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


ISTHMUS ENGINEERING & MANUFACTURING COOPERATIVE, Employer

UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Hearing No. S9600250MD, Account No. 277147


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 agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own.

DECISION

The decision of the administrative law judge is affirmed. Accordingly, the members' services constituted employment as employes for unemployment benefit purposes and the appellant is an employer subject to the provisions of the Wisconsin Unemployment Compensation Act. The appellant is liable for past due and delinquent unemployment insurance contributions, late filing fees, and interest, as more particularly set forth in the initial determination.

Dated and mailed: March 26, 1998
isthmus.ssd : 110 : ET 480

/s/ David B. Falstad, Chairman

/s/ Pamela I. Anderson, Commissioner

/s/ James A. Rutkowski, Commissioner

MEMORANDUM OPINION

This case presents the issue of whether appellant Isthmus Engineering ("Isthmus") is liable for tax contributions on certain payments it makes to persons who work at and for Isthmus. Isthmus is organized as a cooperative under Wis. Stat. Ch. 185, and the persons who are at issue are members and patrons of the cooperative. Isthmus asserts that this makes a difference; the department does not agree. The ALJ held that the contributions were due as assessed in the determination.

Isthmus concedes that the Unemployment Compensation Act does not explicitly exempt cooperatives from employer status. (Appellant's Brief, p. 4). In fact, Isthmus is already covered as an employer of a number of workers whose employe status it concedes. (Synopsis, p. 4; Appellant's Brief, p. 2). Furthermore, Isthmus has not expressly challenged the finding made by the Administrative Law Judge that the member-workers whose employe status is in dispute, were providing services for Isthmus and that Isthmus compensated them for those services. Isthmus also concedes that the member-workers whose employe status is in dispute, are not independent contractors -- in other words, that they do not meet the tests set out in Wis. Stat. § 108.02 (12) for freedom from direction and control and establishment as an independent business. (1) (Appellant's Brief, p. 3).

The argument which is made by Isthmus in this case does not address the technical, statutory issues of UC law. Rather, Isthmus argues that there should somehow be created "a partial or modified exemption on the grounds that its members are not employes because of the special legal and historical characteristics of Wisconsin cooperative associations, and because of the special relationships among cooperatives and their members". (Appellant's Brief, p. 3). Evaluation of this argument requires an understanding of the nature of cooperatives and of the particular type of cooperative exemplified by Isthmus.

Cooperatives, generally -- A cooperative is one of a number of legal forms in which persons may engage in organized activity, including organized business activity. These forms include partnership, limited partnership, business (stock) incorporation, non-stock incorporation, and limited liability companies. Cooperatives ("co-ops") are recognized and governed by Wis. Stat. Chapter 185. (2)

The two main forms of co-ops are producer co-ops and consumer co- ops. Producer co-ops are generally involved in the marketing of products produced by their members (most frequently, agricultural products); they exist to allow their members to take advantage of the greater economic power that a unified group of producers can bring to bear in negotiations with purchasers of their products and to provide efficiencies in the marketing of certain kinds of products. Just as producer co-ops take advantage of the greater economic power of a group when it comes to negotiating prices at which products will be sold, consumer co-ops take advantage of the greater economic power of a group when it comes to negotiating prices at which products will be purchased; by organizing to buy in quantity, members of consumer co-ops can obtain cheaper prices for goods (such as food, or a broader range of goods and supplies such as fuel, seed and other agricultural supplies and materials) which they routinely purchase to consume.

A significant legal concept in connection with co-ops, is patronage, which is defined as

"business done by a patron with a cooperative and, if the bylaws permit, labor performed for a cooperative by a patron".

Wis. Stat. § 185.01 (6m). Examples of "patronage" in the context of conventional producer co-ops and consumer co-ops are the sale by a farmer of his milk to a dairy co-op, and the purchase by a farmer of his fuel, fertilizer and seed at a farmer's (consumer) co-op. (3)

Cooperatives are not intended to generate profit; however, they may in practice generate net income. Because they are not intended to generate profit, the law requires that most of that net income be distributed back to the patrons of the co-op, in proportion to the amount of their patronage with the co-op. Wis. Stat. § 185.45. This is a reflection of the view that any net income received by a co-op is primarily attributable to the persons who have done business with it (i.e., the patrons), and should be viewed as actually belonging to them.

Worker cooperatives -- While the two main forms of co-ops are producer co-ops and consumer co-ops, another form is the "worker cooperative".

