ROBERT K JEFFERS, Employee

C R ENGLAND INC, 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:

The FINDINGS OF FACT and CONCLUSIONS OF LAW section is deleted and the following substituted:

From November 2006 through January 2007, the claimant (Jeffers) was trained by the putative employer (England).

Effective February 2, 2007, Jeffers entered into a contract to provide driving services for England. This contract was denominated an independent contractor agreement.

Due to accidents in which Jeffers was involved on April 11 and 14, 2007, England terminated this agreement.

Jeffers initiated a claim for benefits on May 7, 2008, after his discharge from JRD, a restaurant which had employed him since his separation from England. The issue is whether the amounts Jeffers earned performing services for England during the base period for this claim are required, because he performed these services as an employee rather than as an independent contractor, to be treated as base period wages for purposes of computing the amount of his benefit.

Wisconsin Statutes § 108.02 states as follows, as relevant here:

108.02 Definitions. As used in this chapter:

...(4) Base period. "Base period" means the period that is used to compute an employee's benefit rights under s. 108.06...

(4m) Base period wages. "Base period wages" means:

(4m) 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;...

(11) Eligibility. An employee shall be deemed "eligible" for benefits for any given week of the employee's unemployment unless the employee is disqualified by a specific provision of this chapter from receiving benefits for such week of unemployment, and shall be deemed "ineligible" for any week to which such a disqualification applies.

(12) Employee.

(a) "Employee" means any individual who is or has been performing services for pay for an employing unit, whether or not the individual is paid directly by the employing unit, except as provided in par. (b), (bm), (c), (d), (dm) or (dn)....

(c) Paragraph (a) does 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 satisfies 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.

It is undisputed that Jeffers performed services for pay for England during the base period within the meaning of Wis. Stat. § 108.02(12)(a,) and a presumption that he did so as an employee is therefore created. The remaining question then is whether any statutory exceptions would apply to overturn this presumption.

"Trucker" is defined by Wis. Stat. § 108.02(25e) as "a contract operator with a trucking carrier."

The term "contract operator" is defined in Wis. Admin. Code § DWD 100.02(12) as "an individual who contracts to lease a motor vehicle to a carrier for use in the carrier's business."

"Carrier" is defined in Wis. Admin. Code § DWD 100.02(8) as:

(8) "Carrier" means a person engaged in the hauling of passengers or freight by motor vehicle and includes a person engaged as a "common motor carrier," under s. 194.01 (1), Stats., as a "contract motor carrier," under s. 194.01 (2), Stats., or as a "private motor carrier," under s. 194.01 (11), Stats.

The record shows that Jeffers contracted to lease a truck (tractor) to England, in which he held a leasehold interest, for use in England's business; and England operates as a carrier for the hauling of freight. As a result, Jeffers qualifies as a trucker within the meaning of Wis. Stat. § 108.02(25e).

It is appropriate then to analyze whether the exception to the definition of employee stated in Wis. Stat. § 108.02(12)(c) is applicable here, i.e., whether, as a trucker, Jeffers performed his driving services free from England's direction and control, and in an independently established trade, business or profession in which he was customarily engaged.

This determination is governed by Wis. Adm. Code § § DWD 105.03 [direction and control], and DWD 105.04 [independently established business].

Direction and control

Wisconsin Administrative Code § DWD 105.03 provides as follows:

DWD 105.03DWD 105.03 Contract operators; direction and control.

(1) The department shall examine the factors enumerated in this section to determine, both under contract and in fact, whether the contract operator is free from a carrier's direction or control, while the contract operator performs services for the carrier. The department shall determine whether:

(a) The contract operator owns the motor vehicle or holds the vehicle under a bona fide lease arrangement with any person other than the carrier;

(b) The contract operator is responsible for the maintenance of the motor vehicle;

(c) The contract operator bears the principal burden of the motor vehicle operating costs including such items as fuel, repairs, supplies, insurance and personal expenses while on the road;

(d) The contract operator supplies, or is responsible for supplying, the necessary personal services to operate the motor vehicle;

(e) The contract operator determines the details and means of performance, namely, the type of equipment, assignment of driver, loading, routes and number of stops to be made during the haul, as well as starting, completion and elapsed times;

(f) The contract operator may refuse to make a haul when requested by the carrier;

(g) The contract operator may terminate the lease at any time after reasonable notice; and

(h) The contract operator is compensated on a division of the gross revenue or by a fee based upon the distance of the haul, the weight of the goods, the number of deliveries, or any combination of these factors.

(2) If the department determines that all of the factors under sub. (1) (a) to (h) are present in the relationship between the contract operator and the carrier, the contract operator shall be deemed to be free from the carrier's direction and control in the performance of services under s. 108.02 (12) (b) 1., Stats. If one or more of the factors under sub. (1) (a) to (h) are not present in the relationship between the contract operator and the carrier, the department shall consider additional factors of the relationship, both under contract and in fact, including whether:

(a) The contract operator may negotiate with the carrier to determine the method, frequency and regularity of payments made to the contract operator;

(b) The contract operator has the authority to discharge any driver whom he or she employs;

(c) The carrier requires decals, lettering, signs, emblems or other markings on the contract operator's motor vehicle for the purpose of advertising the carrier's name or business;

(d) The carrier requires the contract operator to submit reports;

(e) The carrier requires the contract operator to obey any work rules or policies; and

(f) The carrier requires any deductions from payments owing to the contract operator for federal or state income taxes or taxes under the federal insurance contributions act.

(3) If the contract operator is found to be under the carrier's direction or control under subs. (1) and (2), the contract operator shall be deemed to be an employee of the carrier under s. 108.02 (12) (b) 1., Stats.

