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


DENA M WHEELER, Employe

WESTERN WISCONSIN PRIVATE INDUSTRY COUNCIL, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 97005178LX


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 claimant is potentially eligible for benefits based on her work for the employer.

Dated and mailed: September 4, 1998
wheelde.usd : 132 : 1  ER 490

/s/ David B. Falstad, Chairman

Pamela I. Anderson, Commissioner

/s/ James A. Rutkowski, Commissioner

MEMORANDUM OPINION

Under the Wisconsin unemployment insurance law, an individual who performs services for a covered employer, for pay, is presumed to be an employe, in covered employment, unless some particular statutory exclusion applies. The issue to be resolved is whether the claimants' services for the employer were as employes in covered employment under Wisconsin unemployment law. (1)

The employer-appellant is a nonprofit agency which administers a variety of social service and employment-related programs. One such program is an AmeriCorps service corps funded through the National and Community Service Act of 1990.

The employer's intention is to provide youth and education- related services to a multi-county region in western Wisconsin. The employer's priorities are education/school success and public safety/community policing. The AmeriCorps participants "will help youth stay in school, get better grades, explore career paths, avoid delinquent activity, set and achieve goals, become involved in the community" through "tutoring/academic assistance for low- achieving students; mentoring at-risk youth; development and facilitation of a new gang intervention program; and promotion/facilitation of local Martin Luther King Nonviolence Project."

The claimants in question were selected to be AmeriCorps members because of their background and wish to be involved in community service work. Once selected, they were placed in service assignments and were expected to complete a minimum of 1700 hours of work during their one-year term. They were paid periodically, through paychecks from the employer, in an amount equal to approximately $8500 per year. Taxes were withheld from the paychecks and W-2s were issued to the claimants. The claimants were also eligible for certain other benefits such as health insurance. In addition, upon completing their service, they became eligible for certain educational benefits if they enrolled in an educational institution. They were supervised in part by a program director and in part by on-site supervisors. Each was assigned to one primary service site, and was expected to put in 20 hours of work per week at that site, together with additional work at that site or other sites, and to attend administrative meetings. They were required to keep track of the time worked; however, their periodical paychecks did not increase or decrease based on the hours worked in any given pay period.

The employer argues that it could be said that the claimants did not perform services for pay, as "the participants were performing service not for the living allowance stipends, but for the pleasures of performing volunteer and service to the community since the stipends were meant to only cover living expenses." However, the "services for pay" requirement has never rested on the subjective intent or motivation of the individual performing services, or at least what the employer claimed was a particular claimant's intent. Further, in the Corporation for National Service Program Director's Handbook, "Taxes" section it states "Under Federal tax laws, ordinary income tax rules apply to Member benefits. A living allowance is taxable as `compensation for services' and generally is subject to Federal withholding." Exhibit G, pp. 31-32. In addition, the claimants received W-2s. (2)

The ALJ found the services were performed in covered employment and the commission affirms such finding. For the most part the employer raises the same arguments in its petition as it made before the ALJ. The commission like the ALJ is not persuaded by such arguments.

First, the employer argues that the federal legislation founding AmeriCorps programs defines people in the program as "participants" not as "employes," and federal law has priority under the Supremacy Clause over inconsistent state law defining participants as employes. However, the commission does not agree that Wisconsin law is inconsistent with the federal legislation.

The employer notes in its petition that 42 U.S.C. ? provides that "participants" are not employes of the program. As the ALJ noted, however, the legislation in question does not specifically address whether participants may be viewed as employes for other purposes, including state unemployment compensation law.

The Department of Labor (DOL) has issued an Unemployment Insurance Program Letter (UIPL) on the issue of whether services performed by AmeriCorps participants for State and local governments and nonprofit organizations are covered services. DOL has stated that it accepts the General Counsel for the Corporation for National Service opinion:

which interprets the NCSA as precluding, as a matter of law, the finding of an employer-employee relationship between the grantee/subgrantee program and the participant. Since the Corporation for National Sevice (sic) is the organization with the responsibility for administering and interpreting the NCSA, the Department has chosen to defer to its interpretation. Therefore, since there is no employer-employee relationship under this interpretation, the required coverage provision of Section 3304(a)(6)(A), FUTA, does not apply. At the same time, nothing in the NCSA or the FUTA requires States to exclude services performed by Americorps (sic) participants. Whether such services are covered is a matter to be determined under each State's law.

