RENA J CHRISTMAN, Employee

CYBRCOLLECT INC, 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:

1. The fourth full paragraph on page 4 of the ALJ's decision is deleted and the following substituted:

The claimant does not satisfy condition 3. because, although she maintains a separate business office, she does not have a collection sales enterprise existing separate and apart from her relationship with the putative employer.

2. The first, second, and third full paragraphs on page 5 of the ALJ's decision are deleted and the following substituted:

Condition 6. is not met because there was no showing that the claimant would suffer any type of penalty for unsatisfactory performance.

Condition 7. is met because payment was rendered on a commission-type basis.

Condition 8. is satisfied because the claimant could earn a profit and sustain a loss.

3. The second sentence of the first full paragraph on page 6 of the ALJ's decision is deleted and the following substituted:

Only five factors, i.e., 1., 2., 5., 7., and 8., are satisfied.

The decision of the administrative law judge, as modified, is affirmed. Accordingly, the claimant performed services for the putative employer as an employee during the time period at issue. Amounts earned by the claimant for her performance of these services may be used in calculating the claimant's benefit entitlement.

Dated and mailed February 9, 2007
christr . umd : 115 : 1   EE 410  EE 410.03  EE 410.06

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner

The matter at issue here is one of benefit eligibility, not employer contribution. The only impact a successful appeal by the putative employer (Cybrcollect) could have would be the deduction from the earnings upon which the amount of the claimant's benefit is computed the small amount she may have earned from Cybrcollect. A successful appeal would not affect the liability of Cybrcollect for unemployment insurance contributions.

The record shows that the claimant, within the meaning of Wis. Stat. § 108.02(12)(a), provided services for pay for Cybrcollect in an employment and, as a result, a presumption that she did so as an employee is created which Cybrcollect has the burden to rebut by showing that the claimant's employment satisfied at least 7 of the 10 conditions set forth in Wis. Stat. § 108.02(12)(bm). 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).

The claimant has a FEIN and filed self-employment tax returns for the years at issue, which satisfies conditions 1. and 2.

The focus of condition 3. is upon determining whether a separate business, i.e., an enterprise created and existing separate and apart from the relationship with the putative employer, is being maintained with the individual's own resources. See, Princess House, Inc., v. DILHR, 111 Wis.2d 46, 330 N.W.2d 169 (1983); Larson v. LIRC, 184 Wis.2d 378, 516 N.W.2d 456 (Ct. App. 1994); Diane Egan/Health Exams Plus, Inc., UI Hearing No. S0300071JV (LIRC April 15, 2005); Lozon Remodeling, UI Hearing No. S9000079HA (LIRC Sept. 24, 1999). Although the record shows that the claimant had a separate office, materials, and equipment devoted to her work for Cybrcollect, it does not show that she performed, or even sought, similar work with other entities or otherwise had a collection sales enterprise which existed separate and apart from her relationship with Cybrcollect. See, Prince Cable, Inc., UI Hearing No. S9900227MW (LIRC Feb. 23, 2001). As a result, the record does not show that condition 3. was satisfied.

Condition 4. requires multiple contracts. These may take the form of multiple contracts with separate entities, or multiple serial contracts with the putative employer if such contracts are shown to have been negotiated "at arm's length," with terms that will vary over time and will vary depending on the specific services covered by the contract. See, Glosky v. Broadband Solutions, Inc., UI Hearing No. 06201041AP (LIRC Sept. 15, 2006). The existence of bona fide multiple contracts tends to show that the individual either has multiple customers, or that she has periodic opportunities for "arm's length" negotiation with the putative employer as to the conditions of their relationship, and that she is not dependent upon a single, continuing relationship that is subject to conditions dictated by a single employing unit. See, T-N-T Express LLC, UI Hearing Nos. S9700385, etc. (LIRC Feb. 22, 2000); Dane Co. Hockey Officials, supra. Here, the claimant operated under a single contract with Cybrcollect, not multiple contracts, with terms that did not vary over time. Condition 4. is not satisfied as a result.

The fact that the claimant paid her travel and office costs, the main expenses related to the services she performed for Cybrcollect, satisfies condition 5.

In regard to condition 6. it is not simply the obligation to do re-work without additional pay which is the determining factor, because this obligation is typical as well of piecework employees. See, T & D Coils, UI Hearing No. S9800147MW (LIRC Dec. 15, 1999); Spencer Siding, Inc., UI Hearing Nos. S0300142GB, etc. (LIRC June 2, 2006). Evidence establishing, for example, not only an obligation to do such re-work but an expectation that it will be done, as well as a penalty for not doing so, would satisfy this condition. Here, although there appeared to be an obligation on the claimant's part, as well as an expectation by Cybrcollect, that she would correct any errors she made, the record does not show that any penalty, e.g., a deduction from her earnings, would be imposed if she failed to do so. As a result, condition 6. was not satisfied.

Condition 7. requires that workers receive compensation for the services they perform on a commission, per-job, or competitive-bid basis and not on any other basis. The claimant solicited businesses to utilize Cybrcollect to collect bad checks for them, and received $10 for every bad check collected by Cybrcollect for one of the businesses she successfully solicited. The ALJ appears to have concluded that condition 7. was not satisfied because this arrangement is similar to payment on a piecework basis. The commission disagrees. If, for example, the claimant were paid a set amount by Cybrcollect each time she made a business solicitation on its behalf, this would be comparable to payment on a piecework basis. However, the claimant's arrangement with Cybrcollect is more closely akin to payment on a commission basis and condition 7. is satisfied as a result.

As it relates to condition 8., if the claimant earned more than she expended for travel and office expenses, this could be considered a profit. If the claimant earned less than she expended, this could be considered a loss. The ALJ's reliance upon the claimant's lack of control over her ability to earn a profit is misplaced, and condition 8. is satisfied.

The claimant did not have recurring business obligations or liabilities, i.e., costs of doing business which she would incur even during a period of time she was not performing work for Cybrcollect, and condition 9. is not satisfied.

The record does not show, within the meaning of condition 10., that the claimant had put a significant investment at risk such that there was the potential for real success by growth in the value of the investment, or for failure through loss of the investment. See, Thomas Gronna, The Floor Guys, UI Hearing No. S9900063WU (LIRC Feb. 22, 2000).

To summarize, the record shows that only five conditions are satisfied (1., 2., 5., 7., and 8.). Since Wis. Stat. § 108.02(12)(bm) requires that seven conditions be satisfied in order for a worker to be considered an independent contractor, the satisfaction of only five conditions compels the conclusion that the claimant performed services for Cybrcollect as an employee.

cc: Attorney William G. Skemp

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