SHELBY WATT, Complainant

FEDEX GROUND PACKAGE  SYSTEM INC, Respondent

An administrative law judge (ALJ) for the Equal Rights Division of the Department of Workforce Development issued a decision in this matter. The complainant filed a petition for review that was one day late. However, for reasons stated in the Memorandum Opinion portion of this decision, the commission has accepted Watt's petition and therefore reviewed his appeal in this case.

The commission has considered the petition and the position of the parties, and has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ and adopts that decision as its own. Accordingly, the commission therefore issues the following:

The decision of the administrative law judge (copy attached) is affirmed.

Dated and amiled August 31, 2004
wattsh . rpr : 125 : 9

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner

On May 26, 2004, the Equal Rights Division mailed to the parties a copy of the administrative law judge's decision, which dismissed complainant Shelby Watt's complaint in this matter.

Wisconsin Statute § 111.39(5) provides, in relevant part, as follows:

(a) Any respondent or complainant who is dissatisfied with the findings and order of the examiner may file a written petition with the department for review by the commission of the findings and order.

(b) If no petition is filed within 21 days from the date that a copy of the findings and order of the examiner is mailed to the last- known address of the respondent the findings and order shall be considered final for purposes of enforcement under sub. (4)(d)..If the commission is satisfied that a respondent or complainant has been prejudiced because of exceptional delay in the receipt of a copy of any findings and order it may extend the time another 21 days for filing the petition with the department."

Also, Wisconsin Administrative Code § DWD 218.21(2) provides, in relevant part, as follows:

"The petition for review shall be filed within 21 days after the date that a copy of the administrative law judge's decision and order is mailed to the last known address of the parties."

Based upon the date the Division mailed a copy of the ALJ's (examiner's) decision to the parties, Watt had until June 16, 2004, to file a petition for commission review of the decision. Watt's petition for review was not filed (i.e., received) with the Division until June 17, 2004, making it one day late. However, it is apparent that the Division failed to mail a copy of the ALJ's decision to Watt's last known address. Watt's address is 209 Swanton RD #6, Madison, WI 53714. While the address on the ALJ's decision itself shows the Swanton RD address as Watt's address, the Notice of Appeal Rights letter attached to the ALJ's decision, which states that the decision was dated and mailed on May 26, 2004, shows Watt's address as "3110 D Old Gate RD Madison WI 53704." The commission also notes that on the inside cover of the case file, where the Division keeps pre-printed address labels for the parties and/or their representatives, that there are pre- printed address labels with Watt's address as "3110 D Old Gate RD" but no such address labels for his correct address on Swanton RD.

Based upon material in the case file the Division had been made aware sometime in June 2003 that Watt's address was no longer on Old Gate RD but on Swanton RD.

Watt did in fact become aware of the ALJ's May 26 decision because he filed a petition for review with the Division on June 17. However, it is not known when he became aware of this decision. As noted above, if the commission were satisfied that Watt was prejudiced because of exceptional delay in the receipt of the decision, Wis. Stat. 111.39(5)(b) permits the commission to extend the time another 21 days for filing the petition for review. Short of remanding this matter for hearing testimony from Watt to determine whether he had been prejudiced because of exceptional delay in the receipt of such decision, there is no way of knowing the answer to this question for sure.

In view of the Division's failure to meet the requirement that it mail a copy of the administrative law judge's decision to Watt's last known address, however, the commission has decided to simply accept Watt's petition and proceed to a review of the merits of his appeal.

The ALJ's decision affirmed a preliminary determination and order that dismissed Watt's complaint of arrest and conviction record discrimination against the respondent. The preliminary determination and order dismissed Watt's complaint due to a lack of jurisdiction by the Equal Rights Division on the grounds that the position in question, a delivery driver position, was an independent contractor position.

Under the Wisconsin Fair Employment Act it is unlawful for any employer to discriminate against an employee or applicant for employment. Wis. Stat. § 111.325. The WFEA provides no protection for independent contractors against discrimination in their contractual relationships. Moore v. LIRC, 175 Wis. 2d 561, 569, 499 N.W.2d 288 (Ct. App. 1993). In Moore, the Wisconsin Court of Appeals adopted the test set forth in Spirides v. Reinhardt, 613 F.2d 826 (D.C. Cir. 1979), to determine whether one seeking the protections afforded under Title VII is an employee or an independent contractor. Moore quoted the test set forth in Spirides 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 'employer' pays social security taxes; and (11) the intention of the parties."

