LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)
STRUCK & IRWIN FENCE INC, Employer
UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Hearing No. S9700192MD, Account No. 243931
Note regarding subsequent history
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 employer is a Wisconsin corporation engaged in the sale and rental of scaffolding equipment. In 1994, it started using the services of Danuta Iwaniuk to perform cleaning services at its business location.
Danuta Iwaniuk reported her income as a cleaner on Federal self-employment income tax forms for the previous tax year. She did her work on her clients' premises. She originally provided the equipment for the job including cleaning supplies, bucket, vacuum cleaner, mop, and rags, but later in some instances used client's supplies and equipment. She performed her services when the building was empty at her own discretion. She requested assistance from friends and relatives as necessary to complete her responsibilities and paid for these services when necessary. She paid her transportation to the work site and her workers' compensation insurance. She had business cards and advertised in the newspaper when she needed work.
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).
Ms. Iwaniuk filed a self-employment tax return for her cleaning business in the preceding year and thereby satisfied the first test of the independent contractor provision. The remaining issue before the commission is whether the employer demonstrated that she met 6 of the 8 factors remaining in Wis. Stat. § 108.02(12)(b).
Ms. Iwaniuk satisfies the first factor by maintaining a separate business with equipment, materials and other facilities. In evaluating this factor the commission considers what is reasonable in a particular case or industry. The employe did her work on her clients' premises since she was a cleaner, so an office would be unnecessary. However the employe indicated that she provided the equipment for the job including cleaning supplies, bucket, vacuum cleaner, mop, and rags.. While the employer currently provides some chemicals, paper towels, garbage bags and vacuum cleaner, the circumstances of her clients vary and she has the equipment and materials which she supplies as needed.
Ms. Iwaniuk also satisfies the second factor. She operates under a verbal open ended contract to perform specific weekly cleaning services for specific amounts of money and she has complete discretion over the means and method of performing her cleaning services. She gets assistance from friends and relatives as necessary to complete her responsibilities and has paid for these services.
Ms. Iwaniuk satisfies the third factor. She incurs the main expenses related to the services that she performs under her contract. She bears many of the costs of the supplies and equipment but not all of them. She pays her transportation to the work site and her workers' compensation insurance. She has business cards and advertises in the newspaper when she needs additional work. Finally she has employed others to help as necessary.
Ms. Iwaniuk satisfies the fourth factor. She is responsible for the satisfactory completion of her cleaning services and is liable for a failure to satisfactorily complete the services. The employe indicated she has been complained to occasionally about her work which she then was obligated to correct.
Ms Iwaniuk also satisfies he fifth factor. She receives compensation for services performed under a contract on a per-job basis and not on any other basis since she is paid per visit each week, the equivalent of a per job basis in this setting. When she decreased her visits from three per week to two visits per week, her payments fell proportionally.
Ms. Iwaniuk does not realize a profit or suffer a loss under her contract to perform services. There is no profit or loss risk under the contract.
Ms. Iwaniuk has recurring business liabilities or obligations arising from her insurance costs and cyclical advertising costs. These satisfy this requirement.
Finally, the success or failure of Ms. Iwaniuk's business depends on the relationship of business receipts to expenditures. This employment is not a hobby. If she hires help, has equipment break down or her insurance goes up, her business could become unprofitable and fail. She satisfies this final factor.
After evaluating the above factors the commission concludes that this individual meets more than the minimum six factors and provides her services as an independent contractor. She runs an independent business and should be excluded from the employer's payroll.
The commission therefore finds that the services of Danuta Iwaniuk were not performed for the employer in employment, and that payments she received are not taxable for unemployment insurance purposes, within the meaning of Wis. Stat. § 108.02(12) and 108.02(26).
The decision of the administrative law judge is reversed. Accordingly, payments made to Danuta Iwaniuk are not taxable for unemployment insurance benefits for the quarter more particularly set fourth in the determination. This matter is remanded to the department to recalculate the employer's correct liability for the quarters at issue, if not otherwise resolved.
Dated and mailed: October 30, 1998
strucir.srr : 178 : 1 EE 410
/s/ David B. Falstad, Chairman
/s/ Pamela I. Anderson, Commissioner
James A. Rutkowski, Commissioner
The commission did not consult with the ALJ prior to reversing. The commission's decision is not based on any differing credibility assessment but arises from a different legal conclusion when applying the law to essentially the same facts.
HOWARD C ANUNSON CPA
SUBY VON HADEN & ASSOCIATES SC
ATTORNEY PETER ZEEH
Note regarding subsequent history:
On November 25, 1998, the Commission set aside this decision, in order to reconsider Ms. Iwaniuk's employment status in 1995 which was prior to the change in the independent contractor statute.
Following reconsideration, another decision was issued in the case on February 26, 1999.
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