JOHN P BUNTON, Employee
DADDY'S HOME/BUSINESS IMPROVEMENTS 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 first sentence of the sixth paragraph on page 3 of the decision is modified to state as follows:
The claimant used certain of his own tools, including smaller hand and power tools, as well as lifting equipment provided by the employer.
The final three sentences in the fourth paragraph on page 4 of the decision are deleted.
The final sentence in the fifth paragraph on page 4 of the decision is deleted.
The last sentence in the seventh paragraph on page 4 of the decision is modified to state as follows:
The claimant was paid on a per-job as well as an hourly basis. Payment on an hourly basis would constitute payment on a basis other than the three stated in the statutory language, preventing a conclusion that condition 7. is satisfied.
The decision of the administrative law judge, as modified, is affirmed. Accordingly, the wages paid to the employee by the employer in the fourth quarter of 2007, totaling $3,200, shall be included in the department's computation of the employee's base period wages for computing potential benefit eligibility.
Dated and mailed April 9, 2009
buntojo . umd : 115 : 5 EE 409 EE 410 EE 410.03
EE 410.07
/s/ James T. Flynn, Chairperson
/s/ Robert Glaser, Commissioner
/s/ Ann L. Crump, Commissioner
During 2007, the claimant (Bunton) performed various construction/repair-related services for the putative employer (Daddy's).
The base period at issue consists of the last quarter of 2007 and the first three quarters of 2008. Bunton did not perform services for Daddy's in 2008, so the only time period relevant here is the last quarter of 2007.
This matter relates exclusively to the amount of benefits to be paid to Bunton, not to Daddy's liability for unemployment insurance contributions.
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:
(a) 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;…
(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).
…
(bm) During the period beginning on January 1, 2000, with respect to contribution requirements, and during the period beginning on April 2, 2000, with respect to benefit eligibility, par. (a) does not apply to an individual performing services for an employing unit other than a government unit or nonprofit organization in a capacity other than as a logger or trucker, if the employing unit satisfies the department that the individual meets 7 or more of the following conditions by contract and in fact:
1. The individual holds or has applied for an identification number with the federal internal revenue service.
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.
3. The individual maintains a separate business with his or her own office, equipment, materials and other facilities.
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.
5. The individual incurs the main expenses related to the services that he or she performs under contract.
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.
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.
8. The individual may realize a profit or suffer a loss under contracts to perform such services.
9. The individual has recurring business liabilities or obligations.
10. The success or failure of the individual's business depends on the relationship of business receipts to expenditures….
(e) This subsection shall be used in determining an employing unit's liability under the contribution provisions of this chapter, and shall likewise be used in determining the status of claimants under the benefit provisions of this chapter….
(14m) Employing unit. "Employing unit" means any person who employs one or more individuals.
(15) Employment.
(a) "Employment", subject to the other provisions of this subsection means any service, including service in interstate commerce, performed by an individual for pay….
(26) Wages. Unless the department otherwise specifies by rule:
(a) "Wages" means every form of remuneration payable, directly or indirectly, for a given period, or payable within a given period if this basis is permitted or prescribed by the department, by an employing unit to an individual for personal services….
Pursuant to Wis. Stat. § 108.02(4m), in order to be considered base period wages, earnings must be "paid to an employee during his or her base period as a result of employment for an employer..."
The services performed by Bunton, for which he was paid by Daddy's in the fourth quarter of 2007, consisted of carpentry and related services for a construction/ remodeling project at The Lodge at Geneva Ridge.
Daddy's first argues, at least by implication, that these services were not performed by Bunton for Daddy's, but instead for Anvan, the architect for the Geneva Ridge project.
The commission disagrees.
Although it is not dispositive in view of the language of Wis. Stat. § 108.02(12)(a), it is relevant that all of the payments to Bunton came from Daddy's, not Anvan.
In addition, the document (exhibit #1) characterized by Daddy's at hearing as setting forth its agreement with Bunton as to the services he would be performing for the Geneva Ridge project, is an agreement between Daddy's, the "contractor," and Bunton, the "subcontractor." The only mention of Anvan in this agreement is that Bunton agreed to perform the work according to the plans and specifications furnished to him by Daddy's, "and to the full satisfaction of said Architect." (1)
Daddy's also contends that not only the content of a meeting at which Bunton, Daddy's, and Anvan were present, but also the fact that Bunton was present at such a meeting, shows that Bunton performed the services for Anvan, not Daddy's.
Bunton's presence at the meeting, without more, would not establish the identity of the contractors.
Daddy's offered at hearing what it represented to be a 30-minute tape recording of this meeting. The ALJ excluded it but did permit Daddy's to summarize the content of the meeting as an offer of proof.
