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

ANGELICA MUNIZ, Employee

INTERNATIONAL TRANSLATORS, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 09605352MW


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 fourth paragraph of the FINDINGS OF FACT and CONCLUSIONS OF LAW section is deleted.

The analysis of conditions 1. through 10. on page 3 of the decision is deleted, and the following substituted:

For two months during the base period for her claim, the claimant (Muniz) performed services as an interpreter for the putative employer (International Translators), a business that supplies interpreter and translation services.

This matter relates exclusively to the amount of benefits for which Muniz is eligible, not to International Translators' 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;...

(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..."

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).

The record shows that Muniz performed services for International Translators for pay during the time period relevant here. As a result, International Translators has the burden to rebut the presumption that she did so as a statutory employee.

Muniz did not appear at the hearing.

The record does not show that Muniz possesses, or has applied for, a FEIN, as required by condition 1, and condition 1. is not satisfied.

The record does not show that Muniz filed a business/self-employment income tax return for any year, 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. 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. The ALJ found that the record shows that Muniz "did maintain a separate business office out of her home." However, the evidence of record does not support this finding. The only testimony offered at hearing is that of Enrique Barbosa (Barbosa), International Translators' owner. Barbosa testified that Muniz "maintained her house as a separate business." This testimony is unclear, and insufficient to establish that Muniz maintained a separate space in her house dedicated primarily to a business purpose. Moreover, the fact that Muniz did not perform similar services for any other entity tends to show that she did not operate a business enterprise separate and apart from her relationship with International Translators. See, Prince Cable, Inc., UI Hearing No. S9900227MW (LIRC Feb. 23, 2001) (fact that worker performs services only for putative employer generally inconsistent with existence of separate business). Consequently, condition 3. is not satisfied.

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

The record shows that Muniz controlled the means and method of providing the interpreter services. The record also shows that Muniz had multiple discrete contracts with International Translators, which satisfies the multiple contracts requirement of condition 4. Condition 4. is 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. The ALJ held that the only expenses related to the services performed by Muniz for International Translators were Muniz's vehicle expenses. However, it is implicit that International Translators would have incurred certain administrative expenses relating to keeping records and remitting payments under its agreements with Muniz. Nonetheless, it is obvious that Muniz's vehicle expenses would necessarily have exceeded the administrative expenses incurred by International Translators, and condition 5. is satisfied.

In order to show that the requirements of condition 6. are satisfied, the record would have to show that Muniz was responsible for the satisfactory completion of the services she performed, and liable for any failure to satisfactorily complete them. This requirement would be satisfied if the record showed that Muniz was expected to remedy any unsatisfactory work, and incurred a penalty for generating such work. A penalty must consist of something more than simply performing remedial work without additional compensation, since this obligation is typical as well of piecework employees. See, T & D Coils, UI Hearing No. S9800147MW (LIRC Dec. 15, 1999); Quality Communications Specialist, Inc., supra.; Wisconsin Tennis Officials, Inc., UI Hearing Nos. S0200129MW, etc. (LIRC Feb. 28, 2005). A penalty must also consist of something more than not being called upon by the putative employer to perform work for it in the future. See, Vanpelt v. Quality Controlled Services, UI Hearing No. 07200634EC (LIRC Aug. 31, 2007). The record does not show that Muniz was liable for failing to satisfactorily complete the services she performed for International Translators, and condition 6. is not satisfied.

Condition 7. requires that a worker be paid on a commission, per-job, or competitive-bid basis, and not on any other basis. Although the ALJ found that Muniz was paid on a per-job basis, the record actually shows that she was paid on an hourly basis, i.e., on some basis other than commission, per-job, or competitive-bid. Barbosa testified that Muniz's pay varied from $15 to $25 per hour, and, although she received different amounts for performing different jobs, she was paid on an hourly basis. 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 Muniz could realize a profit if she received more in pay from International Translators than she had to expend performing the work, it is not realistic that she could suffer a loss given her nominal costs, incurred only if she accepted an assignment, and the guarantee of payment on an hourly basis if she completed the work. See, Gary R. Gilbert, UI Hearing No. S0200083DB (LIRC July 21, 2005). 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, certain professional fees, or liability insurance. The record does not show that Muniz had any such recurring costs and 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, The Floor Guys, UI Hearing No. S9900063WU (LIRC Feb. 22, 2000). The record does not show that Muniz put a significant investment at risk. Condition 10. is not satisfied.

In summary, only conditions 4. and 5. 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 Muniz performed services for International Translators as an employee, not an independent contractor, and that her earnings from International Translators during the relevant time period constitute base period wages.

In its petition, International Translators argues by implication that the fact that the subcontractor agreement it signed with Muniz in November 2007 specifies that she would be performing services for International Translators as an independent contractor should govern here. First of all, this written agreement is not part of the hearing record. Moreover, Barbosa testified that International Translators had only a verbal agreement with Muniz, not a written contract. Finally, Muniz's status as an independent contractor or a statutory employee 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).


DECISION

The decision of the administrative law judge, as modified, is affirmed. Accordingly, the wages paid to the employee by the employer, totaling $2,945, shall be included in the department's computation of her base period wages.

Dated and mailed October 8, 2009
munizan . umd : 115 : 6   EE 410  EE 410.03  EE 410.05   EE 410.06 

/s/ James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner


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