The opinion of the United States Tax Court in Puget Sound Plywood, Inc. v. Commissioner of Internal Revenue, 44 T. C. 305 (1965) contains an informative description of the history of the cooperative movement and an explanation of the types of cooperatives, with a particular emphasis on worker cooperatives:

A cooperative is an organization established by individuals to provide themselves with goods and services or to produce and dispose of the products of their labor. The means of production and distribution are those owned in common and the earnings revert to the members, not on the basis of their investment in the enterprise but in proportion to their patronage or personal participation in it. Cooperatives may be divided roughly into consumer cooperatives and producer cooperatives.

Consumer [cooperative] organizations operate for the benefit of the members in their capacity as individual consumers. * * *

Producer [cooperative] organizations operate for the benefit of the members in their capacity as producers. Their function may be either the marketing or processing of goods produced individually (as in fishermen's or farmers' marketing associations, or associations which make butter or cheese from farm products received from farmer members), or the marketing of goods processed or produced collectively (as in the so-called workers' [cooperative] productive associations operating factories or mills).

The history and characteristics of cooperative associations may be summarized as follows. One of the earliest examples of cooperative associations as they exist today was the Rochdale Cooperative, which was founded in England in 1844 by 28 textile weavers who associated themselves together for the purpose of operating a retail store. The objectives which the members of that association sought to attain were: (1) For themselves to own and manage the store, as distinguished from having it owned and managed by outside equity investors; and then (2) to have their association turn back to the members the excess of the receipts from the store sales over the cost of the goods sold and the expenses of operation. This general form of cooperative organization thereafter spread from England to other nations including the United States, where it has since been utilized not only by consumer cooperatives, but also by producing and marketing cooperatives. Thus in the United States for example, in years immediately preceding and following the War Between the States, various types of cooperative enterprises were organized, including those composed of farmers, dairymen, shoemakers, textile and clothing manufacturers, coopers, and ironworkers.

The worker type of cooperative (which included many of those above mentioned) was intended to provide an alternative to the corporation-for-profit form of organization for conducting manufacturing enterprises. Under the corporation-for-profit form of organization, the profit of the enterprise is vested in outside parties who supply the equity capital which is placed at the risk of the business; who select the management and assume the direction over the enterprise; whose separate corporate entity employs workers that derive only those wages which they are able to obtain through bargaining with the representatives of the equity owners; and which equity owners then receive directly or indirectly the benefit of such net profits as the corporation-for-profit form of organization may produce. Under the cooperative association form of organization, on the other hand, the worker-members of the association supply their own capital at their own risk; select their own management and supply their own direction for the enterprise, through worker meetings conducted on a democratic basis; and then themselves receive the fruits of their cooperative endeavors, through allocations of the same among themselves as co- owners, in proportion to the amounts of their active participation in the cooperative undertaking.
. . .
Thus, the basic and distinguishing feature of a workers cooperative association, as compared with a corporation-for-profit, is that in the case of a workers cooperative association the fruits and increases which the worker-members produce through their joint efforts are vested in and retained by the workers themselves, rather than in and by the association, as such, which functions only as an instrumentality for the benefit of the workers; and that these fruits and increases of the cooperative effort are then allocated among the active workers as patronage dividends, in proportion to their participation in producing the same. In the case of the corporation-for-profit, on the other hand, the fruits and increases of such organization belong to the corporate entity itself; and these increases (called net profits) are then either distributed or retained for the benefit of the equity owners, not in proportion to their personal efforts but rather in proportion to the amounts of capital which they supply. And also these same equity owners, acting either directly or indirectly, also select the management and control the functions and policies of their entity -- not on a one- person one-vote basis without use of proxies, but rather through multiple voting in proportion to the number of shares of capital stock which they hold.

44 T. C. 306-09.

Law and legal issues pertaining to worker cooperatives -- Worker cooperatives are not as prevalent as conventional producer and consumer co-ops, and they have always existed in a legal "gray area" because they do not fit neatly into statutory systems designed for producer and consumer co-ops. As is stated in 1980 article, "Worker Coops and Other Legal Options", by Leo Cashman, which was received as Ex. 4 in this case,

"Actually, worker coops are not expressly provided for under the state coop laws that coops are incorporated under. Perhaps because of this, some people wonder uneasily whether worker coops are really legal."

