TRACY L CAMPBELL, Employee
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 makes the following:
Facts -- This case arises out of a claim for unemployment insurance (UI) benefits filed by Tracy L. Campbell. The question for decision in this case is whether Campbell provided services for the petitioner, Speedmark (1), as its "employee" within the meaning of the UI Act, during her base period.
Speedmark is a business that gathers customer service information for other businesses by assigning "mystery shoppers" to act as shoppers or by having the mystery shoppers conduct merchandizing surveys by questioning customers and recording their responses.
Campbell began performing mystery shopping services for the petitioner in 2005. At that time, Campbell applied for the mystery shopping position online at the petitioner's website. Campbell was required to electronically sign an "independent contractor agreement" as a part of the application process. The agreement was drafted by the petitioner. Upon completing the application process, Campbell received e-mails from the petitioner informing her of potential mystery shopping assignments which involved traveling to a client's store and evaluating the location and customer service. The e-mail contained the amount Campbell would earn for each assignment (between $10 to $12), the locations, and the times and dates when she must perform the mystery shopping services. Campbell would then accept or reject the assignment based upon the information contained in the e-mails. The e-mails from the petitioner also informed the employee of any special requests made by the clients as to how she must conduct the mystery shopping services.
Campbell was required to purchase at least $5 in product during the mystery shopping evaluation which was reimbursed by the petitioner upon the completion of her services. Campbell was required to use the evaluation forms drafted by the petitioner on the petitioner's website. The claimant was not reimbursed for any of her travel expenses; however, she coordinated her mystery shopping evaluations with other personal errands. Although she was required to maintain insurance on her vehicle, she would have done this anyway even if she was not performing services for the petitioner. Upon completing the evaluation, Campbell was required to enter the information on a form on the petitioner's website. If Campbell failed to perform the evaluation as set forth by the petitioner, she would not receive payment. Campbell would receive feedback from the petitioner with suggestions on how she could improve her mystery shopping evaluations.
Campbell performed similar mystery shopping services for other companies while she performed services for the petitioner. Campbell's name was never provided to the clients of any of the companies including those of the petitioner. She also performed telephone sales services from home for different online businesses. Due to her telephone sales services, Campbell maintained a home office with a computer, printer, and internet access. She also used this home office and equipment for personal reasons and would have had them regardless of whether she was performing services for the petitioner. Although Campbell filed self-employment or business tax returns in 2005, 2006, and 2007, they were related to her separate business activity of doing home telephone sales and did not report income from the services provided for the petitioner. Campbell obtained a federal employer identification number in 2007, in connection with the telephone sales services she performed for a different employer.
Additional facts relevant to the application of the statutory standards are described in the discussion which follows.
Discussion -- Under Wisconsin law, the question of whether an individual is an "employee" for unemployment insurance purposes is governed solely by statute. The UI Act effectively provides that any individual who performs services for pay for an employing unit is presumed to be an "employee" of that employing unit, unless that employing unit establishes that certain stated conditions are met. Wis. Stat. § 108.02(12)(a). In the case of a private business such as the petitioner, the relevant conditions are described under Wis. Stat. § 108.02(12)(bm), and the showing which must be made is that at least seven of those ten conditions are met. The entity for which the individual has performed services bears the burden of proving that a sufficient number of conditions are met.
It is not disputed that Campbell performed services for the petitioner for pay within the meaning of § 108.02(12)(a), during her base period (the fourth calendar quarter of 2006 and the first three calendar quarters of 2007). Therefore, she must be found to have been its "employee" within the meaning of that section if the petitioner fails to carry its burden of establishing that at least 7 of the 10 conditions stated in § 108.02(12)(bm)1.-10. were satisfied.
The ALJ found that the petitioner established only that conditions 1, 5, 6 and 7 were met. In its appeal, the petitioner relies on the ALJ's decision as to those two conditions, and it also contends that conditions 3, 4, 8, 9 and 10 were met. The commission's findings and conclusions as to the applicability of the relevant conditions are set out below.
1. The individual holds or has applied for an identification number with the federal internal revenue service - Campbell had applied for a federal employer identification number. Condition 1 was met.
2. The individual has filed business or self-employment income tax returns with the federal internal revenue service based on such services in the previous year or, in the case of a new business, in the year in which such services were first performed
- While Campbell has filed business or self-employment tax returns in connection other activities she engages in, she has not filed business or self-employment tax returns in connection with her earnings from the mystery shopper services she performs. The petitioner concedes, and the commission finds, that condition 2 was not met.
