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


THOMAS E SCHROEDER, Employe

SOUTHEASTERN BUILDERS INC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 98002066WT


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 the applicable law, records and evidence in this case, the commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The claimant provided services as a siding applicator, beginning in November 1995, for the employer, a home builder. His last day of work was around February 20, 1997, which was the date of his last bill to the employer.

Department records show that the claimant applied for unemployment benefits in week 2 of 1998. Thereafter, the department determined his base period, benefit year, benefit rate, and maximum benefit amount totaling $4,962.00, including in that monetary computation the amounts he was paid by the employer. During his applicable benefit year he was paid benefits totaling $4,962.00.

The employer did not control the claimant's work schedule other than to advise him when a home was ready for siding. He provided his own hand tools. The employer provided all materials. His pay was a rate he had negotiated with the management for the employer, using a form that identified himself as "Spectrum Improvements." He notified the employer that he did not have anyone working for him so that he did not have to provide evidence of Worker's Compensation Insurance. The employer paid him at the negotiated rate, without deductions for taxes or social security. At the end of each year, he was provided a form 1099.

The issue to be decided is whether the claimant performed services for the named employer as an employe or as an independent contractor.

A two-step analysis is used to determine whether an individual is an employe. Goldberg v. DILHR, 168 Wis. 2d 621, 625 (Ct. App. 1992). The first step is to determine whether the individual has been performing services for an employing unit, in an employment. Wis. Stat. § 108.02 (12)(a). An "employment" is "any service . . . performed . . . for pay." Wis. Stat. § 108.02 (15)(a). If this test is met, then (with exceptions not applicable here) the burden shifts to the employer to satisfy the department that:

1. The individual:

a. Holds or has applied for an employer identification number with the federal internal revenue service; or

b. Has filed business or self-employment income tax returns with the federal internal revenue service based on such services in the previous year; and

2. The individual meets 6 or more of the following conditions:

a. The individual maintains a separate business with his or her own office, equipment, materials and other facilities.

b. The individual operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means and method of performing the services.

c. The individual incurs the main expenses related to the services that he or she performs under contract.

d. The individual is responsible for the satisfactory completion of the services that he or she contracts to perform and is liable for a failure to satisfactorily complete the services.

e. The individual receives compensation for services performed under a contract on a commission or per-job or competitive-bid basis and not on any other basis.

f. The individual may realize a profit or suffer a loss under contracts to perform services.

g. The individual has recurring business liabilities or obligations.

h. The success or failure of the individual's business depends on the relationship of business receipts to expenditures.

Wis. Stat. § 108.02 (12)(a), (b).

Evidence introduced at the hearing established that the claimant did perform services for the named employer and received payment for such services. Therefore, the named employer must establish that such services were performed as an independent contractor rather than an employe. The named employer has not done so. A mandatory requirement, as reflected above, is that the services at issue be performed by an individual who holds or has applied for an employer identification number or has filed business or self-employment income tax returns with the federal internal revenue services based on such services. The employer had no evidence that either condition had been satisfied. It is not enough that an individual "should have" filed a business income tax return, the statute asks whether it was in fact done. There was no evidence introduced by the named employer to establish that the claimant had filed such returns.

The commission further determines that even if a mandatory factor had been satisfied, the named employer has not met six of the eight conditions contained in Wis. Stat. § 108.02(12)(b)2. There was no evidence that the applicant had an office, the named employer appeared to incur the main expenses of the business as it paid for the materials. The evidence did not establish that the claimant could realize a profit or suffer a loss under the contract or had recurring business liabilities or obligations, or that the success or failure of his business depended on the relationship of business receipts to expenditures.

The commission therefore finds that the claimant performed services for the named employer as an employe in an employment, and that as of week 2 of 1998, he was required to report income received for services he performed for the employer to the department as wages, within the meaning of Wis. Stat. §§ 108.02(12), 108.02(13), and 108.02(26).

DECISION

The decision of the administrative law judge is reversed. Accordingly, the wages paid to the employe by the employer shall be reported to the department as they are earned. There is no overpayment with respect to this issue.

Dated and mailed: September 25, 1998
schroth.urr : 132 : 1 EE 410 EE 410.03  EE 410.05

 /s/ David B. Falstad, Chairman

/s/ Pamela I. Anderson, Commissioner

/s/ James A. Rutkowski, Commissioner

MEMORANDUM OPINION

The commission did not consult with the administrative law judge regarding witness credibility and demeanor. The commission's reversal is not based on a different impression of witness credibility or demeanor but is done as a matter of law. There was no evidence to support the administrative law judge's findings that a mandatory factor had been satisfied. Therefore, the evidence did not support a finding that the claimant performed services for the employer as an independent contractor.

NOTE: This decision 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 this claimant.

cc:
ATTORNEY MICHAEL M KRILL

GREG FRIGO DIRECTOR
BUREAU OF LEGAL AFFAIRS


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