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

LEONORA C KELLY, Employee

SPEEDMARK, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 08201486EC


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:

In the paragraph beginning on the bottom of page 3 and continuing onto the top of page 4 of the decision, the penultimate sentence ["The second part of the test was also not met because the claimant was told by Speedmark when she had to perform her services and how to do them by filling out a required form."] is deleted.

DECISION

The decision of the administrative law judge, as modified, is affirmed. Accordingly, the wages paid to the employee by the employer, totaling $120, shall be included in the department's computation of the employee's base period wages for purposes of computing the amount of benefits to which she is entitled.

Dated and mailed December 23, 2008
kellyle . umd : 115 : 1   EE 410

/s/ James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner

MEMORANDUM OPINION


The putative employer (Speedmark) collects certain types of data for its clients, including but not limited to that gathered by mystery shoppers and inventory counters.

The claimant (Kelly) performed services for Speedmark during 2007 and 2008 as an inventory counter.

Kelly initiated a claim for benefits in week 28 of 2008.

The issue is whether the amounts earned by Kelly during the base period for performing services for Speedmark are required to be factored into the computation of the amount of benefits to which she is entitled.

The commission notes that, even though Speedmark is the appellant, the outcome does not directly affect Speedmark's liability for contributions, only the amount of benefits to which Kelly is entitled.

The record reflects that Kelly, within the meaning of Wis. Stat. § 108.02(12)(a), performed services for pay for Speedmark and, as a result, a presumption that she did so as an employee is created. This presumption can be rebutted if the evidence of record shows that Kelly satisfied at least seven of the ten conditions set forth in Wis. Stat. § 108.02(12)(bm). See, Dane County Hockey Officials, UI Hearing No. S9800101MD (LIRC Feb. 22, 2000); Quality Communications Specialists, Inc., UI Hearing Nos. S0000094MW, etc. (LIRC July 30, 2001).

The record does not show that Kelly held or applied for a federal employer identification number (FEIN) as required by condition 1.

Condition 2. requires that the individual have filed a business or self-employment tax return. It is undisputed that Kelly has not done so, and condition 2. is not satisfied as a result.

The focus of condition 3. is upon determining whether a separate business, i.e., an enterprise created and existing separate and apart from the relationship with the putative employer, is being maintained with the individual's own resources. See, Princess House, Inc. v. DILHR, 111 Wis. 2d 46, 330 N.W. 2d 169 (1983); Larson v. LIRC, 184 Wis. 2d 378, 516 N.W. 2d 456 (Ct. App. 1994); Lozon Remodeling, UI Hearing No. S9000079HA (LIRC Sept. 24, 1999). In Quality Communications Specialists, Inc., supra, the commission clarified that all parts of the test articulated in condition 3. must be met in order for the employer to satisfy its burden.

Kelly does not have a home office, or even a separate space in her home dedicated to a business purpose. In addition, Kelly does not perform similar services for any other entity, a circumstance generally inconsistent with the existence of a separate business. See, Prince Cable, Inc., UI Hearing No. S9900227MW (LIRC Feb. 23, 2001). The record does not show, and Speedmark concedes, that condition 3. is not satisfied.

To satisfy condition 4., it must be established that Kelly operates under contracts to perform specific services for specific amounts of money, and that, under these contracts, she controls the means and method of performing the services.

Condition 4. requires that Kelly control the means and method of performing services under her agreement(s) with Speedmark. Although the parameters of the inventory counting assignments are tightly controlled, the record shows this is attributable to client requirements rather than Speedmark. Requirements mandated by clients do not constitute control by the putative employer of the means or method of performing services for purposes of condition 4. See, MSI Services, Inc., UI Hearing No. S0600129AP (LIRC Sept. 5, 2008)

Condition 4. also requires multiple contracts. These may take the form of multiple contracts with separate entities, or multiple serial contracts with the putative employer if such contracts are shown to have been negotiated "at arm's length," with terms that will vary over time and will vary depending on the specific services covered by the contract. The existence of bona fide multiple contracts tends to show that the individual either has multiple customers, or that he/she has periodic opportunities for "arm's length" negotiation with the putative employer as to the conditions of their relationship, and that he/she is not dependent upon a single, continuing relationship that is subject to conditions dictated by a single employing unit. See, T-N-T Express LLC, UI Hearing Nos. S9700385, etc. (LIRC Feb. 22, 2000); Dane Co. Hockey Officials, supra.

Here, Kelly entered into a verbal agreement with Speedmark to perform inventory counting services at the rate of $10 per store visit for each two-visit job. Kelly understood that she would be required to complete each job by visiting either the Wal-Mart or Festival Foods store near her home, once on a Wednesday and once on a Sunday for each job; and answering the inventory count questions by the deadline specified by the client. Speedmark would contact Kelly to offer her a job, within the terms of the verbal agreement, and she was free to accept or reject it.

