BARBARA J. WAEDEKIN, Employee
COUNTY OF WINNEBAGO, 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:
On page 5 of the ALJ's decision, delete the sentence, "There was also no competent evidence presented to establish any entrepreneurial risk on the part of the claimant, such as an investment in a medical clinic or private practice", and substitute therefor the following:
The claimant assumed some entrepreneurial risk in the form of being required to provide and pay for her own malpractice insurance, which it can be inferred amounted to a significant expense, but there was no competent evidence presented to establish that the claimant assumed any other entrepreneurial risk such as an investment in a medical clinic or private practice.
The decision of the administrative law judge, as modified, is affirmed. Accordingly, the wages paid to the employee by the employer/appellant, as stated in the decision of the administrative law judge, shall be included in the department's computation of the employee's base period wages for computing potential benefit eligibility.
Dated and mailed September 12, 2008
waedeki . umd : 110 : 1 EE 420 ; EE 411 ; PC 714.03
/s/ James T. Flynn, Chairperson
/s/ Robert Glaser, Commissioner
/s/ Ann L. Crump, Commissioner
This case concerns a psychiatrist, Barbara Waedekin, who performed services for the Winnebago County Department of Social Services, in the form of providing psychiatric care to indigent residents of Winnebago County. The ultimate issue is whether Waedekin performed those services as an employee of the County, or as an independent contractor.
The issue arose in the context of Waedekin's unemployment insurance benefit claim, which created the need to determine whether the amounts paid to her for these services should be included in her base period wages for purposes of determining her total potential benefit eligibility. The Department of Workforce Development's determination held that Waedekin was an employee and that consequently the amounts paid to her by Winnebago County in her base period were base period wages usable to determine her benefit entitlement. An ALJ upheld this determination, and the County has petitioned for commission review.
In addition to the underlying substantive (employee/independent contractor) issue, the case presents issues involving both the burden of proof and the fairness and adequacy of the proceedings.
Burden of proof - Winnebago County argues that it presented "prima facie evidence so as to meet its initial burden of proof" that Waedekin was an independent contractor. It argues that it thus established a "prima facie case" to that effect, shifting the burden of proof to Waedekin to prove that she was an employee, and that since Waedekin did not appear at the hearing she failed to meet this burden of proof which passed to her, thus requiring a decision in its favor.
Winnebago County has cited no authority supporting the notion that a prima facie case method of proof such as the one it describes is applicable to determinations of whether an individual is an employee or an independent contractor, and the commission knows of no such authority. On the contrary, the well-established law as to the proper allocation of burdens of proof in cases presenting employee/independent contractor issues is that the department bears an initial burden of proof on the threshold question of whether the person "perform[ed] services for" the putative employer within the meaning of Wis. Stat. § 108.02(12)(a), Keeler v. LIRC, 154 Wis.2d 626, 631, 453 N.W.2d 902 (Ct. App. 1990), and that if that is established, the burden shifts to the putative employer to establish that the applicable exceptions (those in either subsection (bm) or (c) of § 108.02(12), depending on the circumstances) are met. See, e.g., Princess House v. DILHR, 111 Wis. 2d 46, 64-66, 330 N.W.2d 169 (1983); Star Line Trucking Corp. v. DILHR, 109 Wis. 2d 266, 325 N.W.2d 872 (1982); Keeler v. LIRC, supra; Goldberg v. DILHR, 168 Wis. 2d 621, 625, 484 N.W.2d 568 (Ct. App. 1992); Larson v. LIRC et al., 184 Wis. 2d 378, 385-86, 516 N.W.2d 456 (Ct. App. 1994). The commission has repeatedly noted and applied that allocation of burdens of proof, not only in status (tax liability) cases, but also in benefit eligibility cases where the employee/independent contractor issue must be resolved in order to decide how to treat services provided for pay during the claimant's base period (Waedekin's is such a case) or during a claimant's benefit year. (1)
Notwithstanding that the Department did not enter an appearance at the hearing, the commission is satisfied that the threshold condition, that Waedekin "perform[ed] services for" Winnebago County within the meaning of Wis. Stat. § 108.02(12)(a), should be considered to have been established. For one thing, this was effectively conceded by the County. At the beginning of the hearing, counsel for the County stated that the County took the position that Waedekin "provided services to us under contract" but was free from the County's direction and control and also performed her services in an independently established trade, business or profession. In addition, the County's brief to the commission stated that "Waedekin is a licensed psychiatrist who performed services as a psychiatrist for two years for the Winnebago County Department of Human Services in relationship to the delivery of mental health services to indigent County residents". The commission has also previously held that an individual providing care to a needy individual for whom a county has an obligation to see that such care is provided, at the behest of and in the pay of that county, can be considered to be performing those services "for" that county, within the meaning of Wis. Stat. § 108.02(12)(a). Community Partnerships, Inc. (LIRC, Feb. 22, 2008), citing County of Door (LIRC, March 28, 2007), Dane Co. v. LIRC and Welcome (Dane Co. Cir. Ct., No. 82CV4351, May 15, 1983). Thus, it is clear that Waedekin provided services for the County for pay, within the meaning of Wis. Stat. § 108.02(12)(a).
