OWEN T JENSEN, Petitioner
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:
Sometime in April 2010, the claimant applied for and was accepted for work as "talent" with a non-covered employment unit in Illinois (Life Quotes, Inc., hereinafter "Life Quotes"), a business that produces instructional video presentations concerning insurance products. The claimant's work for Life Quotes involved authoring narrative scripts and narrating instructional videos, and consisted of two 10-hour days of work per week performed at the Life Quotes studio located in Darien, Illinois, for which the claimant was paid compensation of $415 per day. The claimant began his work for Life Quotes in the week ending June 19, 2010 (week 25), and continued to perform his work through the week ending September 11, 2010 (week 37), earning $830 in each of those weeks. He also performed work for Life Quotes during the remainder of 2010 and during six weeks in early 2011.
The claimant at all times resided in Green Bay, Wisconsin. His acceptance of work with Life Quotes for compensation of $415 per day was in part based on the claimant's calculation that his earnings performing that work would offset his costs for travel, food, and lodging that were required for his weekly commute from his home to perform his work at the Life Quotes studio in Illinois. Life Quotes paid the claimant no travel allowance or per diem to offset such expenses. In addition to his expenditures for commuting to the Life Quotes studio, his only other expenses consisted of about $20 for cosmetic products and about $50 for the dry cleaning of his apparel worn while performing on video. He estimated that his costs for his use of his cellular phone to perform his work for Life Quotes were $30 per month. He used his personal clothing when performing on video and had little or no additional wardrobe costs.
The claimant did not have, nor had he applied for, an identification number with the I.R.S. At the time of the hearing, he planned to file with his 2010 federal income tax returns a Schedule C, claiming self employment business expense deductions based on his services performed for Life Quotes.
The claimant owned no business facilities and he maintained no home office dedicated to any business operations. He did not advertise, and depended on "word of mouth" for obtaining new contracts for work as video production talent. He had performed no similar talent work since being laid off in August 2009 from his full-time TV reporting job. In October 2010, he entered into a separate agreement with Life Quotes to write an instructional article, for which he was paid the sum of $250. In November 2010, he also entered into a separate agreement with a different business entity to provide services as video talent for the production of an instructional video on one day, for which he was paid $350.
The claimant filed weekly claims for unemployment benefits in Wisconsin during the time that he worked for Life Quotes. He reported earnings of $500 per week in his weekly claims for weeks 25 through 37 of 2010, deducting $330 a week for his travel expenses from the total amount of $830 that he earned each of those weeks.
The issues in this case are whether the claimant was an employee of, or an independent contractor for, Life Quotes during weeks 25 through 37 of 2010; what earnings from Life Quotes, if any, he was required to report on his weekly claims for unemployment benefits in Wisconsin; and whether he is required to repay to the department unemployment benefits and federal additional compensation benefits he received for the weeks at issue. As of the date of this decision, the department has not issued a determination relating to his status vis-?-vis Life Quotes for his earnings from that business in 2011. Since the law changed for services performed after December 31, 2010, and the claimant had earnings from Life Quotes in 2011, the commission has also addressed that issue.
In his petition for commission review, the claimant asserts that if he is not an independent contractor, he has no incentive to keep driving from Green Bay to the Chicago area for employment because he cannot deduct his expenses (mileage), and he may as well stay home and collect unemployment benefits. The commission notes, however, that its decision relates only to the matter of the claimant's eligibility for, and amount of, unemployment benefits. The deductibility of his travel expenses on his federal and state income tax returns is an entirely separate matter.
Applicable state law
In determining whether the claimant was an employee or an independent contractor for Life Quotes, the first question to be addressed is whether Illinois law or Wisconsin law applies. Life Quotes is an Illinois business, and the claimant's services were performed in Illinois. Other than the claimant's residence in Wisconsin and his claim for benefits from Wisconsin, there is no other connection to Wisconsin in this case. However, there is no evidence in the record that the state of Illinois has investigated or made a determination on the matter of the claimant's employment status with Life Quotes. In addition, this is not a matter of particular interest to Illinois, because it does not affect whether Life Quotes must contribute to the unemployment insurance program in Illinois. It only relates to whether the claimant must report his earnings from Life Quotes in filing his weekly claims in Wisconsin.
