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

DAVID J KETTLER, Employee

GRAND AMERICAN ROAD RACING LLC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 06401562AP


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 wages paid to the employee by the employer totaling $5,100.00 shall be included in the department's computation of the employee's base period wages for computing potential benefit eligibility.

Dated and mailed November 15, 2006
kettlda . usd : 164 : 1   EE 410

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner

MEMORANDUM OPINION

The employer has filed a Motion to Remand for Further Introduction of Evidence, on the ground that it never received appropriate notice of the hearing and participated only reluctantly and without benefit of preparation or counsel. While the commission does have the discretion to order the taking of additional evidence in matters before it, that authority is exercised only in a few exceptional circumstances, and the commission sees no reason to order additional hearing in this case. The digital recording of the hearing reveals that, although the employer's representative informed the administrative law judge that she did not receive the hearing notice, she raised no objection to going forward with the hearing. To the contrary, the employer's representative volunteered, without prompting by the administrative law judge, that she would like to go ahead with the hearing as scheduled. The employer has not explained what additional evidence it would have presented had it received appropriate notice, and the commission sees no basis to conclude that any lack of notice resulted in prejudice to the employer's case. The commission therefore sees no reason to order further hearing, and has proceeded to review this matter based upon the evidence already presented.

In the petition for commission review the employer argues that the claimant satisfies eight of the ten enumerated statutory factors and should not be considered an employee. The commission will address only those factors which were not resolved in the employer's favor by the administrative law judge. First, the employer contends that the third statutory factor, requiring a showing that the individual maintains a separate business with his or her own office, equipment, materials and other facilities, has been met. The employer argues that the nature of the employee's services obviate the need for maintenance of a separate business with equipment, materials or other facilities, since racing events occur in many different locations, and the equipment necessary for the inspections is provided by the employer. However, even if there were some basis to conclude that racecar inspectors do not generally maintain their own equipment -- and the record does not support such a finding -- the maintenance of equipment is only one portion of the statutory factor. Where the employee testified that he has no separate business, and where the record establishes that he has no office and no other indicia of a business, the third factor has not been satisfied.

The employer also argues that the employee incurs the main expenses related to the services that he performs under contract. Again, this argument fails. Although the employer contends that the main expenses include travel, food and lodging, for which the employee is responsible, the expenses to which the employer refers are not directly related to the services performed. Rather, the main expenses associated with performing the employee's services as an inspector of racecars include the expenses of purchasing and maintaining the inspection equipment, costs which are incurred by the employer. The fourth factor is therefore not satisfied.

Next, the employer contends that the employee is responsible for the satisfactory completion of the services that he contracts to perform and is liable for a failure to satisfactorily complete the services. The employer points out that the employment contract specifies that the employee is solely liable for any damages resulting from or associated with his performance of services. However, at the hearing the employee testified that he is not responsible for the satisfactory completion of his services and has no legal liability if he does not meet the employer's criteria. The employer did not disagree with the employee's testimony on this point, and elaborated that if the employee did not adequately perform an inspection he would still be paid the full amount, but may not be asked to return. Given this, and considering that as a sanctioning body for professional roadracing, the employer is ultimately responsible for providing the inspection services, with the employee merely performing that function on its behalf, the commission agrees with the appeal tribunal that the sixth factor is not satisfied.

The employer also argues that the employee meets the seventh condition, which requires him to receive compensation for services performed under a contract on a commission or per-job or competitive-bid basis and not on any other basis. The employer contends that the employee is paid on a per-job basis at a flat rate of $300. However, the record indicates that the employee was paid $300 per day, not per job. Payment on a daily basis is indicative of employee status and does not satisfy this statutory factor.

The employer next argues that the employee may realize a profit or suffer a loss under contracts to perform services because his expenses could exceed his payment, or vice versa. However, the salient fact is that the employee provides only his labor, for which he is assured payment, and has no business investment at risk. The mere fact that the employee might incur travel expenses in excess of his pay does not mean that he could realize a profit or suffer a loss under contracts to perform services, as contemplated by the statute.

Finally, the employer argues that the success or failure of the employee's business depends on the relationship of business receipts to expenditures. In support of this assertion, the employer essentially reiterates the argument that the employee had varying travel expenses. The employer also states, without citation to any evidence in the record, that the employee incurs costs in maintaining his knowledge base and communications tools. This argument fails. The employer has not contended that the employee has recurring business expenses, and the record indicates he does not. More importantly, the tenth statutory factor contemplates the existence of an actual business. Here, the employee has no business to succeed or fail and, in fact, engages in this activity more as a hobby than as a for-profit venture. The final statutory condition is therefore not met.

In relation to the tenth statutory factor, the employer argues that a hobbyist, who is not economically dependent upon the employer, is not an employee. However, a hobbyist can be an employee for UI purposes. See In the matter of Dane County Hockey Officials Assn. Inc. (LIRC, Feb. 22, 2000). Where an individual performs services for an employing unit for pay, the statute presumes employee status unless seven of the ten specifically enumerated statutory factors are shown to apply. Here, the employee satisfied no more than two of those factors. For UI benefit purposes, he is considered to be an employee. Accordingly, the appeal tribunal decision is affirmed.

cc: Attorney Thomas P. Godar



 

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