Unemployment Insurance Program Letter No. 25-95, April 20, 1995. (3) UIPL No. 25- 95, thus answers the federal question. AmeriCorps participants are not employes under federal law and so there is no FUTA liability and states are not required to cover AmeriCorps participants' employment. The question remains whether Wisconsin UI law covers the employment, notwithstanding that it is not required to do so. (4)

The employer argues that the services of the participants/claimants are excluded under Wisconsin UI law as being equivalent to a work-relief or work-training program. There is an exclusion under Wisconsin unemployment law for federally- funded work-relief or work-training programs. Wis. Stat. § 108.02(15)(g) provides:

(g) "Employment" as applied to work for a government unit or a nonprofit organization . . . does not include service:

1. By an individual receiving work relief or work training as part of an unemployment work-relief or work-training program assisted or financed in whole or in part by any federal agency or an agency of a state or political subdivision thereof, unless otherwise required as a condition for participation by the unit or organization in such program;

The ALJ rejected the employer's argument that it was a work- relief or work-training program under Wis. Stat. § 108.02(15)(g)(1). The ALJ reasoned that while the employer's program may bear some similarity to such programs, it is not defined as one. The ALJ noted that the purposes of the employer's program are to promote community service and to provide services, in many cases to areas in which there is particular economic need. However, the participants are not required to be unemployed or underemployed in order to enter the program, nor is training during the term of the program a major component, except as it is needed in connection with the particular work assignments. In fact, the participants in the employer's program in many cases held college degrees and in some cases, graduate degrees, and did not join the program in order to participate in work-relief or work-training.

The commission agrees with the ALJ's finding that the employer's program does not fit within the work-relief/work-training program exclusion. In UIPL No. 30-96, August 8, 1996, the DOL set forth its interpretation of the work-relief/work-training exclusion:

The Department's position is that while `work relief' and `work-training' are both excluded, they are two distinct exclusions. Work-relief projects are primarily intended to alleviate the disadvantaged status of the individual by providing employment. For `work- training,' there is no requirement that the individual must be economically disadvantaged. Instead, work- training focuses on improving the individual's employability.

The DOL then went on to list the distinguishing characteristics of a work-relief or work-training program:

A. Both of the following characteristics must be present in either work-relief or work-training:

(1) the employer-employe relationship is based more on the participants' and communities' needs than normal economic considerations such as increased demand or the filling of a bona fide job vacancy;

(2) the products or services are secondary to providing financial assistance, training, or work-experience to individuals to relieve them of their unemployment or poverty or to reduce their dependence upon various measures of relief, even though the work may be meaningful or serve a useful public purpose.

B. A work-relief or work-training program must have one or more of the following characteristics:

(1) the wages, hours, and conditions of work are not commensurate with those prevailing in the locality for similar work;

(2) the jobs did not, or rarely did, exist before the program began (other than under similar programs) and there is little likelihood they will be continued when the program is discontinued;

(3) the services furnished, if any, are in the public interest and are not otherwise provided by the employer or its contractors; and

(4) the jobs do not displace regularly employed workers or impair existing contracts for services.

C. The following characteristic must be present only for work-relief programs:

The qualifications for the jobs take into account as indispensable factors the economic status, i.e., the standing conferred by income and assets, of the applicants.

Unemployment Insurance Program Letter (UIPL) No. 30-96, August 8, 1996.

This is not a work-relief program as it is not "primarily intended to alleviate the disadvantaged status of the individual by providing employment." As noted by the ALJ, there was no requirement that the claimants be either underemployed or unemployed. Further, the evidence did not demonstrate that a claimant's income and assets were part of the qualifications for obtaining a position.

The claimants' services are not excluded on the bases that they were performed in a work-training program. The two important characteristics of the program are that the participants provide needed service and the service of the participants. The employer's priorities are listed on its grant application as education/school success and public safety/community policing. The employer's mission is to help youths stay in school, get better grades, explore career paths, avoid delinquent behavior, set and achieve goals, become involved in the community. Exhibit A. To achieve this mission the employer seeks volunteers such as the claimants which has the effect of increasing community involvement. That volunteers gain work experience, knowledge, or training, while a benefit of volunteering, is not a primary objective of the program. Further, clearly the employer's program is not designed to relieve the participants "of their unemployment or poverty or to reduce their dependence of various measures of relief." The bottom line is that the goal of the employer's program is not to improve the participant's employability.

