DAVID J WELSH, Employee
ADVANCED PLANNING INC, Employer
An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development (department) issued a decision in this matter. A timely petition for review was filed. The commission issued a decision on June 9, 2004 reversing the appeal tribunal decision. Subsequently, it came to the commission's attention that the parties never received a copy of the department's request that the commission act on its own motion to set aside or reverse the appeal tribunal decision. Subsequently, on July 1, 2004, the commission, acting on its own motion, pursuant to Wis. Stat. § 108.09(6)(b) set aside its June 9, 2004 decision so that a briefing schedule could be issued followed by a new decision after consideration of the briefs and review of the evidence. Both parties and the department have filed briefs and the case is now ready for disposition.
Based on its review of the employee's petition, the positions of the parties, all the arguments raised in the briefs, and the evidence in the record, the commission makes the following:
The employee worked out of his home as a life insurance agent. As a regional director for the employer he supervised 20 to 25 subordinates who had offices in funeral homes. The employee worked for the employer from November 1997 until September 21, 2002. Both the employee and his subordinates (also called subagents) sold "pre-need insurance" to cover the cost of an individual's funeral expenses. However, in the State of Wisconsin, direct funeral policies cannot be sold. Rather, insurance companies are required to sell this type of insurance in the form of a life insurance policy; the policy is then assigned to the funeral home upon the death of the insured and funeral expenses are paid from that policy. Under the employee's employment contract, the employee therefore performed services as an insurance agent. Both the employee and his subagents received commissions on the amount of the life insurance policy purchased by the insured; the percentage of commission was determined by the contract. The employer also took a percentage of the amount of the policy sold as its commissions.
More recently, the employee had only sold five life insurance policies because his job currently included helping his subordinates increase their production by selling more life insurance policies. The employee also performed services for these subagents by pricing out the insurance, filling out applications, and facilitating paperwork. The employee and several of his subordinates received incentive trips, which they earned for reaching specific monetary goals. The employer testified that these trips were listed as income on the employee's 1099 form but were paid from the employer's commissions it received from these sales goals accomplished by the employee and his subordinates.
The specific issue is whether the employee performed services in covered employment within the meaning of Wis. Stat. § 108.02(15). More specifically, the issue is whether the employee's services as an insurance agent are excluded within the meaning of Wis. Stat. § 108.02(15)(k)6. This statutory exclusion provides that services as an insurance agent or insurance solicitor are not included in covered employment if these services were performed for remuneration solely by way of commissions.
The sole issue is whether the employee's performance of services as an insurance agent for the employer is excluded within the meaning of Wis. Stat. § 108.02(15)(k)6. Pursuant to this statutory exclusion, services as an insurance agent or insurance solicitor are not included in covered employment if these services were performed for "remuneration solely by way of commissions."
The first concern is whether the employee's remuneration received from the sales made by other insurance agents under his supervision constitutes "remuneration solely by way of commissions." The employer argues that this compensation is still a commission even though the employee may have never made the specific sale. The employee and the department disagree arguing that the remuneration received by the employee were not commissions but rather "overrides" based on the sales made by subagents recruited and/or supervised by the employee.
The employer cites to Wis. Stat. § 628.02(1) to support its argument that the remuneration the employee received from a sale made by one of his subagents is a commission even though the employee himself may not have made the sale. Although the statute cited by the employer defines an insurance agent as one who sells or assists others in selling insurance policies, the statute does not address whether a sales agent's remuneration in the manner in which this employee received it constitutes a commission. The commission understands a commission to be a percentage of money received from a sales and that an insurance agent who sells insurance but receives an "override" based on services performed by another insurance agent is not remuneration solely by way of commissions. The employer's arguments do not persuade the commission to decide any other way.
Additionally, in comparing a similar exclusion found at Wis. Stat. § 108.02(15)(k) 16, regarding direct sellers, remuneration by way of commissions, overrides, bonuses or differentials leads to excluded employment. Under the statutory construction rule "expressio unius est exclusio alterius" (expression of one thing is exclusion of another) it can be reasonably argued that the Wisconsin Legislature intentionally left out overrides, bonuses and differentials as a form of remuneration for insurance agents. Because the employee received overrides it cannot be concluded that the employee received remuneration solely by way of commissions.
Although the parties and the department briefed the additional issue of whether the employee's incentive trips and out-of-pocket expenses constituted remuneration solely by way of commissions within the meaning of the statutory exclusion, the commission is satisfied that the statutory exclusion is inapplicable here based on the its findings regarding the employee's overrides.
The commission therefore concludes that the employee was not remunerated solely
by way of commissions as required within the meaning of Wis. Stat. §
108.02(15)(k) 6. Wages earned from this employment may be used to determine
the employee's benefit eligibility.
The appeal tribunal decision is reversed. Accordingly, David J. Welsh performed services for the employer in employment covered by the Wisconsin Unemployment Compensation Law. Wages earned in this employment may be used to determine benefit entitlement. The department's initial determination issued on May 20, 2003 remains in effect.
Dated and mailed October 28, 2004
welshda2 . urr : 135 : 2 ET 483.07
/s/ James T. Flynn, Chairman
/s/ David B. Falstad, Commissioner
/s/ Robert Glaser, Commissioner
Because credibility was not at issue, the commission did not consult with the administrative law judge as to her credibility impressions. Rather, the commission reaches a different legal conclusion when applying the law to the facts at hand. Because it was not established that the employee was remunerated solely by way of commissions as required under Wis. Stat. § 108.02(15)(k) 6, his services were not excluded employment.
The employer prepared detailed briefs and thoughtful arguments. The employer cites to cases interpreting other states' exclusion and the federal exclusion regarding insurance sales agents, probably in part because there are no reported Wisconsin cases involving Wisconsin's insurance agent exclusion. However, statutory construction rules permit the commission to interpret Wisconsin's exclusion narrowly in order to carry out the remedial nature of the Unemployment Act. The commission is satisfied after its review of the record that the employee was not remunerated solely by way of commissions and consequently reverses the appeal tribunal's findings of fact and conclusions of law reached in its decision.
cc:
Attorney Thomas W. LaFave
Gregory A. Frigo
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uploaded 2004/11/03