DARRELL J KNOPS, Claimant

INTEGRITY PROJECT MANAGEMENT, Employer

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, except that it makes the following modifications:

Delete the last three sentences from paragraph 13 under the administrative law judge's Findings of Fact and Conclusions of Law and insert therefor:

"The claimant had only one written agreement with the employer. Although the agreement provided that if the claimant were to perform services for another client that another schedule would be created, another schedule was not in fact created. The question is not whether the individual had the potential for performing under multiple contracts with the employer, but whether the claimant operated under multiple contracts to perform specific services. For these reasons, the appeal tribunal finds that condition 4. has not been satisfied."

The decision of the administrative law judge, as modified, is affirmed. Accordingly, the claimant's services constitute employment for unemployment benefit purposes.

Dated and mailed May 12, 2006
knopsda . umd : 132 : 4   EE 410

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

Robert Glaser, Commissioner

The claimant has petitioned for review of the appeal tribunal decision that found the claimant performed services for the employer as an employee and not as an independent contractor. The claimant asserts that principles of common sense and administrative economy dictate that the joint agreement of both parties as to the disposition of a case should control. However, conditions of eligibility of a claimant for unemployment benefits are not subject to collective bargaining contracts or other private agreements. Roberts v. Industrial Comm., 2 Wis. 2d 399 (1957). The commission must apply the unemployment insurance law as it is written. The claimant performed services for the employer for pay. The presumption arises that the claimant performed services for the employer as an employee. The presumption is rebutted by establishing that the claimant's services satisfied seven of the ten conditions set forth in Wis. Stat. § 108.02(12)(bm). The intent of the parties is not a statutory condition considered in determining the claimant's status, let alone controlling.

The claimant argues that the ALJ erred in concluding that the claimant was an employee under Wis. Stat. § 108.02(bm). However, the claimant acknowledged that at the time he was performing services for the employer he did not have an employer identification number. The claimant argues that he later obtained an employer identification number. However the question is whether he had such a number when performing services for the employer. The claimant also acknowledged that he did not file business or self-employment tax returns. The claimant argues that it is absurd to hold against him the fact that his taxes were not yet due. However, the fact that the claimant's taxes were not due by the time of the hearing does not mean he has satisfied Wis. Stat. § 108.02(12)(bm)2. The claimant argues that he satisfied condition 2. because he intended to be treated as a separate business entity. However, the commission agrees with the ALJ that the claimant's intent is insufficient to satisfy condition 2. Like condition 2., the fact that claimant was just starting out in business does not mean his intent can satisfy condition 3. The commission has modified the appeal tribunal decision because it concludes that the fact the parties contemplated the possibility of future services performed under different conditions did not did not satisfy condition 4. The claimant did not in fact operate under multiple contacts or under a single contract with terms that varied over time. The claimant does not argue that condition 7. was satisfied.

The claimant argues that he could suffer a loss because he would be responsible to bear liability for any noninsured loss. The claimant also argues that he suffered a loss because he did not always bill the employer for time worked. In Dane Co. Hockey Officials (LIRC, February 22, 2000), the commission said:

[T]here is virtually no activity involving providing service for someone or something, that does not require incurring some kind of outright expense. That can be just as true in the case of an acknowledged employe, who may incur expenses such as work clothes, buying and maintaining a car to be able to get to work, etc. If a person who has incurred such expenses then makes the choice not to do work which is available to them, they may well end up "out-of-pocket", but that does not necessarily constitute a "loss" such as is contemplated in the case of a business. In a real business, genuine risk of loss frequently accompanies contracts to provide particular services not because the person makes a choice not to do anything at all, but because of the unpredictability inherent in the business enterprise. The businessperson who develops a bid to do a particular job for a particular sum, must anticipate variations in prices of supplies, in the availability of time and conditions allowing fulfillment of the contract, and other matters. If they are skilled, they may correctly anticipate these things and fix a price which will generate a profit for them when, at the end of the job, the columns are all tallied. If they are not so skilled, or if unforeseen events occur that prevent the fulfillment of the contract under the conditions they anticipate, then they may suffer a genuine business loss . . .

The claimant's decision not to charge the employer for all work performed, while reducing his income, did not constitute the type of business loss contemplated by Wis. Stat. § 108.02(12)(bm)8. Nor can the commission conclude that the existence of a theoretical but possible noninsured loss suffices to satisfy Wis. Stat. § 108.02(12)(bm)8.

The claimant argues that the ALJ found condition 9. was not satisfied because the claimant did not have significant overhead. However, the ALJ in fact found that condition 9. was satisfied.

Finally, the claimant argues that application of condition 10. to a new business enterprise is unfair. However, again, the commission cannot ignore the condition nor deem it satisfied because the claimant is in a new business endeavor.

NOTE: This determination is issued under Wis. Stat. § 108.09 and only resolves the current benefit eligibility issue. Under Wis. Stat. § 108.101, this decision is not binding for any other purpose and cannot be used to determine whether the employer is liable for contributions based on the services performed by the claimant.

cc: Attorney Donald J. Chewning

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