MICHAEL M KAPPEL, Employee

ACE M/C LLC, 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.

The decision of the administrative law judge is affirmed. Accordingly, the employee is not eligible for unemployment benefits based on this employment with the employer.

Dated and mailed June 23, 2010
kappemi . usd : 105 : 1 ET 483.06 : UW 900

James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner

There are several categories of limited liability companies for unemployment insurance purposes, and the eligibility for benefits of an employee of a limited liability company depends upon the category the company falls within. There are limited circumstances under which an employee of a limited liability company who also is a close relative of a member of such a company may be eligible for unemployment benefits, but no unemployment provisions allow for eligibility to the appellant in the present case. The company is a sole proprietorship for federal income tax purposes, so by operation of Wis. Stat. § 108.068(1) it is also treated as a sole proprietorship for state unemployment insurance purposes. The limited circumstances under which one may be eligible for benefits despite being closely related to a member of a limited liability company pertain to companies that are treated either as corporations or as partnerships under Wis. Stat. § 108.068. A limited liability company treated as a sole proprietorship, however, is governed by the general exclusions in Wis. Stat. § 108.02(15)(k), specifically subdivision 11 in the present case, which excludes from coverage under the unemployment law work by an individual in the employ of the individual's child or spouse. It is this exclusion from coverage that renders the appellant ineligible for unemployment benefits.

The appellant questions why he is paying taxes on employment that is excluded from coverage under the unemployment insurance law. In fact, it appears that the employer should not have been paying unemployment taxes on the appellant's wages in the first instance. Federal law, specifically 26 U.S.C. § 3306(C)(5), excludes from coverage under the federal unemployment tax act (FUTA) the employment at issue in this case. Wisconsin Stat. § 108.02(21) excludes from the definition of payroll (upon which taxes are paid) wages in work performed in employment excluded from coverage under FUTA. For this reason, included with this decision is a copy of form UCT-7842-E, Contribution Adjustment Report. If the employer has been paying unemployment taxes on the appellant's wages, the employer may file contribution adjustment reports for the current year and four previous calendar years.

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uploaded 2010/08/11