The employer seeks to compare the present case to the court's decision in Bliss v. DILHR, 101 Wis.2d 245 (Ct. App. 1981). Bliss involved two individuals who attempted to collect unemployment when their work with a health center, which was funded by the federal CETA program, came to an end. The commission found that their employment was excluded because it constituted work relief or work training under Wis. Stat. § 108.02(5)(g)1. (5) The court agreed. The court cited a definition of work relief as wages paid by a city, town, or county, from funds designated for relief, or from money provided by the federal government "to persons unemployed or whose employment is inadequate to provide the necessities of life . . . ." Bliss at 248, citing City of Madison v. Dane County, 236 Wis. 145, 154, 294 N.W. 544, 548 (1940) and BLACK'S LAW DICTIONARY 1780 (rev. 4th ed. 1968). The court further noted that the stated Congressional purpose of the CETA program was "to provide job training and employment opportunities for economically disadvantaged, unemployed, and underemployed persons, and to assure that training and other services lead to maximum employment opportunities and enhance self-sufficiency . . . ." Bliss at 248, citing 29 U.S.C. ? (1976). Thus, the claimants in Bliss received federal funding because they personally were unemployed, underemployed or economically disadvantaged. As noted above, the claimants here were not required to be, and were not established to have been economically disadvantaged. Therefore, Bliss is inapposite.

The employer also tries to compare AmeriCorps participants with individuals who perform services in the Wisconsin Service Corps (WSC) program or Wisconsin Conservation Corp (WCC) program as assistant crew leaders or corps members. WCC and WSC are programs set forth in Ch. 106 which is titled "APPRENTICE AND EMPLOYMENT PROGRAMS." The objectives of the WSC are set forth in Wis. Stat. § 106.21(2), which provides:

(2) OBJECTIVES. The department shall develop guidelines for the Wisconsin service corps program designed to promote the objectives of:

(a) Employment of young adults. Providing employment for young men and women in a county with a population of 500,000 or more.

(b) Personal development. Encouraging and developing work skills, discipline, cooperation, meaningful work experiences and training and educational opportunities for corps members.

(c) Community services. Addressing the social, health and economic needs of a community within a county that has a population of 500,000 or more.

The objectives of the WCC are set forth in Wis. Stat. § 106.215(2), which provides:

(2) OBJECTIVES. The board shall develop guidelines for the Wisconsin conservation corps program designed to promote the objectives of:

(a) Employment of young adults. Providing employment for young men and women in all regions of the state.

(b) Conservation. Conserving, developing, enhancing or maintaining the natural resources of this state through the implementation of projects which have a long-term beneficial impact on the environment.

(c) Personal development. Encouraging and developing work skills, discipline, cooperation, meaningful work experiences and training and educational opportunities for corps enrollees.

(d) Human services. Promoting the social well-being of children, the elderly, persons with disabilities and persons with low incomes through the implementation of projects that include human services activities.

The AmeriCorps Member Handbook states that its mission is to "provide opportunities for Americans of all ages to help improve the nation through service to communities." The Handbook further lists four objectives of AmeriCorps:

Getting Things Done. AmeriCorps members help communities solve problems in the areas of education, public safety, the environment, and other human needs, both through their own direct service and by mobilizing the volunteer service of other Americans.

Strengthening Communities. AmeriCorps unites individuals from all different backgrounds-and organizations of different kinds-in a common effort to improve our communities.

Encouraging Responsibility. AmeriCorps encourages members to explore and exercise their responsibilities to their communities, their families, and themselves-during their service experience and throughout their lives.

Expanding Opportunities. AmeriCorps helps those who help America. AmeriCorps members receive awards to further their education or to pay back their student loans-as well as invaluable job experience, specialized training, and life skills.

Exhibit H, p. 7. Although included in objectives, job experience and training, as indicated by the "as well as" phrase, is more of a benefit that inures to a volunteer rather than the goal of the program. There is no question but that the primary purpose of both WSC and WCC is to provide participants with job training and improve their employability. Further, the services provided by the AmeriCorps participants can hardly be said to be secondary to the training or work experience. (6)

The employer also argued generally to the ALJ, and argues in its brief, that it would be poor public policy to require it to pay any state unemployment insurance costs, since its federal grant does not provide funds for that purpose, and any benefit costs would have to be funded through some other source. The ALJ noted that while that may be a valid concern of the employer and its related agencies, it is not a determinative factor under Wisconsin unemployment law. To the extent that the employer becomes liable for benefit payment, it must fund those payments from some source.

