In the matter of the unemployment benefit claim of
BRETT G SHOTWELL, Claimant
Involving the account of
BUSHOR LOGGING, Employer
The Department of Industry, Labor and Human Relations issued an initial determination in the above-captioned matter which held that the claimant performed services for the employer as an employe and that in his applicable base period he was paid wages for services totalling $6,867.64. As a result, those base period wages were included in the computation of his potential benefit eligibility. The alleged employer, Bushor Logging, and the claimant both filed appeals of the adverse initial determination. On April 23, 1993, an appeal tribunal issued a decision which affirmed the initial determination. The Bushor Logging then filed a timely petition for commission review of the adverse appeal tribunal decision.
Based on the applicable law, records and evidence in this case, the commission makes the following:
For about six months, the claimant performed services for Bushor Logging, a logging business. The last day he performed services was March 4, 1992 (week 10). He had initiated a claim for unemployment benefits on February 22, 1993 (week 9).
The claimant performed services as a woodcutter and buncher. His father-in-law, the owner of Bushor Logging, performed work as a skidder operator. The claimant set his own hours and days of work. He owned all the tools needed to perform the work. He paid for all expenses regarding the equipment. He was not instructed as to how to perform his services as he had the necessary training and experience to do so.
Both the claimant and his father-in-law found logging jobs. The father-in-law submitted bids for work. Usually a state or county forester would check on the work in progress to ensure that it was done properly.
The claimant could have hired others to perform the cutting services, although he never did so. He did not advertise in a telephone directory, newspaper, or any other form. (But did by word of mouth). He did not have business cards or any other identification as being engaged in an independent business. He did not work for any other entity while he performed services with his father-in-law. At times, the claimant quit working with his father-in-law and became an employe of a different logging business and construction company.
After a job was secured, the claimant and his father-in-law discussed how much would be paid for skidding work. If the claimant felt he was not being paid enough, he would discuss it with his father-in-law. The claimant received weekly checks from his father-in-law for the amount of work he performed each week.
The appeal tribunal found that Bushor Logging established that the claimant performed services free from its direction and control. However, the appeal tribunal concluded that Bushor Logging had not established that the claimant performed his services as part of an independently established trade, business or profession in which he was customarily engaged. The appeal tribunal applied the five factor analysis of Keeler v. LIRC, 154 Wis. 2d 623, 453 N.W.2d 902 (1990). Keeler involved a similar factual situation to the present case, i.e. a logger contending that woodcutters performing services for the logger were independent contractors. The court in Keeler found that the woodcutters did in fact perform services as independent contractors and affirmed the circuit court's reversal of LIRC. In Keeler, the court examined the five factors of integration, advertising or holding out, entrepreneurial risk, economic dependence, and proprietary interest as follows:
"An examination of the record discloses that Keeler testified to the following: woodcutting is a recognized and skilled trade; he had a specific understanding with the woodcutters that they were functioning as independent contractors and not employees; the woodcutters not only contacted Cal's for contracts but also frequently bid on cutting rights themselves and sold their services to other individuals who had secured cutting rights; the woodcutters employed individuals to assist them in the cutting; and the woodcutters looked to contracts for profit, not salary. There is no evidence that the woodcutters were economically dependent on Cal's for their livelihood. In fact, Keeler stated that if he were to go out of business, the woodcutters would find work elsewhere. We conclude that this evidence is sufficient to establish a prima facie case that the woodcutters were engaging in an independent trade or profession."
The claimant in this case believed he was an independent contractor and not an employe. The claimant, although he did not bid on cutting rights, did obtain logging jobs which Bushor Logging then bid on. Although the claimant did not employ an individual to assist him, both Bushor Logging and the claimant believed he had the right to do so. There is no specific testimony regarding whether claimant looked to contracts for profit not sale, but claimant did consider himself to be in an independent business enterprise and completed a tax return listing wages earned from Bushor Logging as wages from an independent business and also listed business expenses. Further, claimant able to go elsewhere to cut wood and did so after quitting work with Bushor Logging. The commission concludes that the facts are sufficient to establish that, like the woodcutters in Keeler, the claimant in this case was in an independent business.
In addition to the five factor Keeler analysis, the commission believes the provisions of chapter ILHR 107 apply in this case. Chapter ILHR 107 was enacted specifically due to requests from the logging industry that the department clarify whether a piece cutter or skidding operator meets the definition of "employe." In this case, under ILHR 107.001 (3), the alleged employer, Bushor Logging, would be a "logging contractor" defined as a person who contracts for the cutting of timber, the hauling of logs or the skidding of logs, purchases timber to cut or sells unmanufactured forest products. The claimant would be a "piece cutter" which is defined in ILHR 107.001 (4) as a person who sells timber, removes branches from timber, saws timber into logs, or stacks logs.