Since the federal and state governments are jointly responsible for administering the unemployment insurance program, state unemployment insurance laws must conform to certain federal requirements, including interstate arrangements for combining employment and wages when an unemployed worker has covered employment in more than one state. See 20 C.F.R. Part 616 (2011). In 2004, the unemployment division of the Wisconsin Department of Workforce Development adopted a policy, UID Number 04-02, relating to such "combined wage claims." That policy requires the department to utilize determinations made by transferring states (states transferring wages to the paying state) in most situations, including issues relating to wage coverage and whether there is an employment relationship.
However, this case is not a combined wage case since the department is not using the claimant's wages earned in Illinois, so-called base period wages, to determine his benefit eligibility in Wisconsin. In addition, there has been no determination issued by Illinois on the issue of whether the claimant was an employee (or an independent contractor) of Life Quotes. Therefore, the commission does not find the department's policy in UID Number 04-02 or the federal regulation relating to combined wage claims to be applicable to this case.
Accordingly, since this is not a combined wage claim, Illinois has not issued a determination on the issue,(1) and Wisconsin's unemployment insurance program has a clear interest in the matter, the commission concludes that the application of Wisconsin law is appropriate in this particular case.
General Legal Analysis under Wisconsin law
Certain statutory provisions of the Wisconsin law relating to the definition of "employee" that were not changed and remain applicable in this case for services performed both before and after December 31, 2010 are as follows:
108.02 Definitions. As used in this chapter:
(11) ELIGIBILITY. An employee shall be deemed "eligible" for benefits for any given week of the employee's unemployment unless the employee is disqualified by a specific provision of this chapter from receiving benefits for such week of unemployment, and shall be deemed "ineligible" for any week to which such a disqualification applies.
(14m) EMPLOYING UNIT. "Employing unit" means any person who employs one or more individuals.
(20) PARTIAL UNEMPLOYMENT. An employee is "partially unemployed" in any week for which he or she earns some wages and is eligible for some benefits under s. 108.05(3).
(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. . . .
Wis. Stat. § 108.05 states, as relevant here, as follows:
(3) BENEFITS FOR PARTIAL UNEMPLOYMENT. (a) Except as provided in pars. (b), (c), and (d), if an eligible employee earns wages in a given week, the first $30 of the wages shall be disregarded and the employee's applicable weekly benefit payment shall be reduced by 67% of the remaining amount, except that no such employee is eligible for benefits if the employee's benefit payment would be less than $5 for any week. . . .
Definition of "employee" under law applicable for services performed through December 31, 2010
Wis. Stat. § 108.02(12) provides, in relevant part, as follows:
(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.
Wisconsin Stat. § 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 Association, Inc., UI Hearing No. S9800101MD (LIRC Feb. 22, 2000); Quality Communications Specialists Inc., UI Hearing Nos. S0000094MW, etc. (LIRC July 30, 2001).
Since the record shows that the claimant performed services for Life Quotes in 2010 for pay, Life Quotes has the burden to rebut the presumption that he did so as a statutory employee. It must establish, therefore, that the claimant met 7 of the 10 conditions listed in the statute.
Analysis of conditions under law applicable to services performed through December 31, 2010
Condition 1 - The claimant has no FEIN number, nor has he applied for one. This condition is not met.
Condition 2 - As of the date of the hearing, March 21, 2010, the claimant had not filed a federal business income tax return for 2010 relating to his services for Life Quotes, the first year he performed such services. He testified that he planned to do so, but an intention to file a federal business income tax return does not constitute the actual filing of one, as required by this condition. See Sure Value Auto Sales, Inc., UI Hearing Nos. S0500191MD, etc. (LIRC July 29, 2008). This condition is not met.