Although the record shows that Jeffers satisfied the requirements stated in Wis. Adm. Code § DWD 105.03(1)(b) through (h), it does not show that he met the requirement of (1)(a) that he hold the truck he used to perform driving services for England under a bona fide lease arrangement with an entity other than England.

The director of England's independent contractor division testified that Jeffers did not own the truck (tractor) he used to drive for England, but leased this truck from Horizon Truck Sales and Leasing, an entity separate from England. Jeffers testified, however, that he signed the lease at one of England's facilities and believed that the lease was with England. The ALJ credited Jeffers and the commission agrees, particularly given that England stated in response to question #1 on a department "Employment Status Questionnaire" it completed May 23, 2008 (exhibit #1, Hearing No. 08401585AP), that Jeffers did not own the truck or "hold [it] under a bona fide lease arrangement with any person other than" England.

Since one of the factors stated in Wis. Adm. Code § 105.03(1) is not satisfied, the rule requires that the factors stated in Wis. Adm. Code § 105.03(2) be considered.

The record shows, and England concedes in its responses on the department's "Employment Status Questionnaire" form referenced above, that Jeffers was unable to negotiate with England to determine the method, frequency and regularity of payments made to him within the meaning of (2)(a). In addition, the record shows that England required Jeffers to obey certain of its work rules or policies, including its accident and safety policy, within the meaning of (2)(e).

England failed to sustain its burden to show that Jeffers performed driving services free from England's direction and control, and therefore failed to rebut the presumption that Jeffers performed these services as an employee.

Even if England had shown that Jeffers was free from its direction and control, it did not show that Jeffers performed the subject driving services in an independently established trade, business or profession in which he was customarily engaged.

Independently established business

This aspect of the analysis is governed by Wis. Adm. Code § DWD 105.04, which states as follows:

DWD 105.04 Contract operators; independently established business; customarily engaged.

(1) If the department determines that a contract operator is free from a carrier's direction or control in the performance of services under s. DWD 105.03, the department shall examine the following factors to determine whether a contract operator who performs services for a carrier is performing these services in an independently established business in which the contract operator is customarily engaged. The department shall determine whether:

(a) The contract operator owns the motor vehicle or holds the vehicle under a bona fide lease arrangement with any person other than the carrier;

(b) The contract operator is free to hire another person as a driver in the performance of services for the carrier; and

(c) The contract operator is free to reject hauling a load offered by the carrier.

(2) If the department determines that all of the factors under sub. (1) (a) to (c) are present in the relationship between the contract operator and the carrier, the contract operator shall be deemed to be performing services in an independently established business in which the contract operator is customarily engaged under s. 108.02 (12) (b) 2., Stats. If one or more of the factors under sub. (1) (a) to (c) are not present in the relationship between the contract operator and the carrier, the department shall consider additional factors including whether:

(a) The contract operator's business may provide a means of livelihood that is separate and apart from the livelihood gained from services performed for a particular carrier;

(b) The business would continue if the relationship with the carrier were terminated; and

(c) The contract operator has an ownership interest in a business that the contract operator alone may sell or give away without restriction from the carrier.

(3) If the contract operator is found to be free from the carrier's direction or control but not engaged in an independently established business under subs. (1) and (2), the contract operator shall be deemed to be an employe of the carrier under s. 108.02 (12) (b) 1. and 2., Stats. If the contract operator is found to be free from the carrier's direction or control and engaged in an independently established business, the contract operator shall be deemed to be an independent contractor and not an employe of the carrier under s. 108.02 (12) (b) 1. and 2., Stats.

Although Jeffers was free to hire another driver and to refuse a load, he did not, as discussed above, own the truck he used to drive for England or hold it under a bona fide lease arrangement with an entity other than England within the meaning of 105.04(1)(c).

Moreover, Jeffers did not satisfy any of the factors stated in 105.04(2). When he reported the second accident to England on April 14, 2007, he was directed not to drive the truck but to leave it parked, and someone from England would come to pick it up. Since Jeffers' livelihood as a driver relied upon this truck, which this incident established was not his asset and subject to his control but instead was controlled by England, Jeffers did not have a means of livelihood separate and apart from that gained from services he performed for England within the meaning of 105.04(2)(a); a business which continued once the relationship with England was terminated within the meaning of 105.04(2)(b); or an ownership interest in a business that Jeffers could sell or give away without restriction from England within the meaning of 105.04(2)(c).

The record does not show that Jeffers was free from the direction and control of England, or engaged in an independently established business, and, as a result, by operation of Wis. Adm. Code § § DWD 105.03 and 105.04, Jeffers functioned as an employee of England, not an independent contractor, and the amounts he earned performing services for England during the base period should be factored into the computation of his benefit eligibility.

England argues that the fact that the contract for Jeffers' services provides that he would be performing services as an independent contractor should define his employment status for purposes of determining his eligibility for benefits. However, a claimant's eligibility for unemployment benefits is to be determined by statute, not by the terms of a private agreement. Roberts v. Industrial Comm., 2 Wis. 2d 399 (1957); Knops v. Integrity Project Management, UI Hearing No. 06400323AP (LIRC May 12, 2006)(the intent of the parties is not a condition considered in determining the claimant's status, let alone controlling it).

The decision of the administrative law judge, as modified, is affirmed. Accordingly, the base period wages paid to the claimant by the employer shall be included in the department's computation of the claimant's benefit entitlement.

Dated and mailed September 19, 2008
jeffero . umd : 115 : 1   EE 421

James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner

cc: Mississippi Labor Consultants

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