In this summary, Daddy's indicated as follows, as relevant here:
The conversation was about the job, what was expected from each sub and each person, and how far along they wanted to be. The claimant said that he was going to participate in hanging all the doors. At that time, the contract started. When we left the meeting, we had a signed contract. It was signed by Mr. Dallman, from Anvan, and me [Tom Felske, vice president of Daddy's]. The claimant did not sign it....I don't have any other testimony regarding the meeting. The recording shows that we were trying to achieve the (unintelligible) and the claimant attended on his own, he was not paid to be there.
However, nothing about this offer of proof would support a conclusion that Bunton contracted with Anvan rather than Daddy's to provide services for the Geneva Ridge project. In fact, this offer of proof indicates that, during the meeting, Daddy's and Anvan entered into a written agreement for the project, but not that Bunton entered into an agreement with either Daddy's or Anvan at that time.
As a consequence, Daddy's has failed to establish, either through the evidence of record, or through its offer of proof, that the subject services were performed for any entity other than Daddy's.
Wisconsin Statutes § 108.02(12)(a) creates a presumption that a person who provides services for pay is an employee, and it requires the entity for which the person is performing those services to bear the burden of proving that the person is not an employee. 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).
As discussed above, the record shows that Bunton performed services for Daddy's for pay during the time period relevant here. As a result, Daddy's has the burden to rebut the presumption that he did so as a statutory employee.
The record does not show that Bunton possesses, or has applied for, a FEIN, as required by condition 1.
The record does show that Bunton filed a business/self-employment income tax return for 2006, the "previous year" to the one at issue, which satisfies condition 2.
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. 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). See, also, Lozon Remodeling, UI Hearing No. S9000079HA (LIRC Sept. 24, 1999). In Quality Communications Specialists, Inc., UI Hearing Nos. S0000094MW, etc. (LIRC July 30, 2001), the commission clarified that all parts of the test articulated in condition 3. must be met. Although the record shows that Bunton used certain of his own equipment, e.g., carpentry tools, it does not show that he maintained a separate office or even a separate space in his home devoted primarily to a business purpose. Even if Bunton performed similar services for other entities, this fact would be insufficient, without proof that he met each relevant element stated in the statutory language, to establish that condition 3. is satisfied. In its petition, Daddy's asserts that Bunton "had a shop at his house," which "had a desk and a phone." Not only is this not set forth in the evidence of record, but, even if it were, it would be insufficient to establish that this "shop" constituted an office or a facility used primarily for business purposes. Condition 3. is not satisfied.
To satisfy condition 4., it must be established that Bunton operated under contracts to perform specific services for specific amounts of money, and that, under these contracts, he controlled the means and method of performing the services.
Although the record shows that Bunton had contracts with other entities, which would satisfy the multiple contracts requirement, it does not show that Bunton controlled the means and method of performing his work, but instead that Bunton's work was closely directed and supervised by either Daddy's vice president; or by Patrick, a more experienced carpenter. 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. See, Quality Communications Specialists, Inc., supra. In the absence of quantification of the expenses borne by Bunton, and given that it is not obvious that his expenses would necessarily exceed the related administrative and equipment expenses borne by Daddy's, the record does not show that condition 5. is satisfied.
In order to show that the requirements of condition 6. are satisfied, the record would have to show that Brunton was responsible for the satisfactory completion of the services he performed, and liable for any failure to satisfactorily complete them. The record does not show this.
Condition 7. requires that a worker be paid on a commission, per-job, or competitive basis, and not on any other basis. The fact that Bunton was paid on an hourly basis in addition to a per-job basis means that he was paid on some "other basis" and condition 7. is not 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). Although Bunton could realize a profit if he received more in pay from Daddy's than he had to spend for transportation and tools, it is not realistic that he could suffer a loss given his nominal costs and the guarantee of payment, generally on an hourly basis, if he completed the work. See, Gary R. Gilbert, UI Hearing No. S0200083DB (LIRC July 21, 2005). The fact that Bunton may not be paid as agreed is a risk borne by employees and independent contractors and would not be dispositive here. See, Quale and Associates, Inc., supra. 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 he was not performing work through the putative employer, such as the cost of an office lease, certain professional fees, or liability insurance. The record does not show that Bunton had any such recurring costs and, as a result, 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 Bunton put a significant investment at risk. Condition 10. is not satisfied.
In summary, only condition 2. is 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 one of the ten conditions compels the conclusion that Bunton performed services for Daddy's as an employee, not an independent contractor.
Daddy's argues that Bunton should be regarded as an independent contractor, not an employee, because that is what his written contract with Daddy's specified. However, as discussed above, the record does not show that Bunton ever entered into that contract with Daddy's. In addition, Bunton's status is determined by statute, not by the terms of a private agreement. Roberts v. Industrial Comm., 2 Wis. 2d 399 (1957). See, also, Knops v. Integrity Project Management, UI Hearing No. 06400323AP (LIRC May 12, 2006).
cc: Braden Olsen Draper LLP
[ Search UC Decisions ] - [ UC Digest - Main Index ] - [ UC Legal Resources ] - [ LIRC Home Page ]