With some important exceptions which will be describe below, the few cases which can be found concerning worker cooperatives have to do with two issues: whether worker-members are covered by wage and hour laws (the Fair Labor Standards Act), and whether cooperatives can exclude money which they distribute to worker- members based on their "patronage" from the gross income which the cooperative must report for income tax purposes.

The earliest wage and hour law applicability cases touching on worker co-ops are of limited significance, since they involved entities that were determined to have been formed specifically to avoid then-newly enacted wage and hour laws and not to have been bona fide cooperatives at all. Fleming v. Palmer, 123 F. 2d 749 (1st Cir., 1941) cert. den. sub. nom. Caribbean Embroidery Cooperative, Inc. v. Fleming, 316 U.S. 662 (1942); McComb v. Homeworkers' Handicraft Cooperative, 4 Cir., 176 F. 2d 633 (4th Cir. 1949), cert. den. 338 U.S. 900 (1949). However, in Mitchell v. Whitaker House Cooperative, Inc., 275 F. 2d 362 (1st Cir., 1960), which involved an organization in which approximately 200 women produced infants' knitted and crocheted outerwear which was sold by the organization, there was a finding that it was a bona fide cooperative.

Over a dissent by Circuit Judge Aldrich, the 1st Circuit Court of Appeals affirmed the District Court's decision, that the payments by the cooperative to the members were a matter of distribution of each member's share of the cooperative's net income, that there was no employer-employe relationship, and that the Fair Labor Standards Act therefore did not apply. Judge Aldrich's views prevailed in the end, though: the U. S. Supreme Court reversed. Goldberg v. Whitaker House Cooperative, Inc., et al., 366 U.S. 28 ( 1961). Justice Douglas, agreeing with and quoting from Judge Aldrich's dissent, stated for the majority that

There is no reason in logic why these members may not be employees. There is nothing inherently inconsistent between the coexistence of a proprietary and an employment relationship. If members of a trade union bought stock in their corporate employer, they would not cease to be employees within the conception of this Act . . . We fail to see why a member of a cooperative may not also be an employee of the cooperative. In this case the members seem to us to be both "members" and "employees." It is the cooperative that is affording them "the opportunity to work, and paying them for it," to use the words of Judge Aldrich, dissenting below. 275 F. 2d, at 366. However immediate or remote their right to "excess receipts" may be, they work in the same way as they would if they had an individual proprietor as their employer. The members are not self- employed; nor are they independent, selling their products on the market for whatever price they can command. They are regimented under one organization, manufacturing what the organization desires and receiving the compensation the organization dictates. Apart from formal differences, they are engaged in the same work they would be doing whatever the outlet for their products. The management fixes the piece rates at which they work; the management can expel them for substandard work or for failure to obey the regulations. The management, in other words, can hire or fire the homeworkers. Apart from the other considerations we have mentioned, these powers make the device of the cooperative too transparent to survive the statutory definition of "employ" and the Regulations governing homework. In short, if the "economic reality" rather than "technical concepts" is to be the test of employment (United States v. Silk, 331 U.S. 704, 713; Rutherford Food Corp. v. McComb, 331 U.S. 722, 729), these homeworkers are employees.

366 U.S. at pp. 32-33.

The other area in which worker cooperatives have found their way into the law, is that of income tax. This concerns not individual income taxation, however, but the income tax liability of the cooperative qua organization. The issue has been whether the cooperative may exclude the amounts which it distributes to its worker-members from the cooperative's gross income. Puget Sound Plywood, Inc. v. Commissioner of Internal Revenue, 44 T. C. 305 (1965); see also, Columbus Fruit and Vegetable Cooperative Association, Inc. v. United States, 7 Cl. Ct. 561 (1985); Linnton Plywood Assoc., Multnomah Plywood Corp. v. United States, 410 F. Supp. 1100 (D. Oregon, 1976). The general principle which has evolved is, that excess receipts of a cooperative which are distributed to member-patrons are not income to the cooperative in the first place, and for that reason can be excluded from its gross income. As explained by the court in the Puget Sound Plywood case:

Since the year 1926, the Federal income tax statutes have accorded exemption from income taxes to certain cooperative associations composed of farmers, fruitgrowers, and the like -- which engage in the marketing of farm products or the buying of farm equipment for both members and nonmembers, and which then turn back to such participants the net proceeds of the cooperative activities. The provision for such tax exemption is presently embodied in section 521 of the 1954 Code. The parties to the present case agree that the instant petitioner does not qualify for exemption under said section.

