of its own fattened cattle or from the fees it receives for feeding cattle owned by others." Id. at 313. As a result, the first dissenting opinion concluded that D B Feedyards qualified for the workers' compensation exemption. See id. at 314. The second dissent concurred wit the first but expressed concern that the current legislation permitted farm and ranch workers "engaged in identical labors [to be] treated differently based on the business structure chosen by their employers." Id. at 315. This dissent also stated that the treatment of workers "turns on distinctions that are too subtle to be understood or anticipated." Id. Thus, it encouraged the Legislature to revisit this issue. See id.

The case was decided on July 26, 2002; this summary was posted February, 2003