Wis.LIRC ER Decision: Schaefer, Mary - November 17, 1995 - Procedure - Coverage of WFEA -Stockholder of corporation may file discrimination complaint against corporation; Procedure - Coverage of WFEA - "employment" determined under "hybrid" standard combining common law "right to control" and "economic realities" tests; Procedure - Coverage of WFEA - Independent Contractors; Procedure - ALJ may dismiss complaint prior to hearing if, looking at allegations, even what Complainant claims is true would not support decision in their favor

STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266- 9850)

MARY E. SCHAEFER, Complainant

NEW BERLIN REALTY, INC, Respondent A

ELMER J SOMMERS INDIVIDUALLY AND
d/b/a NEW BERLIN REALTY, INC, Respondent B

FAIR EMPLOYMENT DECISION
ERD Case No. 9332701, EEOC Case No. 26G910569

An administrative law judge (ALJ) for the Equal Rights Division of the Department of Industry, Labor and Human Relations issued a decision in this matter on June 30, 1994. The complainant and the respondents filed a timely petition for review with the Equal Rights Division, which then forwarded the file to the commission en May 31, 1995.

Based upon a review of the record in its entirety, the Labor and Industry Review Commission issues the following:

FINDINGS OF FACT

1. The complainant, a female, is a real estate broker. She obtained her broker's license in 1983. Prior to 1986 she worked for Wauwatosa Realty.

2. Respondent B, Elmer J. Sommers, owned a sole proprietorship called Sommers Construction Company. Prior to the mid- 1980's, Sommers' primary activity was with his construction company building residential homes. Sommers employed a small work crew and an office person named Lee Wierzba to work for the construction company. He operated this business out of an office in the basement of his home located at 4056 South 56th Street in Milwaukee, Wisconsin. Due to Sommers' limited education he relied on Wierzba to do his reading and writing for him. Beginning in the mid-1980's Sommers became less involved in the construction of homes and more involved in the development of subdivisions and sale of the resulting lots. Eventually, except for Wierzba, Sommers discontinued the employment of all employes at Sommers Construction Company.

3. In 1986, Sommers created a separate sole proprietorship, called E.J. Sommers New Berlin Realty, to sell the lots of the subdivisions that he was developing. The realty company office was operated out of the same location as the construction company. The complainant, who had listed properties for Sommers while employed at Wauwatosa Realty, and Sommers decided that the complainant would perform services as a broker for the realty company.

4. An employment contract listing Sommers as employer and the complainant as employe was prepared by attorney John Carr and set forth the terms of the employment relationship. The employment contract called for the complainant to devote her full working time to said employment and to manage the business of a real estate brokerage firm located at 4056 South 56th Street in Milwaukee. The employment contract stated that the complainant would be paid $30,000 per year for her services, payable in semi-monthly installments on the 1st and 15th of each month. The contract provided a schedule of fees and commissions to be paid for various types of sales made by the complainant that were to be applied against her $30,000 salary. The contract also included specific duties to be performed by the complainant, some of which called for her to "Man employer's model homes at all appropriate times," to "Promote the sale of new homes for the employer" and to "Man sales station located at or near subdivisions being developed by employer."

5. The employment contract stated that it was to commence on June 1, 1986 and continue for one year. Sommers signed the employment contract. The complainant maintains that she had executed the contract but no copy of a contract with her signature has been submitted into evidence. Moreover, the evidence fails to establish that the complainant and Sommers acted pursuant to the terms of the employment contract. For instance, there is no evidence that the complainant undertook any effort to manage and conduct the realty company. In fact, there is no evidence that she had any office space there, or any evidence to show what if any communication she had with Sommers with respect to her activities. Further, the complainant was not paid on the 1st and 15th of the month, but instead paid solely by way of commissions when real estate sales were closed. No tax deductions were made and she was given a Form 1099 for tax purposes.