Condition 3 - This condition, that the claimant maintains a separate business with his own office, equipment, materials and other facilities, is not met.
The focus of this condition is to determine whether a separate business, one created and existing separate and apart from the claimant's relationship with Bankers Life, is being maintained with the claimant's own resources. See, e.g., Princess House, Inc. v. DILHR, 111 Wis. 2d 46, 330 N.W.2d 169 (1983); Christman v. Cybrcollect Inc., UI Hearing No. 06201682EC (LIRC Feb. 9, 2007) (although claimant had separate office, materials and equipment for work with Cybrcollect, record did not show she performed or even sought similar work with other entities or had an enterprise existing separate and apart from her work for Cybrcollect); Ronald Smith dba Smith Field Service, UI Hearing No. S0300197MD (LIRC Mar. 29, 2006) (although offices and equipment were maintained at claimants' own expense at their homes, the central inquiry is whether the activity engaged in by the claimant is genuinely separate from the activity of the putative employer); Quality Communications Specialists Inc., cited previously.
The claimant does not have a business office, business equipment or materials, or other kinds of business facilities.
Condition 4 - This condition, that the claimant operate under contracts to perform specific services for specific amounts of money and under which the claimant controls the means and methods of performing such services,
is met.
This condition requires multiple contracts. As noted in Gronna v. The Floor Guys, UI Hearing No. S9900063WU (LIRC Feb. 22, 2000), the requirement of multiple contracts is based on sound legislative policy, as it "tends to show that an individual is not dependent upon a single, continuing relationship that is subject to conditions dictated by a single employing unit." The commission has consistently stated that this requirement may be satisfied by multiple contracts with separate entities or by multiple serial contracts with a putative employer if it is established that those contracts 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. See, e.g., Preferred Financial of Wisconsin, Inc., UI Hearing No. S0600240MW (LIRC Oct. 23, 2008); Stark v. 3246 LLC, UI Hearing No. 07401621SH (LIRC Mar. 12, 2008); Zoromski v. Cox Auto Trader, UI Hearing No. 07000466MD (LIRC Aug. 31, 2007) (single, continuing relationship with conditions dictated by putative employer does not satisfy the multiple contracts requirement).
In addition to his agreement with Life Quotes for video production work, the claimant entered into a different contract with Life Quotes to write an instructional article, for which he was paid an agreed upon sum of money. Furthermore, he entered into a separate agreement with a different business to provide services as a video talent in the production of an instructional video. Therefore, the evidence does establish that, during the applicable time period, he has operated under multiple contracts to perform specific services for specific amounts of money. Furthermore, he operates with a great amount of autonomy and has discretion to control the means and methods of performing his services.
Condition 5 - This condition, that the claimant incur the main expenses related to the services that he performs under contract,
is not met. 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, e.g., Preferred Financial of Wisconsin, Inc., cited previously;
J Lozon Remodeling, UI Hearing No. S9000079HA (LIRC Sept. 24, 1999).
As noted by the ALJ, the claimant's travel expenses were not required for the performance of the work, but were incidental expenses resulting from the claimant's decision to continue residing in Green Bay, Wisconsin rather than relocate to minimize his commuting distance. That was his personal choice, and cannot be considered the kind of expense contemplated by this condition.
The claimant's expenses for cosmetics, dry cleaning, and cell phone use are minimal compared to the expenses incurred by Life Quotes, such as the cost of the studio facility and studio equipment used to produce the videos worked on by the claimant.
Condition 6 - This condition, that the claimant is responsible for the satisfactory completion of his services and is liable for failure to satisfactorily complete the services,
is not met. There is no evidence that the claimant would not have been paid his set amount of daily compensation if required to redo his work, nor is there evidence that he would have been held liable for failing to satisfactorily complete the services.
Condition 7 - This condition, that the claimant is paid on a commission or per-job or competitive-bid basis, is not met. The claimant was paid a set amount per day, and he was expected to work 10 hours per day. This payment arrangement is similar to an hourly rate, and is not by commission, by job, or by competitive bid.
