BEFORE THE
STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION

In the matter of the unemployment benefit claim of

TOM M. TADYCH, Employee

Involving the account of

R J L CONSTRUCTION & PACE REALTY SERVICES, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 91-401060


Pursuant to the timely petition for review filed in the above-captioned matter, the Commission has considered the petition and all relief requested. The Commission has reviewed the applicable records and evidence and finds that the Appeal Tribunal's findings of fact and conclusions of law are supported thereby. The Commission therefore adopts the findings and conclusions of the Appeal Tribunal as its own, except as herewith amended:

Delete the sixth paragraph of the FINDINGS OF FACT AND CONCLUSIONS OF LAW.

DECISION

The decision of the Appeal Tribunal is amended to conform with the foregoing and, as amended, is affirmed. Accordingly, the employe is ineligible for benefits based on employment with the employer. However, benefits improperly paid on or before February 2, 1991 remain charged to the employer's account. He is required to repay the sum of $1,575.00 to the Unemployment Reserve Fund. The initial Benefit Computation (Form UCB-700), issued on January 10, 1991 is set aside. If benefit payments become payable based on other employment, a new computation will be issued as to those benefit rights.

Dated and mailed August 6, 1991
101 - CD1010  ET 483.13

/s/ Kevin C. Potter, Chairman

/s/ Pamela I. Anderson, Commissioner

/s/ Richard T. Kreul, Commissioner

MEMORANDUM OPINION

In his petition for Commission review, the employe contends that the services he performed for the employer during the benefit period were identical to services performed by others who have been ruled eligible for benefits. Although the employe admits he had a real estate sales license, unlike his coworkers who were allowed benefits, he points out that a real estate sales license was not required for selling time-shares during the period in question. Thus, he cannot understand why he was treated differently than coworkers who were merely certified to sell time-shares.

The Commission first notes that the employe, too, was found eligible for benefits in an Initial Determination of the Department dated February 2, 1991. However, that determination was subject to review by an Appeal Tribunal who reversed it. The employer evidently did not seek review of other initial determinations allowing benefits to the co-workers. While the Department may have initially found the co-workers to have been eligible, that result binds neither the Commission nor the Appeal Tribunal, both of whom have the power to reverse initial determinations on appeal. In short, the Commission finds it entirely possible that the initial determinations allowing benefits for the coworkers were incorrect and may well have been reversed had the employer filed a timely appeal in those cases. Thus, the fact that co-workers may have received benefits does not mean that the employe is entitled to them.

Section 108.02 (15)(k)7, Stats., excludes from the definition of "employment" services by an individual as a real estate agent or as a real estate salesperson, if the services are performed for remuneration solely by way of commission. While the employe sold only time-shares, a time-share interest is an interest in real estate under state law. See secs. 707.02 (26), (32) and (34) and 707.03 (2), Stats. A strong argument could be made that an individual who sells time-shares, whether licensed as a real estate sales person or registered as a time-share salesperson, sells real estate and could be considered a real estate agent or salesperson. Clearly, the real estate sales chapter of the statutes contemplates sales of time-shares through real estate brokers for whom real estate salespeople work. See sec. 452.01 (2)(f) and (7), Stats. However, the Commission need not reach the issue of whether an individual who is only registered as a time-share salesperson fits the exclusion under sec. 108.02 (15)(k)7, Stats., (1)  because the employe in this case is a licensed real estate salesperson. Finally, although the employe contends he was paid some expenses, his actual remuneration for his services was made solely by way of commission.

The employe takes issue with the distinction drawn by the Appeal Tribunal between his case and those of the co-workers who were allowed benefits. Briefly, the Appeal Tribunal pointed out that a licensed "real estate salesperson" could perform a greater range of duties than a certified "timeshare salesperson" who may only perform a limited number of real estate-related functions. The employe contends that the distinction is irrelevant in his case because all he did for the employer was sell time-shares. However, the Commission notes that the employe had a greater number of sales opportunities available to him by virtue of his licensure as a real estate salesperson. To the extent that any distinction is needed between the employe's case and that of his co-workers given the two preceding paragraphs, the distinction pointed out by the Appeal Tribunal is sufficient. The distinction is rationally based and free from invidious discrimination, Dandridge v. Williams, 397 U.S. 471, 485, 25 L. Ed. 2d 491, 501 (1970). Nonetheless, because the Commission does not believe the distinction is necessary, it removed it from the Appeal Tribunal Decision. Under the circumstances, the Commission declines to reverse the Appeal Tribunal Decision in this case based on the initial determinations issued to other parties in different cases.

 

NOTE: In Kevin M. Goluch v. R J L Construction and Pace Realty Service, Hearing No. 90-402576 MN (May 23, 1991), the Commission held that in order for an individual to fit the real estate agent salesperson exclusion from the definition of employment, three criteria must be met. The three criteria are: the real estate agent or salesperson must be licensed by the state, remuneration must be solely by commission and the services must be performed pursuant to a written contract providing that the individual will not be treated as an employe for federal tax purposes. The, criteria are set out under federal guidelines and in a general provision dealing with employment taxes (26 USC 3508), but not in the Federal Unemployment Tax Act (FUTA) itself or the state statute in question (sec. 108.02 (15)(k)7, Stats.)

It does not appear that the Department or the Commission must apply the third factor in every case in order to be in compliance with FUTA. This is not a case where, as with nonprofit organizations or governmental entities, coverage under state law may not deviate from FUTA coverage. See 26 USC 3304 (a) (6) and 3309. Rather, the states have some latitude in determining the kind and extent of unemployment compensation coverage in cases such as this. Claim of Cassaretakis, 289 N.Y. 119, 44 N.E. 2d 391 (1942); aff'd 319 US 30 7 C. Ed. 1416 (1943). Section 108.02 (15)(k)7, Stats., does not mention the third criterion from the federal law requiring express contract language, and the Commission sees no reason to require it. Moreover, the third criterion seems to provide a formalistic trap for unwary employers. Under the circumstances, the Commission disavows that portion of its decision in Goluch which requires an employer prove the existence of a written contract providing that a real estate salesperson is not considered an employe for the purposes of federal taxation in order to qualify for the exclusion under sec. 108.02 (15)(k)7, Stats.



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Footnotes:

(1)( Back ) However, the Commission has previously held that a time-share salesperson may be a real estate agent within the meaning of sec. 108.02 (15)(k)7, Stats. Kevin M. Goluch v. R J C Construction and Pace Realty Services, Hearing No. 90-402576 MN (May 23, 1991).

 


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