3. The individual maintains a separate business with his or her own office, equipment, materials and other facilities - 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 (LIRC Sept. 24, 1999). In Quality Communications Specialists (LIRC, July 30, 2001), the commission clarified that all parts of the test articulated in condition 3 must be met in order for the putative employer to satisfy its burden.
Campbell did not assert, and there is no evidence, that she had a separate free-standing office of any kind. She did testify that she had an "computer room" in her home, but she acknowledged that she used that space and the equipment in it mostly for her business activity of doing home sales for another company, and also for personal purposes, and that she would still have it even if she did not do her mystery shopper work. While she used her car to transport herself to the locations at which she did mystery shopper work, she usually arranged things so that she did that work at locations she would have been going to anyway, and she also acknowledged that even if she had not been doing the mystery shopper work she would still have had the expense associated with that car.
The facts that Campbell had a space in her home where she sometimes did things connected to her services as a mystery shopper, and that she owned some equipment which she sometimes used in connection with those services, are not necessarily indicative of a separate business of the type contemplated by this condition. Most individuals have a home of some kind which contains at least some space -- be it a separate room, a desk in a bedroom, or just a kitchen counter -- that they can use to perform "office" functions connected to work they may be doing. Many individuals have telephones, and computers with internet connections and printers, in their homes. Many individuals have a car which they can use to transport themselves. Individuals with these resources routinely use them for personal purposes, and they would have them and use them in this fashion whether or not they were also engaging in any kind of independent business. Ownership and use of such things for personal purposes is now so common, that in and of itself it simply cannot be taken as an indication that the individual is operating a separate business.
It was not established that either Campbell's "home office" or the equipment she used were acquired by her for the purpose of using them in doing her mystery shopper work. In addition, it was not established that Campbell used these resources primarily for the purpose of doing her mystery shopper work; on the contrary, Campbell expressly acknowledged that she used her home office area, computer, printer, internet connection, and telephone for purposes of her unrelated telephone sales activities and for personal purposes. In these circumstances, ownership of these resources is not determinative. Condition 3 is not met.
4. The individual operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means and methods of performing such services - This condition 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 (LIRC Feb. 22, 2000); Dane County Hockey Officials (LIRC, February 22, 2000).
The ALJ reasoned that Campbell did not meet this requirement because she had only a single contract with Speedmark, pursuant to which she received separate assignments. However, that reasoning focused only on Campbell's relationship with Speedmark. Campbell testified that she performed mystery shopper services for "a lot of companies", and she specifically identified three such companies apart from Speedmark which she had performed services for. This satisfies the multiple contracts requirement of condition 4.
Condition 4 also requires that the individual control the means and method of performing services under these agreements. Although the parameters of the mystery shopping assignments are tightly controlled, the record shows this is primarily attributable to client requirements rather than to Speedmark.
See, MSI Services, Inc. (LIRC Sept. 5, 2008) (requirements imposed by putative employer's clients do not establish control by putative employer over means and method of performing mystery shopper services). The ALJ, in concluding that Speedmark controlled the means and method of carrying out her mystery shopper services, failed to distinguish between requirements imposed by the putative employer and those imposed by the putative employer's clients. The commission concludes that condition 4 is met.
5. The individual incurs the main expenses related to the services that he or she performs under contract - In its argument, Speedmark does not address this condition other than to note that the ALJ found that it was met. However, in reviewing decisions involving application of Wis. Stat. § 108.02(12), the commission is not limited to considering the issues raised by the petitioning party. When a petition for review asserts that an ALJ made an incorrect decision on whether an individual was providing services as an employee under § 108.02(12), that petition implicitly raises the applicability of each of the statutory conditions as an issue. Even though the ALJ may have found that certain conditions were satisfied, and the putative employer relies on this and fails to address them in its argument, the commission may still consider those issues and may decide, contrary to the ALJ, that the conditions were not met. See, e.g., Donald Christopherson (LIRC, Sep. 13, 2006), Borgheѕanі v. Vіrtual Heroeѕ Inc. (LIRC, Dec. 27, 2006). Therefore, the commission will consider the applicability of this condition.
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 generally requires quantification of these expenses.
The ALJ found that the cost of traveling to stores to perform the evaluations was the main expense related to the services performed by the claimant. The commission disagrees. The ALJ appears to have considered only the expenses that the claimant herself actually paid. However, the statutory condition calls for looking at the expenses "related to" the services that the individual performs. This condition can not be construed to call for simply looking at what expenses the individual actually pays, since if it is construed in that way it will always be the case that the individual incurs all of those expenses, and the condition will be reduced to a meaningless nullity. Instead, the condition requires considering all of the expenses which are "related to" the services being performed. To do this, it is appropriate to consider all of the expenses for things which must be done in order for the service to be performed, as expenses "related to" the services.