Notwithstanding this exemption which is accorded a limited type of cooperatives which are able to qualify therefor, the Internal Revenue Service has recognized for many years, in numerous rulings published since at least as early as 1922, that there are many other cooperative associations which, even though they do not qualify for exemption under the above statute, are nevertheless entitled (in their capacity as nonexempt cooperative associations) to exclude from their gross incomes, patronage dividends that are equitably allocated to their participating members pursuant to preexisting legal obligations.

The "patronage dividends", again, are the excess or net income of the cooperative which is distributed to patrons -- as is required by most laws governing cooperatives, such as Wis. Stat. § 185.45 (3) (b).

Of more relevance here is the sole reported (4) authority specifically concerning UC coverage of worker cooperatives. Employment Division v. Surata Soy Foods, Inc., 63 Ore. App. 221, 662 P. 2d 810 (1983), concerned a cooperative corporation organized under Oregon law which, although it was a conceded covered "employer" under Oregon's unemployment compensation law and paid unemployment contributions for its employes who were not members of the cooperative, did not pay unemployment insurance contributions for individuals who performed services in and were members of the cooperative. It operated in the same fashion as Isthmus; that is, member-workers would receive advances against their anticipated share of the cooperative's net income to which they would become entitled as patrons of the cooperative. The Oregon Court of Appeals reversed an administrative ruling that there was no coverage, and found Surata liable for UC tax contributions on the advances to member-patrons of net income.

The Surata decision relied on an earlier decision of the Oregon Court of Appeals in which the equivalent outcome had been reached in a case involving coverage under Oregon's Workers Compensation law, Associated Reforestation Contractors, Inc. v. State Workers' Compensation Board et al, and Hoedads, Inc., 59 Ore. App. 348, 650 P. 2d 1068 (1982). Hoedads was a cooperative under Oregon law, engaged in tree planting. Hoedads argued that its members, who performed labor in return for a share of profits in proportion to the amount of work performed, should not be considered as working for "remuneration" under Oregon's Workers Compensation law, asserting that it was instead a patronage dividend that should be treated, not as remuneration, but as an incident of an ownership interest in the cooperative. The Court of Appeals rejected this argument, noting that "the actualities of the relationship that member workers bear to the cooperative belie Hoedads' argument", and stating,

The legislature chose the broad word "remuneration" to define a subject employer; we see no reason that the recompense that a worker receives for his labor should not be considered remuneration just because the amount varies with the profits of the organization.

59 Ore. App. at 354-5.

The key to the Hoedads decision -- and certainly, an element of the rationale which the Surata court felt was significant when it decided the UC issue -- was the court's observation that the cooperative's member-workers

may be thought of as having a proprietary interest in the cooperative, for the period in which they are members, but this is not inconsistent with what remains in essence an employer-employe relationship.

Surata, 63 Ore. App. at 225, citing Hoedads, 59 Ore. App. at 354. (emphasis added). It is interesting to observe that, whether intentionally or not, this echoes the declaration by Justice Douglas in Goldberg v. Whitaker House Cooperative, that "[t]here is nothing inherently inconsistent between the coexistence of a proprietary and an employment relationship". 366 U.S. at 32.

Isthmus' "exception" argument -- The commission believes that Isthmus' argument, that policy considerations require creation of some kind of common-law exemption from cooperatives from the statutory coverage provisions of the UC Act, runs contrary to the teaching of the decisions discussed above. Surata, Hoedads, and Goldberg v. Whitaker House Cooperative all take the opposite approach, which is to look at the economic realities of the relationship between worker cooperatives and their workers and see that it is in practical effect not distinguishable from employment, in terms of the risks which the programs involved are intended to address.

Isthmus' argument also represents an unbalanced approach to accommodating two potentially conflicting interests (promoting cooperatives and protecting employes). Applying the statutory provisions of the UC Act to require coverage of workers in worker cooperatives will impose a moderate financial burden on such cooperatives, but it will by no means threaten their existence. However, refusing to apply those coverage provisions will completely deprive the workers involved of the protection provided by the UC Act.

Isthmus argues that if it is found liable for contributions on its payments of net proceeds to patrons, it will create a precedent that could lead to broad-scale and unjustifiable taxation of all of the many agricultural cooperatives in Wisconsin. Isthmus argues that it is organized and operating "indistinguishably" from more well-known agricultural cooperatives, in which the member-patrons are not treated as employes, and that the Department would be "hard-pressed" to justify why it should not collect UC tax contributions on payments from such cooperatives to their member-patrons.

