JOHN M BARNETT, Claimant
ALTERNATIVE ENTERTAINMENT INC, Appellant
An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.
The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission makes the following:
The claimant performed installation and service work for the appellant, a satellite dish installation and service business. He discontinued performing work for the appellant for part of 2000, resuming again in November of 2000. He last performed work for the appellant in mid-December of 2001. The claimant did not perform services for the appellant after that date because he was unwilling to be considered an employee of the appellant.
The issue is whether the claimant performed services as an employee of the appellant or as an independent contractor. With respect to benefit eligibility under Wis. Stat. ch. 108, for benefit years beginning on or after April 2, 2000, Wis. Stat. § 108.02(12)(bm) provides that an individual who provides services for an employing unit is performing those services as an employee, unless the employing unit satisfies the department that the individual's services, by contract and in fact, meet 7 of 10 statutory criteria.
1. The individual holds or has applied for an identification number with the federal internal revenue service.
The claimant applied for an identification number with the federal internal revenue service in 1999 and 2000. (Exhibit 15.)
The appellant has established that condition 1. was satisfied.
2. The individual has filed business or self-employment income tax returns with the federal internal revenue service based on such services in the previous year or, in the case of a new business, in the year in which such services were first performed.
The claimant filed self-employment income tax returns with the federal internal revenue service based on services performed for the appellant in 2000 and 2001. The 2001 tax return was admitted into the record as Exhibit 26. The claimant filed a similar return for 2000.
The appellant has established that condition 2. was satisfied.
3. The individual maintains a separate business with his or her own office, equipment, materials and other facilities.
The claimant used a computer and fax machine in performing his services. He owned almost all of the tools necessary to perform the services. The claimant performed the same services for a different entity as an employee. He also performed installation and retail services independent of the appellant on behalf of his own business, and for an entity called Echostar. The claimant received a 1099 from Echostar reflecting compensation in the amount of $1,675.50 for services performed for Echostar in 2001. The claimant had cards and flyers that advertised his business, Exhibits 6 and 7, which did not reference the appellant. On his Schedule C for 2001, the claimant listed office expenses of $1,548.00.
The appellant has established that condition 3. was satisfied.
4. The individual operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means and methods of performing the services.
The claimant performed services under a written contract. (Exhibit 18.) The contract set forth the price structure for various tasks, e.g. $75.00 per installation, $30.00 per service call. The appellant did not establish that multiple contracts existed wherein terms changed after negotiation. It appears there was one contract that essentially renewed unchanged except for updated price structures. The claimant presumably performed work for Echostar under a basic employment contract, i.e. agreement to perform services for pay.
The appellant dictated the location of the work and type of service to be performed. The contract stated that all work was to be performed "in accordance with the standards set forth in the Request for Proposal for the Installation of Satellite Systems and the Dish Network Manual" provided by the appellant to the claimant. The record does not indicate what those standards were, only that there were standards set by someone other than the claimant. The contract also gave the appellant the right to require the claimant to perform work on weekends and holidays and in excess of eight hours per day.
The appellant has not established that condition 4. was satisfied.
5. The individual incurs the main expenses related to the services that he or she performs under contract.
The only testimony regarding expenses incurred by the appellant was that the satellite systems were $100-$200. It is not clear if this was the cost of the system for the appellant, the customer or the claimant. In any event, as far as installation and servicing of accounts was concerned, activities the claimant appears to have spent the most time performing, the system itself was not an expense of the services performed. See, e.g. Lozon Remodeling, UI Hearing Dec. No. S9000079HA (LIRC Sep. 24, 1999) (cost of siding supplied by the putative employer did not constitute an expense related to the siding installers' performance of their services). The claimant's expenses included tools estimated to total $600, coaxial fittings and cable used in installation (1), and a pager that cost $120 per year.
The appellant has established that condition 5. was satisfied.
6. The individual is responsible for the satisfactory completion of the services that he or she contracts to perform and is liable for a failure to satisfactorily complete the services.
The contract required the claimant to warrant his work for one year. The warranty included repair and replacement of defective workmanship and satisfaction of damage claims. The appellant could require the claimant to remedy improper work or reimburse the appellant for costs of remedying work. In addition, the contract indicated that penalties could be assessed for defective work.
The appellant has established that condition 6. was satisfied.
7. The individual receives compensation for services performed under a contract on a commission or per-job or competitive-bid basis and not on any other basis.
