KATIE R WILLIAMS, Employee

MTEC, 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 makes the following:

The claimant (Williams) has a Ph.D. in microbiology, and has particular expertise in K-12 science education.

The issue is whether wages earned by Williams for performing certain instructional services were required to be reported by her in claiming benefits because such services were performed as an employee rather than as an independent contractor.

The putative employer, Milwaukee Teacher Education Center (MTEC), a nonprofit, offers a masters degree program in urban education. At all times relevant here, this program was not yet accredited. As a result, although it was an MTEC program, classes in this program were provided under the auspices of certain post-secondary institutions. In the fall of 2006, this institution was Marian College, and, in the spring of 2007, Mount Mary College.

Williams instructed one of the core courses in this program during the fall of 2006 and the spring of 2007. She was selected as an instructor by MTEC, which established the class schedule after consulting with Williams, and to which Williams submitted her syllabus/instruction plan. The class was held in the spring of 2007 in a Mount Mary College facility. Williams independently determined the instructional methods to be utilized, and independently assessed and graded the students. Williams submitted student grade reports to Marian/Mount Mary College. The students received credit for the class through Marian/Mount Mary College.

In the fall of 2006, Williams' contract was with Marian College for $3,600. In the spring of 2007, Williams' contract was with Mount Mary College for $2,400 and with MTEC for $1,200.

MTEC administers several education programs, including an alternative teacher certification program, and a leadership program for teachers in the public school system.

During the relevant time period, Williams entered into contracts with twenty school districts to teach a three-hour science lab program she had developed for K-12 students. Prior to October of 2006, she had been employed as an instructor by Cardinal Stritch University, the University of Wisconsin-Whitewater, and Waukesha County Technical College; and by the Medical College of Wisconsin to present science education programs to K-12 students.

The week at issue here is week 16 of 2007, the week ending April 21.

MTEC is the appellant. The commission notes that the sole issue under consideration here relates to Williams' eligibility for benefits, not MTEC's liability for contributions. In addition, MTEC, in its argument, appears to be under the impression that the claim initiated by Williams on April 27, 2007, is also at issue. It is not. The matter at issue relates instead to the claim initiated by Williams on October 13, 2006, and, more particularly, to whether Williams is required, as of week 16 of 2007, as a part of that claim, to report wages earned pursuant to her contracts with MTEC/Mount Mary College in filing her weekly benefit claims.

The analysis of the issue under consideration here is a multi-step process. The first step is to determine whether Williams was an "employee" within the meaning of Wis. Stat. § 108.02(12)(a), which provides as follows, as relevant here:

"Employee" means any individual who is or has been performing services for an employing unit, in an employment, whether or not the individual is paid directly by such employing unit;...

"Employment" is broadly defined by Wis. Stat. § 108.02(15) as service performed by an individual for pay, subject to certain exclusions not applicable here. There is no question that MTEC and Mount Mary College are employing units, and that Williams is an individual who performed services for pay.

A more difficult question is whether Williams performed the subject services for MTEC or for Mount Mary College. Although the identity of the employing unit often does not matter for purposes of the employee/independent contractor analysis, it does here. MTEC is organized as a nonprofit and subject, as a result, to the provisions of Wis. Stat. § 108.02(12)(c). The record does not indicate whether Mount Mary College is a nonprofit or is instead subject to the provisions of Wis. Stat. § 108.02(12)(bm). See, Dexter-Dailey v. Independent Disability Services, Inc., UI Hearing No. 07002206JV (LIRC Nov. 2, 2007).

As the commission stated in Dexter-Dailey, supra., citing Acuity Mutual Ins. Co. v. Olivas, 298 Wis.2d 640, 726 N.W.2d 258 (2007), the most important consideration in resolving questions as to the identity of the employing unit is the presence or absence of a right to control the details of the work. Here, even though Williams had contracts with both MTEC and Mount Mary College, MTEC developed and managed the urban education master's program, selected Williams to teach one of the program's core courses, and was the entity to which Williams submitted the course syllabus/instruction plan. In contrast, Mount Mary provided a classroom and an administrative mechanism for awarding credit to the program's students. MTEC's control over the substantive components of the program, and of Williams' relationship with the program, rendered MTEC the entity for which the services at issue here were performed.

MTEC argues that Williams is required to be considered an independent contractor because that is what her contract with MTEC specifies. However, Williams' status is determined by statute, not by the terms of a private agreement. Roberts v. Industrial Comm., 2 Wis. 2d 399 (1957). See, also, Knops v. Integrity Project Management, UI Hearing No. 06400323AP (LIRC May 12, 2006).

As discussed above, since MTEC is a nonprofit, Wis. Stat. § 108.02(12)(c) governs. This provision states:

(c) Paragraph (a) shall not apply to an individual performing services for a government unit or nonprofit organization, or for any other employing unit in a capacity as a logger or trucker if the employing unit satisfied the department:

1. That such individual has been and will continue to be free from the employing unit's control or direction over the performance of his or her services both under his or her contract and in fact; and

2. That such services have been performed in an independently established trade, business or profession in which the individual is customarily engaged.

The first question presented under § 108.02(12)(c) is whether Williams has been and will continue to be free from MTEC's control or direction over the performance of her services both under her contract and in fact.