Here, there were clearly other things that had to occur in order for these services to be performed, and these other things involved expenses which were borne by parties other than Campbell. For one thing, Speedmark or its clients bore the cost of the retail products or food purchased by Campbell in carrying out an assignment. Campbell, who would have known how much she spent in purchasing products for her mystery shopping along with having the best knowledge of what her own expenses were, testified that the main expenses associated with the services she performed for Speedmark was probably the items she had to buy at the store - an expense ultimately borne by Speedmark, which reimbursed Campbell for those purchases. In addition to that expense, Speedmark would clearly have had administrative and record-keeping costs, including the costs of assignment posting, screening, questionnaire development, scheduling, and quality control. For example, Speedmark had to develop and maintain the website used by mystery shoppers to contact it regarding assignments and to obtain forms; it also had a "Scheduling Group" in which it had schedulers who were involved with coordinating and confirming (through telephone calls) assignments for mystery shoppers.
The amounts of the various expenses which must have been involved in these various other functions carried out by Speedmark or its clients, are not quantified in the record. Because the petitioner bore the burden of proof, the consequences of the lack of evidence allowing a quantitative comparison of the expenses necessarily falls on it. It is not obvious that the expenses borne by Campbell necessarily exceeded those other expenses. For these reasons, it is concluded that condition 5 is not met.
See, MSI Services, Inc., supra.
6. The individual is responsible for the satisfactory completion of the services that he or she contracts to perform and is liable for a failure to satisfactorily complete the services -- In order to satisfy this condition, Campbell is required to have been responsible for the satisfactory completion of the mystery shopper services she performed, and liable for any failure to satisfactorily complete them.
The record shows that Campbell may not get paid if she did not properly complete the required post-shopping reports, and would not be offered further jobs if her performance was not satisfactory. These facts do not distinguish Campbell's circumstance in this regard from those of a piecework employee, and is not a determining factor. See, Spencer Siding, Inc. (LIRC June 2, 2006); Vanpelt v. Quality Controlled Services (LIRC Aug. 31, 2007).
However, the record also shows that agreement which governed Speedmark's relationship with its mystery shoppers included an indemnity provision requiring the mystery shoppers to hold harmless and indemnify Speedmark from any and all claims of third parties from acts committed by the mystery shopper. The presence of such provision in the agreement between an individual and a putative employer satisfies condition 6,
see, MSI Services, Inc., supra, and therefore this condition is met here.
7. The individual receives compensation for services performed under a contract on a commission or per-job or competitive-bid basis and not on any other basis
- Campbell was paid on a per-job basis. This satisfies this condition.
8. The individual may realize a profit or suffer a loss under contracts to perform such services - This condition 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). Consistent with the commission's analysis in Quality Communications Specialists, Inc., supra., the receipt by Campbell of more in payments than she was required to spend performing services for Speedmark could be considered to constitute "realiz[ing] a profit...under contracts to perform services." However, since Campbell was essentially guaranteed payment if she satisfactorily performed the mystery shopping services, and selected the shopping jobs she performed, it is difficult to envision how she could have suffered a loss. See, Dane County Hockey Officials, supra.; Van Pelt v. Quality Controlled Services, supra.; MSI Services, Inc., supra. The commission concludes that this condition was not met.
9. The individual has recurring business liabilities or obligations -- This condition requires proof of a cost of doing business which the worker would incur even during a period of time he or she was not performing work through the putative employer, such as the cost of an office lease, professional fees, or professional liability insurance. Campbell did not have any such recurring business liabilities or obligations. She had no business liability insurance. While she had internet and automobile insurance expenses, it was not established that she used her internet connection and her automobile primarily for the purpose of engaging in her mystery shopper work; on the contrary, it appeared that these were resources which she also used for personal purposes, and the expenses connected with them thus cannot be considered "business liabilities or obligations". Because Campbell had no such liabilities of obligations which arose from her mystery shopper activities, this condition was not met.
10. The success or failure of the individual's business depends on the relationship of business receipts to expenditures -- The commission has interpreted condition 10. as intending to examine the overall course of a worker's business.
See, Quality Communications Specialists, Inc., supra. This condition 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 (LIRC, February 22, 2000). The record does not show that Campbell put any significant investment at risk in connection with her mystery shopping activities. She did not acquire any assets for use in connection with those activities which could decline in value, nor did she invest any capital in the activity which she was at risk of losing. There was no entrepreneurial risk of the type contemplated by condition 10. The commission therefore agrees with the ALJ that condition 10. is not satisfied.