Condition 8 - This condition, that the claimant may realize a profit (income received under the contract exceeds expenses incurred in performing the contract) or suffer a loss (income received under the contract fails to exceed expenses incurred in performing the contract), is not met. Although the claimant might realize a profit by earning more than he had to spend for his transportation and other expenses, it is not likely that he would suffer a loss given that he was being paid a set amount for his services, and his expenses, even including transportation, were clearly less than his earnings. As noted in Quality Communications Specialists, Inc., cited previously, there is no realistic prospect of experiencing a loss under a contract when fixed, predictable expenses are more than offset by the income earned providing those services.
Condition 9 - This condition, that the individual has recurring business liabilities and obligations, is not met. This condition requires proof of a cost of doing business that the claimant would incur even during a period of time that he was not performing work for Life Quotes. He had no overhead costs, nor did he incur any ongoing business expenses.
Condition 10 - This condition, that the success or failure of the individual's business depends on the relationship of business receipts to expenditures, is not met. The commission has interpreted this condition to require a significant investment that is put at risk. See, e.g., Gustavson v. Carpenters Inc., UI Hearing No. 09400168AP (LIRC April 30, 2009)(carpentry tools and fax machine not the types of business investments with attendant entrepreneurial risk contemplated by condition 10); Quality Communications Specialists, Inc., cited previously (relatively small recurring expenditures could be readily discontinued if the flow of work ceased). The claimant has no durable property or other financial investment that is at risk.
Therefore, under the law applicable to the claimant's services through December 31, 2010, only one of the ten conditions, condition 4, has been met. Since the law applicable at that time requires that seven conditions be satisfied for an individual to be considered an independent contractor, the claimant must be considered an employee and not an independent contractor for these services, and must report wages earned from Life Quotes during that period of time on his weekly unemployment claims.
Wages required to be reported on weekly claims
Wis. Stat. § 108.02(26) provides, in relevant part, as follows:
(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.
(b) "Wages" includes:
1. Any payment in kind or other similar advantage received from an individual's employing unit for personal services, except as provided in (c).
The claimant was paid $415 per day for performing his services for Life Quotes, Inc. No portion of that payment was intended by Life Quotes, Inc. to reimburse him for any expenses he might have, travel or otherwise. Although he may be able to deduct work-related expenses on his income taxes, he is required to report his total earnings for unemployment insurance purposes in Wisconsin.
Overpayment issue
Accordingly, given the claimant's weekly earnings of $830 during weeks 25 through 37 of 2010, the claimant was not eligible to receive any unemployment benefits for those weeks under the partial benefits provision at Wisconsin Stat. § 108.05(3), previously cited. He was erroneously paid benefits of $48 for weeks 25 through 37 of 2010 (13 weeks), totaling $624, because he reported wages of $500 from Life Quotes for these weeks, instead of the $830 that he had been paid.
As noted by the ALJ, generally a claimant who receives unemployment benefits in error is required to repay those benefits to the department. However, Wis. Stat. § 108.22(8)(c), provides that recovery of overpaid benefits shall be waived if the overpayment was the result of department error, not due to employer fault, and did not result from the fault of the employee. Such employee fault includes a failure to provide correct and complete information to the department. Wis. Stat. § 108.04(13)(f).
Therefore, since the $624 overpayment was due to the claimant's failure to properly advise the department of his wages in the weeks at issue and not due to any department error or employer fault, the claimant is responsible for the overpayment in the amount of $624. He is also responsible to repay Federal Additional Compensation (FAC) benefits that he received for weeks 25 through 37 of 2010.
Definition of "employee" under law applicable to services performed after December 31, 2010
Wis. Stat. § 108.02(12) provides, in relevant part, as follows:
(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. (bm), (c), (d), (dm) or (dn).
