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

ROGER G WEGER, Employee

RURAL MUTUAL INSURANCE CO, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 07607809MW


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 claimant performed services during the base period in an employment. This matter is remanded to the department to determine whether the claimant performed these services for the putative employer as an employee or as an independent contractor.

Dated and mailed April 25, 2008
wegerro . usd : 115 : 1 ET483.07   PC 749

/s/ James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner

MEMORANDUM OPINION


Roger Weger (Weger), the claimant, worked more than twenty years as an insurance agent for Rural Mutual Insurance Company (Rural). Rural terminated the relationship effective October 25, 2007.

Weger filed a claim for benefits on October 31, 2007.

The issue is whether the payments Weger received from Rural for services he performed in 2006/2007 are base period wages to be included in computing the amount of his benefit. The issue does not relate to Rural's liability for contributions.

As defined in Wis. Stat. § 108.02(4m)(a), base period wages means, "All earnings for wage-earning service which are paid to an employee during his or her base period as a result of employment for an employer."

The first question then is whether Weger was performing services for Rural in an employment. Subject to certain exceptions, an "employment" is defined by Wis. Stat. § 108.02(15)(a) as "any service...performed by an individual for pay." It is undisputed that Weger performed services for Rural for pay during the base period.

Rural argues, however, that the exception set forth in Wis. Stat. § 108.02(15)(k)6. is applicable here. This statutory provision states as follows:

(k) "Employment" as applied to work for a given employer...does not include service:

6. By an individual for a person as an insurance agent or an insurance solicitor, if all of the service performed as an insurance agent or solicitor by the individual for the person is performed for remuneration solely by way of commissions; (emphasis added)

The record shows that, although Weger was paid by Rural during 2006/2007 primarily based upon commissions he earned from policies he sold, Weger also received three monthly "minimum production bonus" payments of $250 each for the first quarter of 2007.

Weger's agreement with Rural (Exhibit #1) provides as follows on page 14 in regard to such minimum production bonus payments:

c. Minimum Production Bonus

    Each month an agent will earn an additional $250.00 commission if:

1. For the rolling 12 months the agent has new Rural Mutual premium production of at least $12,000, and:

2. The agent's principal business office is a business office approved by the Company in accordance with guidelines established by the Company.

Although the agreement delineates this $250 payment as a "commission," the commission concludes that it is not.

In Welsh v. Advanced Planning, Inc., UI Hearing No. 03004131MD (LIRC October 28, 2004) LIRC clarified that a commission in this context is "a percentage of money received from sales," and that "...the Wisconsin Legislature intentionally left out overrides, bonuses, and differentials as a form of remuneration for insurance agents" in Wis. Stat. § 108.02(15)(k)6.

In Geib v. Mutual of Omaha, UI Hearing No. 92005533FL (LIRC Sept. 29, 1993), the commission held that the use of the word "solely" in relation to the receipt of commissions in Wis. Stat. § 108.02(15)(k)6. means that the Legislature intended the statute to be strictly construed. See, also, Prosch v. Bankers Life & Casualty, UI Hearing No. 05001155MD (LIRC Nov. 8, 2005).

Here, the minimum production bonuses awarded to Weger in each of the first three months of 2007 were not calculated as a percentage of sales, i.e., as a commission, but instead as a $250 lump sum once a certain sales level was achieved. As a result, the remuneration Weger received from Rural did not consist solely of commissions, and the exclusion stated in Wis. Stat. § 108.02(15)(k)6. does not apply.

There is no other statutory exception arguably applicable here. As a result, Weger performed services for Rural in an employment during the base period.

The next question would then become whether Weger did so as an employee or as an independent contractor.

Unfortunately, in her decision, the ALJ simply reversed the department determination, apparently failing to recognize that the analysis of the underlying base period wages issue now required review of the employee/independent contractor question. As a result, the commission has remanded this matter to the department for it to determine whether the claimant performed services for Rural during the base period as an employee or as an independent contractor.

In its petition, Rural requests oral argument pursuant to Wis. Adm. Code § LIRC 1.08, and review of a transcript of the hearing before the ALJ in addition to review of the synopsis in accordance with Wis. Adm. Code § LIRC 1.045.

Wis. Adm. Code § LIRC 1.08 gives the commission discretion to grant oral argument "if it determines that an issue would be more clearly presented by oral argument." Oral argument would not provide such additional clarity here.

Wis. Adm. Code § LIRC 1.045 enables a party to obtain a copy of the hearing synopsis, so does not actually relate to Rural's request for review of a transcript of the hearing as well as the synopsis.

Wis. Adm. Code § LIRC 1.04 states as follows:

LIRC 1.04 Review. Review by the commission is on the record of the case including the synopsis or summary of the testimony or other evidence presented at the hearing, as prepared by the department of workforce development, by the commission, or by an outside contractor, from a tape recording of the hearing or from notes taken at the hearing by the administrative law judge. The commission may also consider the hearing tapes or a transcript of the hearing testimony. Review shall be based on the transcript if a transcript was prepared prior to issuance of the administrative law judge's decision and the administrative law judge used the transcript in arriving at the decision, or if a party shows to the commission that a synopsis is not sufficiently complete and accurate to fairly reflect the relevant and material testimony and other evidence taken.

The file in this matter does not show, nor does Rural allege, that a transcript was prepared upon which the ALJ relied in arriving at her decision. Nor does Rural contend that the synopsis prepared by the department was not sufficiently complete or accurate. As a result, there is no reason for the commission to review a transcript of the hearing, in addition to the review of the synopsis it has already completed, in order to comply with this code provision.

cc: Attorney Norman D. Farnam


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