Conclusion - Only conditions 1, 4, 6, and 7 were shown to have been met with regard to Campbell's services for petitioner. The petitioner has thus failed to establish that at least seven of the ten conditions in Wis. Stat. § 108.02(12)(bm) were met, and the presumption of employee status existing by virtue of Wis. Stat. § 108.02(12)(a) thus stands unrebutted.
The commission therefore finds that in her applicable base period, the employee performed services for the petitioner as an employee in an employment, and that the amounts paid to her for those services were wages, all within the meaning of Wis. Stat. § 108.02(12) and 108.02(26).
The decision of the administrative law judge is modified to conform with the foregoing and, as modified, is affirmed. Accordingly, the wages paid to the employee by the petitioner shall be included in the department's computation of the employee's base period wages for purposes of determining her total potential benefit eligibility.
Dated and mailed April 27, 2009
mficamp1 . urr : 110 : EE 410 EE 410.03 EE 410.04b EE 410.06 PC 749 PC 751
/s/ James T. Flynn, Chairperson
/s/ Robert Glaser, Commissioner
/s/ Ann L. Crump, Commissioner
NOTE: The determination in this case involved the question of whether the services performed by Campbell for Speedmark were performed by her as an employee. However, that question was presented only for a limited purpose: it had to be answered in order to decide whether amounts paid to Campbell for those services would be included in her base period wages. The determination made it clear that its actual effect was similarly limited: it determined simply that the amounts paid could be included in computing the employee's total base period wages, which would form the basis for computing the amount of her total UI benefit entitlement.
The determination also stated,
NOTE TO THE EMPLOYER: This determination is issued under section 108.09 of the Statutes and only resolves the current benefit eligibility issue. Under section 108.101 of the statutes, this decision is not binding for any other purpose and cannot be used to determine whether the employer is liable for contributions based on services performed by this claimant.
The statutory section referred to, Wis. Stat. § 108.101(2), provides:
108.101 Effect of finding, determination, decision or judgment.
. . .
(2) No finding of fact or law, determination, decision or judgment made with respect to rights or liabilities under s. 108.09 is binding in an action or proceeding under s. 108.10.
As the NOTE explained, the determination was one issued under Wis. Stat. § 108.09 involving the particular benefit claim and rights of a claimant. It was not a determination issued under § 108.10 holding that Speedmark had to pay UI taxes on amounts it paid to Campbell (or anyone else). By virtue of § 108.101(2), in any separate proceeding which did involve Speedmark's tax liability - which would be a proceeding under § 108.10 - this determination would not be binding. Thus, this determination had no binding effect, actual or potential, on the current or future tax liability of Speedmark.
The determination also had no other effect, actual or potential, even on the balance of Speedmark's UI account. Base period employers who have contributed less than 5% of a claimant's base period wages do not have any charge made against their UI account when benefits are paid to that claimant. Wis. Stat. § 108.07(3m). Department records in the file in this matter reflect that the total amount of the payments Speedmark made to Campbell during her base period came to only $120, and that this amounted to only 3.665% of Campbell's total base period wages. For this reason, Speedmark faced no potential for liability as a base period employer in connection with benefits being paid to this claimant.
Notwithstanding that the determination in this case had no material effect on any material interests of Speedmark, the commission was required to review and decide Speedmark's appeal. It was required to do so because Wis. Stat. § § 108.09(2r) and 108.09(6)(a), which grant all parties a right to appeal, do so without any reference to whether the decisions being appealed from affect or are adverse to any material interests of that party.
Speedmark should note, however, that this is not the case with respect to the right to appeal this decision of the commission to circuit court.
Pursuant to Wis. Stat. § 108.09(7), a party may commence an action for judicial review of a commission decision if the party does so "in accordance with s. 102.23." Section 102.23 in turn provides that "any party aggrieved [by]" a commission decision may commence an action for judicial review thereunder. It has been expressly held that an employer whose UI account is not affected by the commission's decision, is not "aggrieved" within the meaning of this provision, and has no standing to commence an action for judicial review of that decision. Cornwell Personnel Associates v. ILHR Dept., 92 Wis. 2d 53, 63, 284 N.W.2d 706 (Ct. App. 1979).
Market Force Information
Attorney Stephen A. Ditullio
Dewitt, Ross & Stevens
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(1)( Back ) "Speedmark" is a business name of Hiller Sales & Marketing, Inc., which is in turn a wholly-owned subsidiary of Market Force Information, Inc.