6. Sommers and the complainant did not execute a subsequent employment contract after the one year period. However, their association did not end as the complainant continued to sell properties in which Sommers had an interest after the expiration of the contract. In November 1988 Sommers and the complainant formed New Berlin Realty, Inc., with Sommers listed as the president and treasurer and complainant as the vice-president and secretary, and each owning 50 per cent of the corporations' stock. The evidence shows that New Berlin Realty, Inc. was formed only because of the complainant's concern that sharing commissions from the sale of real estate with Sommers, who was not a licensed real estate broker, would jeopardize her real estate license. Neither the complainant nor Sommers paid any money for their listed shares of capital stock (50 to each), no meetings were ever held and no stock of the corporation was ever issued.

7. The complainant maintains that she was an employe and that despite the absence of a further employment contract she continued working as an employe for Sommers, providing services for Sommers under the terms of the original employment contract until June 25, 1990, at which time she was discharged. The complainant asserts that she followed Sommers from subdivision to subdivision and sold his properties exclusively. She asserts that she had to hold open houses, that she had to be available nights and weekends, that Sommers told her who she would meet, that Sommers attended all open houses, that he was present for all offers being written and all closings, that Sommers set the price of properties, that she could sell only Sommers' property, that Sommers paid all of her realtor association dues (Waukesha Bd. of Realtors, MLS), paid for her phone, gas, office supplies, office furniture, office equipment, and paid for her health insurance but that Sommers did not pay her social security taxes or disability insurance.

8. Sommers testified that the complainant had permission to come and go as she pleased, that he did not tell her what to do, never set appointments for her, never told her to be at the model home at certain times and that she could have listed with others. Sommers admits that he was present when most offers to purchase were written but that he did not take part in writing them. He admits going to all closings and signing closing documents. Sommers also admits that the costs for such items as office supplies, advertising bills, office equipment, as well as the complainant's MLS dues, Board of Realtor dues and health insurance for the complainant, were paid out of the share of the commissions that the company or corporation received from the sale of real estate properties.

9. Over the course of their association Sommers purchased expensive jewelry and fur coats for the complainant.

10. Some time prior to the formation of New Berlin Realty, Inc., Sommers constructed a model home at 4500 South Sunnyslope Road in a subdivision called Sommerset Gardens. An entity called Sommers Estates, a joint venture, owned the subdivision. The joint venture consisted of Elmer J. Sommers as one venturer, and Kateri Investments as the other venturer, the latter being a limited partnership, with John Carr as general partner and several investors as the limited partners. Around the time of the creation of New Berlin Realty, Inc., the complainant moved into the model home where she resided in an upstairs bedroom and maintained an office.

11. Lee Wierzba kept records for New Berlin Realty, Inc., including doing the books and closing files. Around May 1989, Sommers moved into a bedroom at the model home on Sunnyslope Road. About the same time, Wierzba and the office which had existed at 4056 South 56th Street in Milwaukee also moved to the model home and operated from a first floor location.

12. In early June 1989 the complainant and Sommers filed a petition for a temporary restraining order against Sommers' wife. The petition stated, among other things, that Mrs. Sommers was harassing the complainant, causing damage to the property at 4500 South Sunnyslope Road and that Mrs. Sommers had threatened to throw Schaefer's belongings out the window if she did not vacate the premises.

13. The complainant asserts that while she was residing at the model home Sommers, among other things, frequently tried to kiss her, that once he grabbed her breasts, that once he patted her bottom, that once he invited her to take a bath with him, that once he commented that sex would not hurt and that every night that both were at home he would ask if she would sleep in his bed or if he could sleep in hers. The complainant asserted that her response when Sommers engaged in this conduct was always to push him away, tell him to stop or tell him no. The complainant asserted that on June 25, 1990, Sommers told her that since she refused to have sex with him "she was gone." Sommers denied each and every one of the complainant's assertions.