ILHR 107.04 (1)(a)-(e) sets forth a number of factors that determine direction and control. Among these factors are (a) whether the piece cutter is responsible for providing and maintaining his own equipment, (b) whether the piece cutter applies necessary personal services to meet contract obligations and may engage the services of other individuals without the knowledge or consent of the logging contractor, (c) whether the piece cutter can refuse work, (d) whether the logging contractor supervises the piece cutter in the performance of services; and (e) whether the logging contractor can discipline the piece cutter or impose work rules to obey. The commission finds that the factors set forth in ILHR 107.04 (1)(a)-(e) are satisfied in this case and therefore the alleged employer, Bushor Logging, has established that the claimant was free from its direction and control under ILHR 107.04. ILHR
ILHR 107.05 sets forth factors to determine whether a piece cutter is in an independently established business in which the piece cutter was customarily engaged. The first set of factors is found in ILHR 107.05 (1)(a)-(f). These factors are (a) whether the piece cutter negotiated contracts with the logging contractor for the right to cut timber; (b) whether the piece cutter negotiated the compensation to be paid for cutting timber; (c) whether the piece cutter had an ownership interest in a business (in determining whether ownership exists the department shall consider whether the piece cutter could sell or give away the business without restriction from the logging contractor, whether the piece cutter had an expectation of profit or bears the risk of loss while performing services for the logging contractor, and whether the piece cutter had a monetary investment in the trade, such as tools, equipment and inventory, which are usual and customary in the industry); (d) whether the piece cutter is represented to logging contractors as a person who provides timber cutting services; (e) whether the piece cutter is free to solicit contracts, enter into contracts and perform services under contract for more than one logging contractor at or about the same time; and (f) whether the piece cutter determines the rate of pay, is liable for paying the wages, and actually pays the wages of individuals, including other piece cutters, engaged by the piece cutter to meet the contract obligations.
The commission believes that Bushor Logging has established the claimant's independence in terms of factors (b), (c), (d), (e), and, in part, (f),. Since one or more factors under ILHR 107.05 (1)(a)-(f) have been met, the commission next examines the factors set forth in ILHR 107.05 (2)(a)-(e). These latter factors are (a) whether the business of the piece cutter could continue when the contractual relationship with the logging contractor ends; (b) whether the piece cutter is free to perform services for other logging contractor while performing services for the logging contractor; (c) whether the piece cutter bears the principal burden of maintaining personal expenses such as meals, lodging and transportation, while performing services; (d) whether the piece cutter has a reputation in the community generally on which to rely for business as a piece cutter; and (e) whether the piece cutter may incur liability for damages if there is a breach of contract by the piece cutter. The commission finds that all the factors set forth in section 107.05 (2) are present except for that contained in (2)(e), since there is no evidence that the claimant would incur liability for damages if there was a breach of contract by him.
Section ILHR 107.05 (3) provides that if the department determines that all the factors under sub. (2)(a) to (e) are present in the relationship between the piece cutter and the logging contractor, the piece cutter shall be deemed to be performing services in an independently established business in which the piece cutter is customarily engaged under section 108.02 (12)(b)2, Stats., if one or more of the factors under sub. (2) (a) to (e) are not present, the piece cutter may be deemed to be performing services in an independently established business in which the piece cutter is customarily engaged under section 108.02 (12)(b)2, Stats.
Under ILHR 107.05 (3), even though all the factors under sub. (2) are not present, if one or more of the factors under sub. (2) are not present, the department can still find the piece cutter is in an independent business.
As noted above, the commission agrees with the appeal tribunal that Bushor Logging had met the burden of establishing that the claimant performed work free from it's direction and control. The commission believes that a sufficient number of the factors in ILHR 107.05 are present to determine that the claimant was in an independent business. Both the alleged employer and the claimant in this case believe that he was working as an independent contractor, and enough of the factors set forth in ILHR 107 have been met to find such independent enterprise.
The commission therefore finds that the claimant performed services for Bushor Logging as an independent contractor and not as an employe within the meaning of section 108.02 (12) of the statutes.
The appeal tribunal decision is reversed. Accordingly, the claimant performed services as an independent contractor and not an employe and has no wages for services performed for Bushor Logging usable to compute potential benefit eligibility.
Dated and mailed August 31, 1993
132 : CD6009 EE 413 EE 420 EE 422
/s/ Pamela I. Anderson, Chairman
/s/ Richard T. Kreul, Commissioner
/s/ James R. Meier, Commissioner
NOTE: The commission did not consult with the administrative law judge regarding witness credibility or demeanor. The commission reverses the appeal tribunal decision as a matter of law.
cc:
Honorable Toby Roth
Honorable Roger Breske
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