Given the foregoing, the question becomes whether the County satisfied the burden which passed to it, to prove that the applicable exceptions are met. Because this case involves a public employer, the applicable set of potential exceptions to the presumption of employee status are those in § 108.02(12)(c). (2)
The ALJ found that the "freedom from direction and control" test in (12)(c)1. was established, but that the "independently established trade, business or profession" test in (12)(c)2. was not. As to that, the ALJ found that none of the five factors identified as relevant in
Keeler v. LIRC, 154 Wis.2d 626, 631, 453 N.W.2d 902 (Ct. App. 1990) were established. For the following reasons, the commission agrees with the ALJ's ultimate conclusion that Waedekin was not shown to have provided her services in an "independently established trade, business or profession".
Integration - In its brief, the County asserts that "the [ALJ] found that the County had met its burden with regard to [this] factor". The County then notes, however, that the ALJ found that Waedekin's services were "directly related to the delivery of mental health treatment services conducted by the appellant" and were "integrated into the appellant's mission to a great degree". It appears that the County may be under the impression that when an individual's services are found to be integrated into the putative employer's business, this factor is met, and weighs in favor of a conclusion that the individual is an independent contractor. If that is indeed the County's impression, it has it backwards; integration of an individual's services with the business of a putative employer supports a conclusion that the individual is an
employee of that employer. See, e.g.,
Margoles v. LIRC, 221 Wis. 2d 260, 270, 585 N.W.2d 596 (Ct. App. 1998) (where physicians' medical services were directly related to putative employer's business of providing medical services to those patients the integration factor weighed in favor of the physicians being categorized as employees). The ALJ's finding that Waedekin's services were integrated into the County's business supports the conclusion that Waedekin was the County's employee.
Advertising / holding out - The County argues that the traditional method of psychiatrists' advertising services as an independent contractor to various clinics and agencies was by word of mouth, rather than by advertising, and that given the professional services nature of the business traditional advertising would not be appropriate. This is really beside the point, for two reasons. First, holding out other than through conventional "advertising" is already contemplated by this factor, and second, and more important, there was no evidence that this particular individual engaged even in any kind of holding out, either by word of mouth or in any other fashion. There is simply no basis on which it could be concluded that this factor was satisfied.
Entrepreneurial risk - The ALJ concluded that there was no competent evidence presented to establish any entrepreneurial risk on Waedekin's part, specifically noting the lack of evidence of an investment in a medical clinic or private practice. While it is true that there was no evidence of any such investment, the County argues that the existence of entrepreneurial risk was established by the provision in the contract between it and Waedekin requiring her to provide her own malpractice insurance and to hold the County harmless for any liability on her part. The commission agrees. The contracts (Exs. 1-3) do so require, and a copy of a coverage declaration (Ex. 4) shows that Waedekin did obtain such insurance. It is reasonable to infer that such medical malpractice insurance coverage would have involved significant expense. In addition, the risk of exposure to claims exceeding the policy limits can also be inferred to be at least potentially significant. Considering this, the commission believes that the "entrepreneurial risk" factor can be considered to have been satisfied.
Economic (in)dependence - The County argues that "there was a great deal of testimony presented as to the fact that [County witness] Mr. Saari believed that at the time the contract was in force between Winnebago County and Dr. Waedekin, that Dr. Waedekin [w]as performing similar contractual services to other entities, specifically, the State of Wisconsin and Appleton Psychiatric Consultants". The ALJ characterized this testimony as "speculation" and decided that it was not sufficient to meet the County's burden. The commission agrees. The County witness who provided the testimony the County relies on here -- and it was actually Dr. Daehn rather than Mr. Saari -- testified that when the County first contracted with Waedekin, she was providing services for Appleton Psychiatric Consultants, a private mental health provider, and that he "believed" she had been working at Taycheedah Prison as well. There is a real question of whether Dr. Daehn's testimony as to these facts was competent; there is no foundation in his testimony as to how he knew these things. In addition, his testimony only goes to what Waedekin had been doing at the time she started providing services for the County, not what she was doing while she did so. While it might be inferred from his testimony that Waedekin would "with some frequency refer people from her other places of employment", that she was engaged in providing other services, this small bit of evidence provides no basis for making any kind of quantitative assessment of how much she was making from such other services, and therefore it provides no basis for concluding that she had real economic independence vis-…-vis the County. The lack of specific evidence about Waedekin's activities precludes a finding that this factor was satisfied.
