In the matter of the contribution liability,
or status, under Chapter 108, Stats., of

ROSEMARY BISCHOFF STUDIOS & MODEL AGENCY, INC., Employer

A department deputy's initial determination issued on February 28, 1986, held that the employer was liable for additional unemployment compensation tax contributions, together with interest, for each quarter in 1983 and 1984. The employer timely appealed and a hearing was held before an appeal tribunal. The appeal tribunal affirmed the initial determination except with respect to the contributions attributable to two individuals, Laurae Lauritch and Durward McDonald, whom the appeal tribunal held did not perform services as "employes" of the employer. The employer timely filed a petition for review with respect to the contributions attributable to all except Lauritch and McDonald, and the department timely filed a petition for review with respect to the finding that Lauritch and McDonald were not "employes" of the employer.

Based on the applicable law, records and evidence in this case, the Commission makes the following:

The first issue to be resolved is whether the models, actors and part-time instructors employed by the employer in 1983 and 1984 were "employes," within the meaning of section 108.02 (12) of the statutes.

The models, actors and part-time instructors performed services for the employer during the period in question by acting and modeling for its clients, and by giving instructions at the employer's school. Therefore, under section 108.02 (12)(b) of the statutes, they must be deemed to have been "employes" of the employer unless the employer has demonstrated:

(1) That these individuals were free from the employer's control or direction over the performance of their services both under their contracts and in fact; and

(2) That these individuals performed their services for the employer in an independently established trade, business or profession in which they were customarily engaged.

The employer advertises for and accepts applications from individuals who wish to act or model. They are interviewed and, if accepted, they complete a "registration form" which asks for detailed information concerning their physical characteristics and experience, and provides that they will pay the employer a 15 percent placement fee for all assignments. The form also requires the individuals to agree not to solicit or accept any work directly from one of the employer's clients, or to allow any of the employer's clients to call them directly. Finally, the form provides that each individual is to check with the employer for wardrobe requirements for each assignment. The employer then chooses individuals for assignment to particular clients, establishes and collects a fee from the client, and pays the individual after subtracting its placement fee. The employer took note whenever a client complained of unsatisfactory performance, and on occasion would counsel an individual so that he/she could do a better job in the future.

The employer provided very little information concerning the hiring and training of its part-time instructors. It asserted that its instructors were considered to be employes, unless they worked on a part-time basis, in which case they were considered to be independent contractors.

The employer retained significant direction and control over the models and actors in the performance of their services. These individuals could not solicit or accept any employment with the employer's clients unless it was through the employer. The employer retained and exercised the right to assign or not assign individuals as it saw fit; and in particular, such assignment or non-assignment was responsive to feedback the employer received from its clients. In short, the employer exercised significant control over the most fundamental aspect of these individuals' performance of services, i.e., their ability to work for any of the employer's clients. The employer also required the individuals to check with it in order to determine wardrobe requirements, and established the fee amount which the client would pay for the individuals' services.

The Commission infers that the employer exercised direction and control over its part-time instructors, since the nature of such work would require significant supervision and/or training, and the employer has failed to submit any evidence to the contrary. The employer's distinction between part-time and full-time instructors is arbitrary, and no difference between their duties has been established beyond the fact that they worked a different number of hours.

The employer has also failed to establish that any of the actors, models or part-time instructors were independently established in a trade, business or profession of their own. The employer submitted virtually no evidence with respect to this question, beyond the fact that some of the individuals were unionized and presumably performed similar work for other employers. The department subpoenaed one of the employer's former models, and she indicated that during the period in question she had performed this work exclusively for the employer. She never had a business name nor did she advertise her services as a model.

It is therefore evident that the employer has failed to demonstrate that the individuals in question were free from its direction or control, or that they were independently established.

The second issue concerns the fact that prior department decisions held that certain individuals who performed services for the employer in 1983-84 were independent contractors. An initial determination so held in the case of Lorae Lauritch on December 12, 1985, and an appeal tribunal decision so held in the case of Durward McDonald on January 4, 1985. These decisions were issued by the Benefits Division of the department, in response to claims for unemployment benefits. The appeal tribunal held that the Enforcements Division of the department is collaterally estopped by these decisions from issuing any determination finding that Lauritch or McDonald performed services as "employes" of the employer rather than as independent contractors. However, the doctrine of collateral estoppel is not applicable because the Enforcements Division was not a party to the decisions issued by the Benefits Division. The Enforcements Division is charged with separate responsibilities under section 108.10 of the statutes, and issued its initial determination in this matter under the authority of that statute. It is unfortunate that the same issue was decided differently by different divisions of the department, but neither the Enforcements Division nor the Commission may forego their statutory responsibility under the enforcements statute, because incorrect determinations were made in benefit proceedings.

The Commission therefore finds that the models, actors and part-time instructors, including Lorae Lauritch and Durward McDonald, performed services as "employes" of the employer during 1983 and 1984, within the meaning of section 108.02 (12) of the statutes.

The decision of the appeal tribunal is affirmed in part and reversed in part. The employer is liable for additional unemployment, compensation tax contributions, together with interest, as more particularly set forth in the initial determination.

Dated and mailed November 18, 1987
185 - CD6322   EE 411

/s/ Hugh C. Henderson Chairman

/s/ Carl W. Thompson, Commissioner

/s/ Pamela I. Anderson, Commissioner

NOTE: That portion of the appeal tribunal decision which was reversed, was reversed as a matter of law.

cc: Michael Mathis
     Enforcements

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