(bm) Paragraph (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 the conditions specified in subds. 1. and 2., by contract and in fact:
1. The services of the individual are performed free from control
or direction by the employing unit over the performance of his or her services. In determining whether services of an individual are performed free from control or direction, the department may consider the following nonexclusive factors:
a. Whether the individual is required to comply with instructions concerning how to perform the services.
b. Whether the individual receives training from the employing unit with respect to the services performed.
c. Whether the individual is required to personally perform the services.
d. Whether the services of the individual are required to be performed at times or in a particular order or sequence established by the employing unit.
e. Whether the individual is required to make oral or written reports to the employing unit on a regular basis.
2. The individual meets 6 or more of the following conditions:
a. The individual advertises or otherwise affirmatively holds himself or herself out as being in business.
b. The individual maintains his or her own office or performs most of the services in a facility or location chosen by the individual and uses his or her own equipment or materials in performing the services.
c. The individual operates under multiple contracts with one or more employing units to perform specific services.
d. The individual incurs the main expenses related to the services that he or she performs under contract.
e. The individual is obligated to redo unsatisfactory work for no additional compensation or is subject to a monetary penalty for unsatisfactory work.
f. The services performed by the individual do not directly relate to the employing unit retaining the services.
g. The individual may realize a profit or suffer a loss under contracts to perform such services.
h. The individual has recurring business liabilities or obligations.
i. The individual is not economically dependent upon a particular employing unit with respect to the services being performed.
(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.
This new test involves first, an analysis of whether the claimant's services are performed free from control or direction by the employing unit, and second, whether the claimant meets 6 or more of 9 specific conditions relating to economic independence and entrepeneurial risk.
Wisconsin Stat. § 108.02(12)(a) was not substantively changed by the new law(2). It still creates a presumption that a person who provides services for pay is an employee, and it still 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 Association, Inc., cited previously; Quality Communications Specialists Inc., cited previously.
Since department records show that the claimant has performed services for Life Quotes in 2011 for pay, Life Quotes has the burden to rebut the presumption that he does so as a statutory employee. It must establish that the claimant operates free of its direction or control and that the claimant meets at least 6 of the 9 conditions set forth in the statute.
Analysis of conditions under law applicable to services performed after December 31, 2010
The first part of the test provides five important statutory factors to consider, although these factors are not the only factors that may be considered in determining whether the claimant performs his services free from the control or direction of the employing unit. Each factor is a separate indicator of an employing unit's exercise of direction or control over the claimant, none of them are essential in any case, and each factor may be weighted differently depending upon the facts of each case.
Wis. Stat. § 108.02(12)(bm)1. - Freedom from control or direction by the employing unit
a. Instructions - This condition looks at whether the individual is free from the employing unit's direction to comply with instructions concerning how to perform the services. Although Life Quotes provides information as to what each assignment will entail, the claimant has an enormous amount of autonomy in determining how to perform his services and is not subject to instructions by Life Quotes relating to how to perform his services. The commission finds that this factor
is met.
b. Training - This condition looks at whether the individual is free from training by the employing unit with respect to the services performed. The claimant is not required to attend training on how to perform his services and, in fact, he brings to the assignments the skills and experience he has obtained through his previous jobs, and does not require additional training. The commission finds that this factor
is met.
c. Personal performance - This condition looks at whether the individual is free from the requirement of personal performance of the services. Given that the claimant has significant expertise and skill in performing the services required by Life Quotes, it is unlikely that Life Quotes would permit another individual to step in and perform the work for the claimant. He has been retained by Life Quotes, on the terms and conditions negotiated by the parties, to perform work that he knows how to perform. Another individual would not possess his experience or skill. The commission finds that this factor
is not met.
d. Services at times or in a particular order or sequence - This condition looks at whether the individual is free from the requirement of performing services at times or in a particular order or sequence established by the employing unit. There is not much detail in the record on this issue. However, the claimant determined his own schedule, customarily two days a week, ten hours per day. There were numerous videos that Life Quotes had for the claimant to do, and he wrote and narrated those videos, also performing editing work on those videos. He appears to have been free of any requirements that he do work at particular times or in a particular order. The commission finds that this factor is met.
e. Oral or written reports - This condition looks at whether the individual is free from the requirement of making oral or written reports to the employing unit on a regular basis. There was no evidence presented that the claimant made any reports, oral or written, to Life Quotes on a regular basis. He simply provided his work product to Life Quotes upon its completion. The commission finds that this condition is met.