Isthmus' argument ignores what was stated very thoroughly and correctly in the Cashman article (Ex. 4): worker cooperatives are fundamentally different from producer coops in important ways. Producer cooperatives are associations of individuals who each individually produce, in the course of their operation of an independent business which they own, a product which they then own, and who then sell that product to the cooperative so that it may re-sell the product under conditions and on terms that maximize the sale price. Worker cooperatives simply do not fit this model. The workers are selling their labor, not a product which they have made with their labor. "Workers may be regarded as being a type of supplier for a business; workers are supplying one of the necessary factors of production: labor needed to make the business run." (Ex. 4, p. 5). While the workers at Isthmus "make" products, they do not do so individually as part of their own individual businesses, they do not individually own those products once they are made, and they do not sell them to the cooperative (as the dairy farmer sells his milk to the cooperative).

This significant distinction between worker cooperatives and other forms of cooperatives (such as producer and consumer cooperatives) as they are described in state cooperative association laws, is exactly why the Cashman article notes, "some people wonder uneasily whether worker coops are really legal". (Ex. 4, p. 1). In fact, there may be reason to wonder about precisely that question in Wisconsin. In its description of the types of contractual arrangements which may permissibly be made between a coop and its members, Wis. Stat. § 185.41 seems to contemplate only producer co-ops in which members market products produced by the member. What the workers at Isthmus agree to provide to Isthmus, is their services.

Of course, whether Isthmus is in fact legally entitled to be organized as a cooperative under Ch. 185 is neither within the expertise nor the jurisdiction of the commission. However, the significant questions about whether it is like the types of cooperatives which clearly are contemplated by Ch. 185 is a legitimate consideration, especially given Isthmus' argument that it would be difficult to distinguish between it and other cooperatives in Wisconsin when it came time to decide whether to collect Unemployment tax contributions on distributions of net proceeds to patrons. In fact, it would not be difficult at all.

For all of these reasons, the commission rejects Isthmus' "policy" argument against coverage. That leaves the matter where it properly should be, dependent on the application of the statutory provisions relating to coverage in the UC Act.

Statutory provisions governing UC taxation -- Isthmus argues in its Reply Brief that there is no "explicit statutory or regulatory authority describing the application of unemployment compensation practice to members of a Wisconsin cooperative." (Appellant's Reply Brief, p. 1). That is incorrect.

There are a number of coverage and applicability issues that can arise under the UC Act, such as issues of whether a person may claim benefits and whether an employer must pay taxes. There are also a number of terms used in the UC Act ("employer", "employment", "payroll", "wages") which touch upon these issues (5). The interrelationship of these terms is not always clear on the face of the statute. However, a degree of clarity is provided by Wis. Stat. § 108.02 (12) (e) (6), which expressly provides that an employing unit's liability under the contribution provisions of this chapter shall be determined by using the definition of "employe" which is contained in Wis. Stat. § 108.02 (12). That definition provides, in relevant part:

(12) EMPLOYE. (a) "Employe" means any individual who is or has been performing services for an employing unit, in an employment, whether or not the individual is paid directly by such employing unit; except as provided in par. (b) . . .

It is well established that this provision creates a presumption which has the effect of placing the burden on the employer to establish the applicability of the exceptions. The exception which must be proven applicable by Isthmus is incorporated in Wis. Stat. § 108.02 (12) (b), As noted above, Isthmus does not dispute that the individuals in question perform services for it, it has been affirmatively conceded that the persons in question are not independent contractors, and the record also leaves no doubt that they are not independent contractors. Because the applicability of the exception is not even argued, much less demonstrated, the case must be resolved against Isthmus (7).

Conclusion -- The commission wishes to note that it sees absolutely no reason to suspect that Isthmus was formed as a ruse to escape coverage under laws governing employment such as the Unemployment Compensation Act. On the contrary, it is clear that Isthmus was formed in a good faith attempt to use the cooperative structure to create a democratically operated, worker-owned-and- controlled enterprise, wholly in keeping with the traditions of the cooperative movement. However, while Isthmus argues that policy considerations ought to result in the recognition of some kind of "exemption" from coverage in the case of operations organized as it is, a number of persuasive decisions from other jurisdictions undercut this argument. Its structure as a bona fide worker cooperative is simply not a good reason to exempt it from coverage under the Unemployment Compensation Act. The risk which that Act is intended to address is just as real in the case of a worker cooperative as in the case of any other similar operation. Furthermore, the application of the statutory language leads unequivocally to a conclusion, that contributions are due on the payments made to the persons in question.

cc:
Attorney Scott Herrick
Attorney Peter Zeeh


Appealed to Circuit Court.  Affirmed March 16, 1999. Appeal to Court of Appeals dismissed as untimely.

