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

STANTON OUTSTANDING SERVICE,
SOS EXPRESS LLC, Appellant

UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Account No. 061256, Hearing No. S0100197MW


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 it has reviewed the evidence submitted to the ALJ. Based on its review, the commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The appellant's business was hauling expedited freight for a variety of companies. It engaged the services of drivers to perform courier work. The drivers were paid a percentage of the amount the appellant billed its customers. For example, the appellant had a set fee of $140.00 for a delivery to O'Hare and drivers received 60% of that amount. Drivers provided their own vehicles and paid all associated expenses, e.g., gas, oil, and insurance. The drivers had pagers and cell phones so that the appellant could contact them.

On January 25, 2000, the appellant had all drivers apply for a federal employer identification number. The appellant had no personal knowledge of whether any driver filed self-employment income tax returns. Mr. O'Brien and Mr. Archambeau signed contracts in 1999, containing indemnification and assumption of liability provisions. Other contracts in the record did not contain such provisions.

The appellant engaged the services of drivers and paid the drivers for services performed. Accordingly, it is the appellant's burden to establish that such services were performed as independent contractors. For the fourth quarter of 1999, the appellant must establish one of two mandatory factors: that the driver held or had applied for an employer identification number (FEIN) with the federal internal revenue service or filed business or self-employment tax returns with the IRS based on such services in the previous year. Wis. Stat. § 108.02(12)(b)1.

The appellant required that the drivers apply for FEINs in 2000. There was no credible evidence presented at the hearing that the drivers applied for FEINs in 1999. Further, no driver appeared at the hearing in this matter and the appellant did not present any firsthand evidence to establish that any driver filed a business or self-employment tax return in 1998.

For services occurring in the four quarters of 2000, the previously mandatory factors became 2 of 10 factors to be considered in determining an individual's status. The appellant is required to establish that 7 of 10 statutory conditions set forth in Wis. Stat. § 108.02(12)(bm) have been met, by contract and in fact.

1. The individual holds or has applied for an identification number with the federal internal revenue service.

The appellant established that the drivers who performed services for it in 2000 had applied for FEINs. Subdivision 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.

There was no evidence that any of the individuals whose services were at issue filed business or self-employment income tax returns in 1999 or 2000. That the drivers should have, or were given the opportunity to file self-employment tax returns did not suffice to establish that any driver in particular, in fact, filed self-employment income tax returns. Subdivision 2 was not satisfied.

3. The individual maintains a separate business with his or her own office, equipment, materials and other facilities.

The evidence did not establish that any driver whose status was at issue maintained a business separate from the appellant with his or her own office, equipment, materials, or other facilities. Merely owning a vehicle does little to establish that the individual is in an independent business. Further, there was no evidence at the hearing to establish that the drivers actually owned the vehicles they used to perform services. Subdivision 3. was not 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 appellant did not establish that any driver at issue entered into multiple contracts with conditions that changed over time. The second part of subdivision 4. requires that the contracts be to perform specific services for specific amounts of money under which the individual controls the means and methods of performing the services. While the appellant dictated a particular outcome, e.g., delivery by a specified date and time, the means and methods of accomplishing that goal were left to the individual drivers. The contracts in evidence did not address specific deliveries or specific payments. The appellant did not establish that the drivers had multiple contracts to perform specific services for specific amounts of money. The single, continuing and non-specific contracts between the drivers at issue and the appellant fail to satisfy the condition set forth above. Subdivision 4. was not satisfied.

5. The individual incurs the main expenses related to the services that he or she performs under contract.

The main expense associated with performing delivery services was the expense associated with operating and maintaining a vehicle. That expense was borne by the drivers. Subdivision 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.

Contracts 2 through 5 and contract 7 contain language which basically mimics most of the subdivisions of paragraph (bm), in particular, under the "SERVICES AS AN INDEPENDENT CONTRATOR" section, paragraph E. states that "CONTRACTOR is responsible for the satisfactory completion of delivery services under this agreement and is liable for a failure to complete the work or service." Simply repeating a statutory provision, without any specifics as to what the liability was or how it would be applied, fails to meet the requirements of subdivision 6. Contracts 1 and 6, signed by O'Brien and Archambeau, respectively, contained indemnification and liability provisions. Both contracts were signed in late 1999 and by their terms covered a 12-month period and therefore apply to services performed in 2000. Subdivision 6. was satisfied with respect to services performed in 2000 by O'Brien and Archambeau, but was not satisfied as to the other drivers.

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 drivers were paid a percentage of the amount the appellant charged its customers for the delivery. The services were thus performed on a commission basis. Subdivision 7. was satisfied.

8. The individual may realize a profit or suffer a loss under contracts to perform services.

There was no testimony at the hearing regarding the amount, as opposed to type, of expenses incurred in performing the services at issue. The evidence is simply insufficient to determine that any driver could suffer a loss under his or her contract with the appellant. Subdivision 8. was not satisfied.

9. The individual has recurring business liabilities or obligations.

In order to perform services at issue the drivers had recurring obligations such as insurance. Subdivision 9. was satisfied.

10. The success or failure of the individual's business depends on the relationship of business receipts to expenditures.

The appellant did not present any testimony to establish the existence of any business operated by any particular driver outside of the services performed for the appellant, and therefore did not establish that the success or failure of such business depended on the relationship of receipts to expenditures. Subdivision 10. was not satisfied.

For the fourth quarter of 1999 the appellant failed to establish that any driver met the mandatory factors necessary for a finding of independent contractor status. For the four quarters of 2000, the appellant established that O'Brien and Archambeau satisfied 6 out of 10 of the subdivisions, and the other drivers satisfied 5 out of 10 of the subdivisions. The appellant had the burden of establishing that 7 out of 10 subdivisions were satisfied. The appellant failed to meet its burden of proof.

The commission therefore finds that during the fourth quarter of 1999 and the four quarters of 2000, the individuals at issue performed services for the appellant as employees within the meaning of Wis. Stat. § 108.02(12).

DECISION

The decision of the administrative law judge is modified to conform to the foregoing findings and, as modified, is affirmed. Accordingly, the appellant is liable for unemployment insurance taxes, as more particularly set forth in the initial determination.

Dated and mailed February 26, 2003
sosexpr . srr : 132 : 1    EE 410 EE 410.04a  EE 410.06

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner


cc: Attorney Jorge L. Fuentes


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