Williams was required under her agreement with MTEC to prepare a course syllabus and submit it to MTEC, to meet with students, to monitor the completion of assignments, and to complete grade reports

The commission held in Eichman v. Wisconsin Technical College System Foundation, UI Hearing No. 06003528JV (LIRC Jan. 18, 2007), in which the claimant performed instructional services under contract with a nonprofit educational entity, that this entity's requirement that the claimant conform his conduct to certain standards, "would be typical, whether stated or implied, for those providing unsupervised classroom instruction to others whether as an employee or as an independent contractor." That same rationale would apply here, i.e., whether an instructor was an employee or an independent contractor, she would be expected to develop a course syllabus/instruction plan for the sponsoring program/institution, to meet with students, and to monitor and grade assignments/exams. These are basic components of any instructional setting. Williams was, however, free to independently develop the course syllabus/instruction plan, utilize whatever instructional techniques she chose, develop examinations and other assessment tools, and grade the students' accomplishments. These factors establish her freedom from MTEC's direction and control within the meaning of Wis. Stat. § 108.02(12)(c)1.

The next question then is whether Williams' services were performed in an independently established trade, business or profession in which she was customarily engaged.

This condition is properly analyzed in light of the five interrelated factors set forth in Keeler v. LIRC, 154 Wis. 2d 626 (Ct. of App. 1990):

1. Integration -- whether the services performed directly relate to the activities conducted by the company retaining those services.

2. Advertising or holding out -- whether the alleged employee advertises or holds out to the public or a certain class of customers the existence of its independent business.

3. Entrepreneurial risk -- whether the alleged employee has assumed the financial risk of the business undertaking.

4. Economic dependence -- whether the alleged employee is independent of the alleged employer, performs services and then moves on to perform similar services for another.

5. Proprietary interest -- whether the alleged employee owns various tools, equipment, or machinery necessary in performing the services involved, but also including whether the alleged employee has proprietary control, such as the ability to sell or give away some part of the business enterprise.

The Keeler factors are not to be mechanically applied. Rather, the weight and importance of each factor varies according to the specific facts of each case. The five factors should be applied in a manner consistent with the purpose of the statute. i.e., "to effect unemployment compensation coverage for workers who are economically dependent on others in respect to their wage-earning status." Larson v. LIRC, 184 Wis.2d 378, 391 (Ct. App. 1994); Ristau v. Fox Valley Symphony Orchestra Assoc., Inc., UI Hearing No. 06401057AP (LIRC Aug. 23, 2006).

The record shows Williams' services were integrated into MTEC's business. MTEC developed and implemented instructional programs, and Williams instructed a course within one of those programs.

Although the record does not establish that Williams advertised her services, it would be reasonable to infer from the fact that she performed instructional services for 20 different school districts during the relevant time period that she held herself out to the education community as a professional instructor. See, Eichman, supra; Ristau, supra.

Although the entrepreneurial financial risk required of the claimant was small given the nature of the services she was providing, the record shows that she did assume the only risk, i.e., she transported herself at her expense to the instruction locations. See, Eichman, supra. Although Williams did not bear the cost of the teaching facility or of books and other teaching materials, this is not the proper focus, i.e., the "business undertaking" at issue here is not a school but instead the provision of professional instructional services.

As noted by the court in Larson, supra, economic dependence is not a matter of how much money an individual makes from one source or another, but refers to the survival of the individual's independently established business if the relationship with the putative employer ceased to exist. Larson at 392. Here, if Williams' relationship with MTEC ceased to exist, her business would continue. Likewise, the ability of Williams to work for others, as well as the fact that she did work for others, further establishes the separateness of her business from MTEC. See, Eichman, supra.

Finally, as to proprietary interest, Williams does not in fact have anything she alone could sell or transfer as an ongoing concern, such as goodwill. However, as was noted by the court in Larson, supra, the proprietary interest factor is not the sole test of whether an individual is engaged in an independently established business. The court stated, "We do not read the supreme court to foreclose 'independently established business' status from all individuals whose businesses depend on their own particular talents and not upon an extensive personnel pool or equipment inventory. Business based on the provision of creative services are common in the film industry. [Cite omitted]. Thus, even though the facts do not show that the crew members could sell their businesses, we consider that factor in light of film industry practices." Larson at 395. As in Larson, Williams' business depended upon her particular knowledge and talents as an instructor, not upon a personnel pool or equipment inventory.

Considering the Keeler factors set forth above, on balance, Williams' services were performed in an independently established business in which she was customarily engaged.

Since Williams meets both the direction and control requirement and the independently established business requirement, Williams did not perform the subject services as an employee within the meaning of Wis. Stat. § 108.02(12).

The decision of the administrative law judge is reversed. Accordingly, the services at issue do not constitute employment for unemployment benefit purposes and the claimant is not required to report wages from such services as they are earned.

Dated and mailed November 21, 2007
willika . urr : 115 : 1   ER 453 ER 460  EE 409 EE 412  EE 413

/s/ James T. Flynn, Chairman

Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner

NOTE: The commission did not confer with the administrative law judge before reversing his decision, because its reversal was not based upon a differing view as to the credibility of witnesses, but instead upon a differing interpretation of the relevant law.

cc: Attorney Autumn M. Kruse

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