Moore, 175 Wis. 2d at 569.

Based upon the parties' submissions to the ALJ, including the "FedEx Home Delivery Standard Contractor Operating Agreement" (hereinafter, Agreement) that would have governed their relationship, and an analysis of the "economic realities" as delineated in Spirides and Moore, she concluded that the delivery driver position was an independent contractor position and therefore did not fall under the protection of the WFEA.

The record fully supports the ALJ's decision. First, with respect to the most important factor, "the extent of the employer's right to control the 'means and manner' of the worker's performance," the Agreement states as follows:

"Contractor agrees to direct the operation of the Equipment and to determine the methods, manner and means of performing the obligations specified in this Agreement . . .
. . .
It is specifically understood and agreed by both parties that Contractor shall be responsible for exercising independent discretion and judgment to achieve the business objectives and results.and no officer, agent or employee of FHD shall have the authority to direct Contractor as to the manner or means employed to achieve such objectives and results. For example, no officer, agent or employee of FHD shall have the authority to prescribe hours of work, whether or when the Contractor is to take breaks, what route the Contractor is to follow, or other details of performance."

Sections 1.4 and 1.14.

Additionally, consideration of other matters of fact indicates that the position was that of an independent contractor and not one involving that of an employer- employee relationship. For example, as indicated by the above-quoted sections of the Agreement, the work was not to be done under the direction of a supervisor. Also, the contractor furnishes the vehicular equipment to provide pick-up and delivery service and the contractor, at his or her expense, is responsible for the maintenance of the equipment, insurance liability coverage and compliance with all applicable safety standards specified in federal, state and municipal laws, rules and regulations. Agreement Background Statement, sections 1.2, 1.3 and 3.1. In addition, the contractor has authority to employ or provide persons to assist in the performance of the obligations specified in the Agreement and is responsible for all expenses associated with such persons. Further, the Agreement states that the contractor could use the equipment for other commercial or personal purposes when it is not in the service of FHD provided FHD's identifying numbers, marks, logos and insignia are removed or masked. Further, the method of payment is based not by time but based on the number of deliveries and pick-ups and mileage. Section 4.1 and Addendum 3. The manner in which the work relationship is terminated also indicates that the position involves that of an independent contractor since neither party can terminate the Agreement at will. Section 9.1. Further, under the Agreement, annual leave is not afforded, the contractor does not accumulate retirement benefits and FHD does not pay social security taxes. The Agreement provides that the contractor will be compensated for each business day that the contractor provides services under the Agreement and that "FHD shall have no responsibility to make deductions for, or to pay wages, benefits, health, welfare and pension costs, withholding for income taxes, unemployment insurance premiums, payroll taxes, disability insurance premiums, social security taxes, or any other similar charges with respect to Contractor of Contractor's employees." Sections 4.1 (b) and 4.2.

Finally, the Background Statement of the Agreement specifically states that it is the intention of the parties that the services will be provided as an independent contractor: "Both FHD and Contractor intend that Contractor will provide these services strictly as an independent contractor, and not as an employee of FHD for any purpose."

Watt asserts that while the ALJ's decision states that the parties had agreed during a telephone conference that rather than a hearing be held that they would file submissions so she could make a determination regarding the independent contractor issue, this was not what he recalled. Watt then goes on to state that he "was under the impression that the submissions were to be used as a preliminary to a hearing if needed." Watt may very well have heard that the written submissions of the parties would be considered preliminarily before deciding that a hearing was needed. It may be that the ALJ considered that a hearing might be necessary.

However, the ALJ has concluded that the matter could be decided on the basis of the parties' submissions. The commission agrees. There is no mandatory requirement under DWD 218.05 that an ALJ hold a hearing. Section DWD 218.05(3) simply states that if a complainant files a timely appeal from a preliminary determination and order dismissing any complaint, "The matter shall be referred to the hearing section of the division for review by an administrative law judge. The administrative law judge shall issue a decision which shall either affirm, reverse, modify or set aside the preliminary determination." (Underlining emphasis added.)