Proprietary interest - In the section of its brief in which it argues that there was evidence establishing the foregoing factors, the County conspicuously omits any argument that the fifth
Keeler factor ("proprietary interest") was shown to have been established. The commission agrees with the ALJ that there was no evidence presented to show that the claimant had a proprietary interest in a medical practice or other enterprise associated with her profession as a psychiatrist that she could sell or give away.
Application of the Keeler factors -- The Keeler factors are not strict tests but instead guidelines, to be analyzed in light of the public policy of more fairly sharing the economic burdens of unemployment for those economically dependent on another, not those who pursue an independent business. The weight given to the various factors and the importance of each varies according to the specific facts of each case.
Keeler, 154 Wis. 2d at 634. While in this case one factor consistent with independent contractor status (entrepreneurial risk) was present, the other four factors were clearly not. Considered overall, the application of
Keeler here requires a conclusion that the claimant was not an independent contractor, but an employee.
Fairness and adequacy of the proceedings - Perhaps in recognition of the factual weakness of its case, Winnebago County raise what is in effect an argument in the alternative, that Waedekin's failure to appear at the hearing placed it in an unfair position when it came to trying to prove that case. Noting that much of the best evidence bearing on the "independently established" question would have been available through Waedekin herself, it asserts that it made good faith efforts to ensure her presence at the hearing by attempting to serve her with a subpoena, but that she "avoided service". It contends that, even if the burden of proof was not shifted to Waedekin by the evidence it presented, a fair ruling could not be made in the case without Waedekin's appearance. Citing Wis. Stat. § 108.09(4)(e), the provision governing non-appearance by respondents, it asserts that the ALJ "should have ordered the Respondent's appearance, and if necessary, asked the Court for an attachment for the personal appearance of the Respondent", and that it was "effectively deprived of judicial due process" by the ALJ's failure to do so.
It does appear that the County made an effort to get Waedekin to the hearing, contracting with a professional process server to get Waedekin served with a subpoena. The County filed with the ALJ an affidavit of attempted service indicating that the process server attempted to serve Waedekin at her residence on the evening of Sunday, April 13, which was three days before the scheduled hearing, and that "no one will answer the door". It is also clear that Waedekin knew about the hearing and consciously decided not to attend; a note in the file indicates that she called the department and indicated that she was aware of the hearing and would not attend it.
However, the circumstances here do not warrant granting the County further hearing, because the County failed to follow up on the difficulty it was confronted with by actually asking for a continuance of the hearing.
According to the County's brief, and also as indicated by the FAX transmission information at the top of the affidavit of attempted service, the County knew by at least the day prior to the scheduled hearing that the efforts to serve Waedekin with a subpoena had been unsuccessful, but there is no evidence that it contacted the department at any time prior to the hearing to ask for a continuance to allow it more time to serve Waedekin.
While the County complains in its brief that the ALJ "should have ordered the Respondent's appearance, and if necessary, asked the Court for an attachment for the personal appearance of the Respondent", this complaint rings hollow when considered against the fact that at the hearing the County never asked the ALJ to do anything of the sort. Nor did it ask the ALJ for a continuance, or in any other fashion raise the argument it is now making based on the failure of Waedekin to appear at the hearing.
The County's argument regarding Wis. Stat. § 108.09(4)(e) is without merit. While this section does apply to situations in which a respondent has failed to appear at a hearing, its specific (and sole) applicability in that regard is to such cases in which that non-appearing respondent "delivers or transmits to the department a written explanation for nonappearance" which is received before a decision is issued (subs. (e)2.) or within 21 days after a decision is issued (subs. (e)3.) The provision is clearly intended to deal with situations in which the non-appearing respondent contacts the department, making a claim of asserted good cause for having missed the hearing, and seeking relief. This did not happen here. The provision is simply inapplicable. The statutory and rule provisions which would be applicable, are Wis. Stat. § 108.09(4)(b), which indicates that at the discretion of the department or the appeal tribunal the hearing may be continued, adjourned or postponed, and Wis. Admin. Code § DWD 140.08, governing postponement of hearings. Significantly for the issue raised here, § DWD 140.08(1) provides that a party who requests a postponement of a hearing shall make the request known to the hearing office "as soon as the party becomes aware that a postponement is necessary" and that "unreasonable delay in requesting a postponement may be the basis for denial of the request". Here, as described above, Winnebago County knew in advance of the hearing that it had not been successful in serving Waedekin with a subpoena, and it should under § 140.08(1) have promptly requested a postponement at that point.
cc: Attorney John A. Bodnar
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