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

HEIDI A KOHLMETZ, Employee

ARBONNE INTERNATIONAL LLC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 10400842AP


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:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

In December 2008, the claimant (Kohlmetz) entered into an agreement with the putative employer (Arbonne) to purchase and then resell its products. These products consist of cosmetics, nutritional supplements, and personal care items.

The issue is whether the services Kohlmetz performed for Arbonne for pay during the time period at issue pursuant to this agreement constitute base period wages.

Kohlmetz paid an initial $109 fee to Arbonne to obtain the right to perform services as an "independent consultant," and to sponsor other independent consultants or "preferred clients." Kohlmetz paid an annual fee of $50 to retain this right.

Kohlmetz sold Arbonne's products in one-on-one or small group settings with customers, generally in a home. The business model was similar to that employed by Avon or Amway.

Kohlmetz received compensation for the services she performed for Arbonne through commissions, overrides, or bonuses.

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;...

(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....

(k) "Employment" as applied to work for a given employer other than a government unit or nonprofit organization, except as the employer elects otherwise with the department's approval, does not include service:

...16. By an individual whose remuneration consists solely of commissions, overrides, bonuses or differentials directly related to sales or other output derived from in-person sales to or solicitation of orders from ultimate consumers, primarily in the home;...

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 exception stated in Wis. Stat. § 108.02(15)(k)16. specifically excludes from the definition of employment the types of services Kohlmetz performed for Arbonne, i.e., in-person sales to ultimate consumers, primarily in the home, remunerated solely by commissions, overrides, bonuses, or differentials. Consequently, the amounts earned by Kohlmetz for performing such services would not be considered base period wages. See, Roth v. World Financial Group, Inc., UI Hearing No. 07002934MD (LIRC Jan. 10, 2008); Jaeger v. Pre-Paid Legal Services, Inc., UI Hearing No. 09006981MD (LIRC April 15, 2010).

The commission finds that, although the claimant performed services for the putative employer during the base period, these services were performed in excluded employment and, consequently, the claimant's earnings for performing these services are not base period wages within the meaning of Wis. Stat. § 108.02(4m).

The commission further finds that no overpayment of benefits results from this decision.

DECISION

The decision of the administrative law judge is reversed. Accordingly, the amounts earned by the claimant during the time period at issue performing services for the employer were not earned in an employment and may not be included in the department's computation of the claimant's base period wages.

Dated and mailed November 12, 2010
kohlmhe . urr : 115 : 1 ET 483.01 : UW 900

/s/ James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

Ann L. Crump, Commissioner

NOTE: The commission did not confer with the administrative law judge before reversing her decision, because its reversal was not based upon a differing view as to the credibility of witnesses, but instead upon a differing interpretation of the relevant law.

cc: Attorney C Brenton Kugler


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