14. The complainant testified that on July 5, 1990, a note from John Carr was taped to her bedroom door. This note stated that her tenancy at sufferance at the premises was terminated, that she had 5 days to vacate and that she pay the sum of $17,500 as the fair and equitable market value for residing at the house. According to Carr, there was a great deal of conflict between the complainant and Sommers and Sommers' wife, and that he convinced Sommers that it would be better for all concerned that the complainant no longer live at the model home. The complainant eventually moved out after she came home one day and found her belongings in the garage, and was subsequently advised that her services would no longer be utilized.

15. On August 19, 1990, the complainant traced Sommers' signature on a vacant land listing contract which showed her as having exclusive rights to sell property owned by Sommers for the period December 5, 1989 to December 5, 1992.

Based on the above FINDINGS OF FACT, the commission makes the following:

CONCLUSIONS OF LAW

1. Respondent A, New Berlin Realty, Inc., is a person within the meaning of the Wisconsin Fair Employment Act.

2. Respondent B, Elmer J. Sommers, is an employer within the meaning of the Act.

3. The complainant is not an employe of either Respondent A or Respondent B, but an independent contractor and thus not covered under the provisions of the Act.

Based on the above FINDINGS OF FACT and CONCLUSIONS OF LAW, the commission now therefore issues the following:

DECISION

Complainant Schaefer's complaint in this matter is dismissed.

Dated and mailed November 17, 1995

/s/ Pamela I. Anderson, Chairman

/s/ Richard T. Kreul, Commissioner

/s/ David B. Falstad, Commissioner

MEMORANDUM OPINION

The Wisconsin Fair Employment Act prohibits acts of unlawful employment discrimination. Since the term "employment" is not defined, however, and the Act's definition of employe simply states that "`(e)mploye' does not include any individual employed by his or her parents, spouse or child" (sec. 111.32(5)), Title VII case law has been looked to for guidance in interpreting the state law. Moore v. LIRC, 175 Wis.2d 561, 499 N.W.2d 289 (Ct. App. 1993). In Moore, the court adopted the "hybrid" standard which combines the common law "right to control" and "economic realities" tests, for purposes of determining employe status, and thus entitlement to the protections afforded under the Fair Employment Act. Id. at 570.

In Moore, it was noted that the "hybrid" test first appeared in Spirides v. Reinhart, 613 F.2d 826 (D.C. Cir. 1979). Quoting from Spirides about this standard the court of appeals stated as follows:

(D)etermination of whether an individual is an employee or an independent contractor for purposes of (Title VII) involves ...analysis of the "economic realities" of the work relationship ....Consideration of all of the circumstances surrounding the work relationship is essential, and no one factor is determinative. Nevertheless, the extent of the employer's right to control the "means and manner" of the worker's performance is the most important factor to review here ....

Additional matters of fact that an agency or reviewing court must consider include, among others, (1) the kind of occupation, with reference to whether the work usually is done under the direction of a supervisor or is done by a specialist without supervision; (2) the skill required in the particular occupation; (3) whether the "employer" or the individual in question furnishes the equipment used and the place of work; (4) the length of time during which the individual has worked; (5) the method of payment, whether by time or by the job; (6) the manner in which the work relationship is terminated...; (7) whether annual leave is afforded; (8) whether the work is an integral part of the business of the "employer"; (9) whether the worker accumulates retirement benefits; (10) whether the "employer" pays social security taxes; and (11) the intention of the parties.

Moore, 175 Wis.2d at 569.