Watt asserts that "many of my questions are still not answered, false statements made by the Respondent, parts of the Operating Agreement that need to be addressed." However, some of the questions that Watt feels have not been answered or need to be addressed offer no insight into whether the delivery driver position entails an employer-employee relationship. For example, Watt asks if the respondent requires drivers to have a specific class of license, but the class of license required is dictated by government regulations based on the weight of the vehicle and/or the vehicle's use. Watt also asks other questions that will not assist in determining the nature of the working relationship such as what expenditures would an independent contractor incur in connection with wearing approved FedEx uniforms, if the respondent could compute how many independent contractors have been working in Wisconsin since 1997 and how many arbitration hearings have been held since 1997 (the Agreement provides for disputes involving termination of the Agreement to be settled by arbitration).

Still, other questions asked by Watt appear to be general informational inquiries about the Agreement. For example, Watt has asked the respondent to explain what the phrase "subject to the determination of FHD of its suitability for the service called for in this Agreement" means in the sentence of the Agreement which reads as follows: "Contractor certifies that the [vehicular] Equipment meets the requirements of all applicable federal, state and municipal laws and regulations, and, subject to the determination of FHD of its suitability for the service called for in this Agreement, the selection and replacement of the Equipment is within the discretion of Contractor." Watt has also asked the respondent to explain the contractor's escrow account and for the respondent to elaborate on the contractor's right to assign his rights under the Agreement to a replacement contractor.

Watt has not identified what he claims were false statements made by the respondent.

Apparently suggesting the possible existence of evidence that the respondent exercises control over the means and manner of the performance of the contractor's work, Watt claims confusion about what the five-day training session entails and whether or not it was mandatory. However, the respondent has specifically stated the reason for this training session and what it entails. The respondent states:

"DOT regulations require that motor carriers ensure that all drivers are instructed regarding DOT's Motor Carrier Safety Regulations. See 49 CFR 390.3(e)2. The DOT regulations and safe driving generally (see, e.g. 49 CFR Parts 392, 395 and 396), hazardous material handling/transportation procedures (see 49 CFR Part 177), DOT required shipment documentation (see, e.g., 49 CFR 373.10) and accident reporting requirements (see 49 CFR 390.15) are explained and discussed at the orientation. The DOT required road test is also conducted. See 49 CFR 391.31." (Underlining emphasis added.)

Watt apparently argues that the respondent requires contractors to have a handheld scanner and that this is evidence of an employer-employee relationship. However, even assuming that the respondent requires the use of this equipment, it is not equipment that is supplied by the respondent but equipment the contractor must furnish at his or her expense.

Watt is also apparently under a belief that the respondent allows the contractors to participate in company medical/dental plans or individual retirement accounts based upon one of the respondent's websites that he has seen. However, the respondent states that the programs outlined in this website are programs offered by a third-party provider with no connection to the respondent. More importantly though, the Agreement that would have governed the work relationship between the respondent and Watt specifically provides that the respondent "shall have no responsibility to make deductions for, or to pay . . . benefits, health, welfare and pension costs . . . or any other similar charges with respect to the Contractor or Contractor's employees."

Watt apparently also suggests that a contractor would not be able to have other clients because the contractor would have to take the time to cover the respondent's markings on the vehicle and also because the Agreement states that FHD and the contractor have a mutual interest in increasing package volume and the number of customers. However, even assuming these factors may have precluded the contractor's ability to have other clients this was not sufficient to establish that there would have been an employer-employee relationship when balanced against the other evidence that establishes he would have been an independent contractor.

Finally, Watt is dissatisfied with the respondent's answer to his request for more detail about the respondent's policy regarding applicants with criminal records. However, whatever the respondent's policy might be the preliminary issue is whether Watt would have been employed by the respondent or as an independent contractor. Consideration of all the circumstances surrounding the delivery driver position clearly indicates that Watt would not have been an employee but an independent contractor.

Accordingly, the commission affirms the administrative law judge's decision dismissing Watt's complaint due to a lack of jurisdiction.

cc: Gary D. Dunbar

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uploaded 2004/09/08