It is not apparent from the record whether the relevant contract(s) would be the single verbal contract entered into between Speedmark and Kelly, or the multiple agreements created by Kelly's acceptance of particular jobs. Neither, however, satisfies the multiple contracts requirement of condition 4., the single verbal contract for obvious reasons, and the multiple job-specific agreements because the record does not show they were negotiated at arms length, i.e., the terms did not vary over time or by service See, Barnett v. Alternative Entertainment, Inc., UI Hearing No. 02003109WU (LIRC Oct. 29, 2002); Van Pelt v. Quality Controlled Services, UI Hearing No. 07200634EC (LIRC Aug. 31, 2007); MSI Services, Inc., UI Hearing No. S0600129AP (LIRC Sept. 5, 2008)(putative employer's agreements with mystery shoppers do not satisfy multiple contracts requirement of condition 4.). The record also does not show that Kelly had contracts with other entities. As a result, the multiple contracts requirement of condition 4. is not satisfied.

Applying condition 5. requires a determination of what services are performed under the contract, what expenses are related to the performance of these services, which of these expenses are borne by the person whose status is at issue, and whether these expenses constitute the main expense. Lozon Remodeling, supra.; Quality Communications Specialists, Inc., supra. This inquiry requires quantification of these expenses.

Kelly bore the cost of transportation to the two retail locations, and printing from her computer the form she used to count inventory. Speedmark presumably bore certain administrative and record-keeping costs, including the costs of offering jobs to Kelly, monitoring her completion of the jobs by the client deadlines, and approving payments to her. Even though there is no quantification in the record of any of these costs, it is obvious that the costs borne by Kelly necessarily exceeded those borne by others. As a result, condition 5. is met.

In order to satisfy condition 6., Kelly is required to have been responsible for the satisfactory completion of the services she performed, and liable for any failure to satisfactorily complete them. The record shows that Kelly would not get paid if she did not properly complete the required two-stop inventory counting, and would not be offered further jobs if her performance was not satisfactory. These facts do not distinguish Kelly's circumstance in this regard from that of a piecework employee. See, Spencer Siding, Inc., UI Hearing Nos. S0300142GB, etc. (LIRC June 2, 2006); Van Pelt v. Quality Controlled Services, supra.; MSI Services, Inc., supra. Condition 6. is not satisfied.

Since Kelly was paid on a per-job basis, condition 7. is satisfied.

Condition 8. examines whether, under an individual contract for a worker's services, there can be a profit (if the income received under that contract exceeds the expenses incurred in performing the contract), as well as whether there can be a loss under that contract (if the income received under that contract fails to cover the expenses incurred in performing the contract). It is arguable, as the commission concluded in Quality Communications Specialists, Inc., supra., that the receipt by Kelly of more in payments than she was required to spend performing services for Speedmark could constitute "realiz[ing] a profit...under contracts to perform services." However, since Kelly was essentially guaranteed payment if she satisfactorily performed the inventory counting service, and selected the jobs she would perform; it is difficult to envision how she could suffer a loss. See, Dane County Hockey Officials, supra.; Van Pelt v. Quality Controlled Services, supra.; MSI Services, Inc., supra. As a result, condition 8. is not satisfied.

Condition 9. requires proof of a cost of doing business which the worker would incur even during a period of time she was not performing work through the putative employer, such as the cost of an office lease or professional liability insurance. The record does not show that Kelly actually incurred any such costs, and, as a result, condition 9. is not met. Speedmark argues that Kelly's expenses for her vehicle, computer, and printer should be considered continuing business liabilities or obligations. However, Kelly acquired and used this equipment for personal as well as business purposes, and her related costs do not, as a result, satisfy condition 9. See, MSI Services, Inc., supra. Condition 9. is not satisfied.

Finally, the commission has interpreted condition 10. as intending to examine the overall course of a worker's business. See, Quality Communications Specialists, Inc., supra. Condition 10. requires that a significant investment is put at risk and there is the potential for real success through the growth in the value of the investment and for real failure in the sense of actual loss of the investment. See, Thomas Gronna, supra. The record does not show that Kelly put a significant investment at risk, and, as a result, condition 10. is not satisfied.

In summary, only conditions 5. and 7. are satisfied. Since Wis. Stat. § 108.02(12)(bm) requires that seven conditions be satisfied in order for a worker to be considered an independent contractor, the satisfaction of only two of the ten conditions compels the conclusion that Kelly performed services for Speedmark as an employee, not an independent contractor, and her earnings from Speedmark during the base period are required to be factored into the computation of her benefit.

cc: Karen Frame, General Counsel

 

Ed. Note:  As originally issued, this decision had a typographical error by which the name of the employer was shown in the caption (although not elsewhere in the decision) as "Speekmark".


 

[ Search UC Decisions ] - [ UC Digest - Main Index ] - [ UC Legal Resources ] - [ LIRC Home Page ]


uploaded 2009/01/26