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

JEFFREY FLEURY, Employee

MYRIK COMMUNICATIONS INC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 06400554GB


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's services for the employer are deemed to constitute employment for unemployment insurance benefit purposes.

Dated and mailed October 27, 2006
fleurje . usd : 178 : 1   EE 410

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner

MEMORANDUM OPINION

In its petition for commission review, the employer argues that the claimant was not an employee for unemployment insurance purposes. In particular, the employer finds fault with the commission's reasoning in several similar cases which found cable installers to be employees as defined in Wis. Stat. § 108.02(12).

The employer argues each of the conditions which the ALJ found not to apply to the employee's situation. It first argues that the ALJ misapplied condition two when she limited its applicability to a new business which had actually filed a tax return. It argues that the employee testified that he intended to file a self-employment tax return and had managed his tax affairs in a manner consistent with federal tax law. The commission rejects this argument. The statute is clear. The employee had not filed a tax return for the first year of this "business." This condition is not satisfied.

The employer argues that the employee satisfied condition three. First the employer argues that the employee has a separate business because he intends to identify himself as a sole proprietor to the IRS, and that he ran his business solely providing all his own equipment, tools and other expenses. It further argues that to insist on the requirement of a home office or other facilities in a case where there is no business necessity is pointless and wasteful. It finally argues that the commission's construction of this section would also require all employees have "other facilities" even in such cases where this would be absurd.

The commission's approach to applying this condition has been that a separately maintained business is the requirement, and that the language regarding "an office, equipment, materials, and other facility" is a nonexclusive list of factors that, where present, tend to show the maintenance of a separate business. There are not, however, an exclusive list of factors that indicate the existence of a real business separate from activities of the putative employer. T-N-T Express LLC, UI Hearing Nos. S9700385, etc. (LIRC Feb. 22, 2000). See, Dane County Hockey Officials, UI Hearing No. S9800101MD (LIRC Feb. 22, 2000); Quality Communications Specialists, Inc., UI Hearing Nos. S0000094MW, etc. (LIRC July 30, 2001).

In this case, the employee had no independent business separate from his relationship with the employer. His business ceased when his relationship with the employer ended. He neither sought nor accepted work from other clients. His expenses and overhead were minimal. The commission concludes that condition 3 was not satisfied in this case.

The employer also argues that the employee satisfied condition four. It maintains that each work order constituted a separate contract as defined by Wisconsin law and the commission's interpretation of this section in Quality Communications Specialists, Inc. is wrong. While the employer maintains that contracts could and were negotiated, the employee testified that he did not do so and there was no change in rates during his tenure. The employer also rejects the contention that negotiation between the parties is a necessary condition for finding these work orders to be contracts. The commission has specifically rejected such a construction in multiple cases.

The commission's rationale is based on the factor's relevance to establishing an independent business. As the commission has stated:

The existence of multiple contracts tends to show that an individual is not dependent upon a single, continuing relationship subject to conditions dictated by a putative employer. The threshold requirement of multiple contracts can be satisfied, in the view of the commission, either by multiple serial contracts or multiple contemporaneous contracts. Multiple contracts that an individual enters into with multiple business entities are most indicative of that individual's economic independence from a particular putative employer. However, multiple serial or contemporaneous contracts with a particular putative employer may satisfy the criterion if the contracts are shown to have been negotiated "at arm's length." In genuine independent contractor relationships, negotiation will typically result in terms that will vary over time and will vary depending on the specific services covered by a contract. " T & D Coils, Inc. (LIRC, Dec. 15, 1999).

"The test is therefore not met in cases in which the individual provides services for only one entity, and does not negotiate and re-negotiate rates with that entity, but simply accepts what is given as the going rate for the services in question, and provides those services in the course of a continuing relationship the terms of which do not vary over time. Dane Co. Hockey Officials (LIRC, February 22, 2000). Quality Communications Specialists, Inc.

Moreover, "the mere fact that there are work assignments given out on a regular basis does not amount to multiple serial contracts; see, Prince Cable, Inc. (LIRC, February 23, 2001)." Quality Communications Specialists, Inc.

The employer also argues that the employee controlled the means and method of supplying his services. It argues that oversight maintained by Direct TV and Premier Communications was solely for the purposes of satisfying its customers and was consistent with the right of oversight in most contractual arrangements. It particularly disputes the inference made by the ALJ that the right to dispute the employer's characterization of poor work and redo his own work must be present to demonstrate independence over the means and method. The test does not ask whether the putative employer controls the means and method of performing the service; it asks whether the individual whose status is at issue controls the means and method of performing the service. If they do not, it does not matter who does. The amount and types of discretion exercised by the employee are not sufficient to overcome this. In fact, the employee lost his employment specifically because he did not perform installations on the schedule prescribed by the employer. This condition is not met.

The employer argues that the employee satisfied condition seven. It maintains that any requirement that the contract be negotiated or vary over time is extra statutory. It maintains that each work order constituted a separate job as contemplated under this condition. The commission disagrees. It has already rejected the employer's arguments that each work order constitutes a separate contract. The work orders in this case were a series of work assignments and the employee was compensated on a piece work basis.

The employer argues that the employee satisfied condition nine because he bore the total expenses of his business and had recurring liability in the van purchase. However, the van payments ceased when he quit. He had no overhead which persisted beyond his relationship with the employer, which would be the case if he were a genuine business owner. The employer's insistence that such a characterization requires the independent contractor to maintain those liabilities in perpetuity is disingenuous. The employee does not satisfy this condition.

Finally, the employer argues that the employee satisfied condition 10. It argues that in a case where a business ceases, recurring expenses also end. However, what characterizes a separate business is that the overhead expenses do persist causing a genuine loss. This condition contemplates the existence of a genuine business endeavor, where a significant investment is put at risk and there is potential for real success in the growth and value of the investment or real failure in the sense of actual loss of the investment. The employee had minimal investment in tools and supplies and his most significant expense ceased when he quit. His efforts would not have resulted in a growth in the value of this investment.

The employee was not an independent contractor. He performed his services as an employee. The commission has considerable experience in interpreting this statute and the outcome in this case is consistent with the outcome in factually similar cases involving cable and satellite dish installers.

 

NOTE: The commission notes that the decision in this case simply means that the wages this claimant earned during his base period while performing work for the employer will be considered when calculating his maximum benefit amount and weekly benefit rate. Wis. Stat. § 108.101 provides that no finding of fact or law, determination of decision made with respect to rights or liabilities under Wis. Stat. § 108.09 is binding in an action or proceeding under Wis. Stat. § 108.10, and is not admissible or binding in any other administrative or judicial proceeding not arising under chapter 108, unless the department is a party or has an interest in the action or proceeding.

 

cc: Attorney Ross W. Townsend



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