The evidence fails to demonstrate that Sommers exercised the type of control over the complainant in the performance of her work as a real estate broker that would support a finding of employe status. The complainant attempts to establish that she worked under the direct strict supervision and control of Sommers asserting that she "had to hold open houses" and "had to place ads in the Journal," because Sommers attended all open houses and was present for all offers being written, and because he set prices for all properties and was at all closings. However, the holding of open houses is the normal procedure used by real estate brokers to stimulate sales. So is the placing of advertisements in newspapers. There is nothing unusual about an owner attending open houses. Moreover, it is the owners of real estate, not brokers, who set prices and execute sales contracts. Further, while the complainant has asserted that she "worked seven days per week and twenty-four hours per day" and that Sommers told her who she would meet, the evidence does not support a showing that Sommers regulated her work activity in such manner. In fact, the evidence indicates that the complainant kept her own hours. Lee Wierzba testified that while working at the model home on Sunnyslope Road she saw very little of the complainant, that usually around 1 p.m. she knew the complainant was awake because she could hear the complainant's parrot and that the only way to reach the complainant was by calling her phone number. The complainant produced no written memoranda or other evidence which would indicate that Sommers required her to work a set schedule of hours, required her to make any report of her activities or regulated the manner in which sales transactions were to be conducted. The evidence simply fails to establish that Sommers exhibited control over the means and manner in which the complainant performed her work.

Many of the other factors to be considered under the "hybrid" test also lead to the conclusion that the complainant did not have employe status. For instance, a real estate broker is a specialist and a professional, working without supervision by the very nature of the work. The skill required of a real estate broker is high, such occupation requiring a license which is granted only after satisfactory proof of competence. Section 452.03, Stats. The complainant was not paid a salary but solely by way of commissions at the time real estate sales were closed. The record fails to establish that the complainant was provided annual leave or retirement benefits. No federal, state or social security income taxes were withheld from her commission earnings and she was given a Form 1099.

The complainant has emphasized the fact that she and Sommers had a long term relationship, that Sommers "provided" the work office location at 4500 South Sunnyslope Road and the equipment, paid all expenses relating thereto, plus the cost of health insurance for her as well as her real estate broker's license fees, and that her work selling and marketing real estate was an integral part of Sommers business as a real estate developer. None of these matters assist the complainant in elevating her status to that of an employe in the instant case, however.

The fact that selling and marketing of subdivision lots was an integral part of New Berlin Realty, Inc. does not assist the complainant. It has been said that the premise underlying this factor appears to be that a company is less likely to rely on the performance of independent contractors for its core functions (Golden v. A.P. Orleans, Inc., 681 F. Supp. 1100, 46 FEP Cases 1477, 1480 (D.C. Pa 1988)). However, in the instant case Sommers was unable to effectuate the sale of real estate as he was not licensed to do so.

The complainant and Sommers association of about four years, without more, does not establish an employe-employer relationship. As noted by the respondent, what the complainant and Sommers association "really indicates is that brokers who can attract and keep good customers, real estate sellers, seek to maintain the relationship for as long as possible, and time length be it short or long merely indicates that period during which each is satisfied with the performance of the other. In this regard the situation is not unlike an attorney/client or doctor/patient relationship. Lifelong clients or patients do not make the lawyer or doctor employees of the client or patient."

The inference the complainant apparently seeks to draw because she was "provided" an office at the model home and Sommers paid for equipment and office supplies -- that the employer exercised direction and control over her -- is not borne out by evidence. The evidence indicates that some two years after their association began the complainant moved into the model home and occupied an upstairs bedroom where she maintained her own office separate from the office where Sommers and Wierzba conducted Sommers' business, that she kept her own schedule, had her own private telephone line and reported to no one about her whereabouts or daily activities. Further, the fact that Sommers paid for the complainant's health insurance and real estate broker license fees and board of realtor dues is not particularly enlightening in view of the fact that he also bought her fur coats, jewelry and allowed her to live rent-free at the model home.

Finally, the very fact that the complainant forged Sommers' signature on a listing contract granting her the right to sell subdivision lots for Sommers indicates an admission on her part that there was no type of employment relationship in existence between her and Sommers, either that of an employe or independent contractor.

NOTE: The commission has issued its own decision in this matter because it disagrees with the ALJ's determination that the Act "does not appear to require the complainant to establish that the respondents are employers or that she is an employe ...(only) that a Respondent is a `person' and that the Complainant is an "individual' in order to have the protection of the WFEA apply."

cc:
Martin J. Greenberg
Glen B. Kulkoski

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