The claimant clearly was not paid on a commission or competitive-bid basis. The appellant asserts that the claimant was paid per-job. The commission disagrees. Rather, the method of payment was similar to that addressed in Quality Communications Specialists Inc., UI Dec. Hearing Nos. S0000094MW and S0000095MW (LIRC Jul. 30, 2001). In QCS, the commission stated:
By referring to a 'per job' payment basis, the legislature clearly had in mind a situation in which an independent businessperson enters into a contract to do an entire job of some kind for which a price is then set, the price presumably having been arrived at by the parties' negotiation taking into account the particulars of the job contracted for. In this case, the tap auditors are simply doing one task, over and over again, and being paid according to the number of times they do it. The price per task does not change, and no separate contract is entered into for each task.
The appellant has not established that condition 7. was satisfied.
8. The individual may realize a profit or suffer a loss under contracts to perform services.
The claimant could realize a profit performing services for the appellant. It was possible that his expenses, in particular those associated with overnight travel, could result in expenses exceeding his income, at least for that assignment. If he did his job poorly enough, he could be assessed penalties and charged for rework that would result in a loss.
The appellant has established that condition 8. was satisfied.
9. The individual has recurring business liabilities or obligations.
The claimant had a recurring liability - liability insurance of $300 per year.
The appellant has established that condition 9. was satisfied.
10. The success or failure of the individual's business depends on the relationship of business receipts to expenditures.
The claimant was not engaging in the services at issue as a hobby. However, the evidence did not indicate that the claimant faced a realistic risk of a significant period during which he would be required to make expenditures without any receipts coming in.
The appellant has not established that condition 10. was satisfied.
The appellant has established that conditions 1., 2., 3., 5., 6., 8., and 9. were satisfied. The appellant has established that 7 of 10 conditions were satisfied. The commission therefore finds that the claimant performed services for the appellant as an independent contractor and not as an employee within the meaning of Wis. Stat. § 108.02(12).
The commission further finds that the claimant was paid benefits in the amount of $9,174.00 for weeks 9 through 41 of 2002, for which the claimant was not eligible and to which the claimant was not entitled, within the meaning of Wis. Stat. § 108.03(1).
The final issue to be decided is whether recovery of overpaid benefits must be waived.
Wisconsin Statute § 108.22(8)(c), provides that the department shall waive the recovery of overpaid benefits if the overpayment was the result of departmental error, and the overpayment did not result from the fault of the claimant. Under Wis. Stat. § 108.02(10e)(a) and (b), department error is defined as an error made by the department in computing or paying benefits which results from a mathematical mistake, miscalculation, misapplication or misinterpretation of the law or mistake of evidentiary fact, or from misinformation provided to a claimant by the department, on which the claimant relied.
The overpayment in this case results from the commission's reversal of the appeal tribunal decision. Such reversal was not due to department error as defined in Wis. Stat. § 108.02(10e)(a) and (b).
The commission further finds that waiver of benefit recovery is not required under Wis. Stat. § 108.22(8)(c), because although the overpayment did not result from the fault of the claimant as provided in Wis. Stat. § 108.04(13)(f), the overpayment was not the result of a department error. See Wis. Stat. § 108.22(8)(c)2.
The decision of the administrative law judge is reversed. Accordingly, the claimant's services for the appellant do not constitute employment for unemployment benefit purposes. The claimant is required to repay the sum of $9,174.00 to the unemployment reserve fund. The benefit recomputation (Form UCB-20) issued on September 11, 2002, is set aside. If benefits become payable based on work performed for other employers a new computation will be issued as to those benefit rights.
Dated and mailed October 29, 2002
barnejo . urr : 132 : 1 : EE 410
/s/ David B. Falstad, Chairman
/s/ James A. Rutkowski, Commissioner
/s/ Laurie R. McCallum, Commissioner
The commission did consult with the ALJ who presided at the hearing regarding her impressions of witness credibility and demeanor. The ALJ indicated that she did not consider that the parties disagreed on the facts, but generally found the parties to be credible. The commission's reversal is not based on reaching credibility or demeanor impressions of the witnesses that differ from those reached by the ALJ.
Finally, the commission notes that the ALJ did not analyze all of the conditions set forth in Wis. Stat. § 108.02(12). The ALJ found that, since four out of the first seven conditions were not met, seven out of ten conditions could not be met. The commission believes that it is preferable for ALJs to analyze all the conditions set forth in Wis. Stat. § 108.02(12), as the ALJ's decision is subject to appeal.
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(1)( Back ) Fittings cost $10 to $30 per box and came 100 to a box. The claimant used 4 to 100 fittings per house. Cable costs $55 per 1000 feet. The claimant used 30 to 40 feet per house.