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Footnotes:

(1)( Back ) This case concerns quarters prior to December 31, 1995. Therefore, the governing law is the "old" test which existed prior to the recent amendments.

(2)( Back ) The parties have argued about whether cooperatives are corporations. While the statute speaks of cooperatives as being "incorporated", they are declared by Ch. 185 to be a type of "association". Wis. Stat. § 185.01 (2). The law also provides that a cooperative "shall use the term `cooperative' or an abbreviation thereof as part of its corporate name", Wis. Stat. § 185.94 (3). However, the commission believes that ultimately the issue is of little if any legal significance. The definition of "employer" in Wis. Stat. § 108.02 (13) includes both "association" and "corporation". There is no provision of the UC Act which provides for different treatment of "associations" and "corporations" which would have any bearing on the issues presented here).

(3)( Back ) Patronage is different from membership. A person may be a patron of a cooperative (i.e., do business with a cooperative), without being a member. However, as a practical matter, members of a co-op will be patrons as well, as a consequence of IRS regulations which restrict membership in co-ops to patrons of the co-op.

(4)( Back ) A Representative of the Commissioner of the Minnesota Department of Employment Security held in a 1980 administrative decision that an employment relationship did not exist between a Minnesota worker co-op and its members and that the cooperative was therefore not obliged to pay UC tax on them. Chronic Electronic Corp., Acct. No. 1363936-0-00, Minnesota Dept. of Economic Security, March 27, 1980. However, that decision relied, expressly and exclusively, on the 1st Circuit Court of Appeals' decision in Mitchell v. Whitaker House Cooperative, apparently without realizing that it had been unequivocally reversed by the Supreme Court in Goldberg v. Whitaker House Cooperative. The commission has been advised by the Commissioner of the Minnesota Department of Employment Security that the Chronic Electronic Corp. decision was effectively repudiated by the Minnesota Commission in 1990, due to that decision's reliance on invalid authority. The 1980 Chronic Electronic Corp. decision is therefore unpersuasive.

(5)( Back ) "Employer" is defined in Wis. Stat. § 108.02 (13) as: "every . . . association . . . which is subject to this chapter under the statutes of 1975, or which has had employment in this state and becomes subject to this chapter under this subsection . . .". Contribution liability involves the term "payroll", in that Wis. Stat. § 108.18 (1), provides: "Each employer shall pay contributions to the fund for each calendar year at whatever rate on the employer's payroll for that year duly applies to the employer pursuant to this section", and "payroll" is defined in Wis. Stat. § 108.02 (21) as: "... all wages paid directly or indirectly by an employer within a certain period to individuals with respect to their employment by that employer . . . ". The term "wages" is defined broadly, in Wis. Stat. § 108.02 (26) (a): " `Wages' means every form of remuneration payable, directly or indirectly, for a given period, or payable within a given period if this basis is permitted or prescribed by the department, by an employing unit to an individual for personal services". Finally, "Employment" is defined in Wis. Stat. § 108.02 (15) (a) as follows: " `Employment', subject to the other provisions of this subsection means any service, including service in interstate commerce, performed by an individual for pay".

(6)( Back ) This was numbered as subsection (12)(c) prior to the recent amendments. Given the quarters at issue, the prior statutes apply to this case.

(7)( Back ) Isthmus has raised the argument, not infrequently encountered in this area, that if liability is determined it should not be retroactive because Isthmus honestly believed that it was not subject to such coverage. The commission is not persuaded by this argument. The liability is not being created retroactively; the statute imposed the liability all along, and Isthmus simply did not satisfy it. Businesses which undertake to engage in activities in which persons provide services for them are appropriately charged with constructive knowledge of their liabilities for contributions under the UC Act. In this case, since Isthmus was a covered employer as to its conceded employes, it certainly was aware of the potential issue as to its members. The evidence in the record as to the background of Isthmus' formation also shows that there was general awareness among persons working on the development of such worker cooperatives that there were issues as to UC coverage.