For the above reasons, and for the reasons set forth in the appeal tribunal decision, the commission affirms that decision.

cc: ATTORNEY GERALD O FLAHERTY
PARKE O FLAHERTY


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Footnotes:

(1)( Back ) The employe's case was heard with another case involving a group of AmeriCorps members. For this reason the decision refers to claimants.

(2)( Back ) The employer's executive director, Mr. Hanoski testified at the hearing, and the employer argues in its brief, that it cannot fire a member for job performance. However, the Corporation for National Service Program Director's Handbook under "Member Release and Grievance" states in a Q and A format the following: May we release a Member for cause based on grounds other than those set forth in the Corporation's regulations? Yes, but you must articulate the grounds ahead of time in the Member contract. Examples of conduct which programs may decide are grounds for release for cause include chronic truancy, consistent failure to follow directions, and failure to follow program rules and guidelines. Exhibit G, p. 26. In fact, the Agreement of Participation in the AmeriCorps Program signed by Ms. Wheeler and Mr. Boreson, Exhibits E and F, respectively, sets forth "Rules of Conduct" and includes a number of catch-all paragraphs such as "The program may release the Member for cause if, in the opinion of the Program Director, he/she repeatedly or periodically continues to demonstrate inappropriate behavior by engaging in a pattern of misconduct."

(3)( Back ) In UIPL No. 1-96, October 5, 1995, the DOL advised states that in its opinion the UIPL's did have legal effect. The UIPL's are directives used to set forth official agency policy. The directives state or clarify DOL's position, particularly with respect to the interpretation of minimum Federal requirements for conformity and compliance.

(4)( Back ) Indeed, it was clearly contemplated that UI taxes might be required to be paid depending on a state's laws. The Program Budget submitted at the hearing lists under "Member Support Costs," items or expenses which include Workers' Compensation and Health Care, "(if required by State) Unemployment Insurance." In addition, the Corporation for National Service Program Director's Handbook, in a Q and A section on "Taxes" includes the following: Should we pay unemployment insurance taxes? The U.S. Department of Labor issued a favorable ruling which agrees with the Corporation's position: Federal unemployment compensation law does not cover Members because no employer- employee relationship exists. However, each State may continue to mandate unemployment coverage for Members under its own law, and programs are responsible for finding out what State law requires via their State Commission, legal counsel, or the applicable State agency. Programs may charge up to 85% of the program's share of unemployment insurance taxes against the grant if it is included in the approved budget. Exhibit G, p. 31.

(5)( Back ) Then Wis. Stat. § 108.02(5)(g)1, is identical to Wis. Stat. § 108.02(15)(g)1.

(6)( Back ) Prior to January 7, 1998, Wis. Stat. §§106.21(9)(d) and 106.215(10)(d), expressly stated that individuals working on a crew under WSC/WCC were ineligible for UI. As the programs developed certain workers were ineligible for UI (corps members and others receiving training) while others were eligible for UI (crew leaders whose duties were not limited to receiving training). Those provisions were repealed by 1997 Wisconsin Act 39, as was Wis. Stat. § 108.02(15)(gm), which had expressly stated that employment did not include service as a corps member or assistant crew leader for WCC. Now, whether such employment is covered is determined under Wis. Stat. § 108.02(15)(g)1. This demonstrates that Wis. Stat. § 108.02(15)(g)1. is not a blanket exclusion, that is, mere service for a program in which some individuals receive training or relief does not automatically exclude an individual's employment. The question is whether the individual is receiving the work relief or training. Thus, citing similarities between WCC and AmeriCorps participant does not establish that these claimants are in excluded employment. Like the claimants in Bliss, the WSC/WCC assistant crew leaders or corps members are the individuals that the programs are attempting to train and provide relief to. The WSC/WCC goals could not more clearly meet the definition of work relief/work training. Notwithstanding the similarities that may exist between the two programs, the stated objectives and operation of the WSC/WCC programs separate the corp members in those programs from these participants in the AmeriCorps program.