No other factors were raised by either party on the issue of whether the claimant has been, and will continue to be, free from direction or control by Life Quotes, and the commission is not aware of any other relevant factors. Based on the statutory factors, the commission finds that the claimant performed his services free from the control or direction of Life Quotes.
Nevertheless, since both parts of the statutory test must be satisfied for an individual to be considered an independent contractor rather than an employee, it is necessary to determine whether 6 of the 9 conditions in the second part of the test have been met.
Wis. Stat. § 108.02(12)(bm)2. - Economic independence and entrepeneurial risk
The commission notes that several of these conditions, in whole or in part, are the same as conditions contained in the previous law. The analysis in the earlier part of this decision relating to services performed by the claimant in 2010 would, therefore, be applicable for these unchanged conditions, as would the commission decisions and case law relating to these conditions under previous law.
a. The individual advertises or otherwise affirmatively holds himself or herself out as being in business.
The claimant does not advertise his services to the public, and relies on "word of mouth" to obtain new contracts for work as video production talent. No evidence was presented that he has business cards or that he affirmatively holds himself out as being in business. This condition is not met.
b. The individual maintains his or her own office or performs most of the services in a facility or location chosen by the individual and uses his or her own equipment or materials in performing the services.
The claimant does not maintain an office for business purposes, and he performs most of his services in an office or studio at Life Quotes. He uses equipment and materials furnished by Life Quotes in performing his services. This condition is not met.
c. The individual operates under multiple contracts with one or more employing units to perform specific services.
This factor is similar to condition 4 under the old test, retaining the first part of that condition relating to multiple contracts, but not the second part, and warrants the same finding, that the condition
is met. See discussion of condition 4 of the old test.
d. The individual incurs the main expenses related to the services that he or she performs under contract.
This condition is identical to condition 5 under the old test, and warrants the same finding - that this condition is not met. See discussion of condition 5 of the old test.
e. The individual is obligated to redo unsatisfactory work for no additional compensation or is subject to a monetary penalty for unsatisfactory work.
This condition replaces condition 6 of the old law that read - "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." There was no evidence that the claimant is obligated to redo unsatisfactory work for no additional compensation, nor was there evidence that he would be subject to a monetary penalty for unsatifactory work. This condition is not met.
f. The services performed by the individual do not directly relate to the employing unit retaining the services.
In order to understand what is meant by this condition, it is helpful to look at the legislative history giving rise to the change in the statute, specifically a report to the Unemployment Insurance Advisory Council(3) dated June 25, 2009, by the committee appointed to study and to suggest changes to the definition of "employee" under §108.02(12).(4) See Milwaukee County v. DILHR, 80 Wis. 2d 445, 259 N.W.2d 118 (1977) (Wisconsin Supreme Court looks to Advisory Council comments made in conjunction with recommended law changes to determine or to clarify legislative intent), citing Western Printing & Lithographing Co. v. Industrial Comm., 260 Wis. 124, 50 N.W.2d 410 (1951).
The committee notes in its report that this condition relates to the concept of "integration," one of the factors currently used by the courts and the commission to determine employee/independent contractor status for government and nonprofit employers, and cites the case of Keeler v. LIRC, 154 Wis. 2d 626, 631 (Ct. App. 1990). In Keeler, the Court of Appeals gave an example of the integration concept - a tinsmith was called upon to repair the gutter of a company engaged in a business unrelated to the repair or manufacture of gutters. Since the tinsmith's activities were totally unrelated to the business of the company retaining his services, his services were not "integrated" into the alleged employer's business, and were considered to be a factor evidencing an independent business.
In this case, the claimant performed services that were related to and integrated into the business of Life Quotes, a business that produces instructional and informational videos concerning insurance products and topics. This condition is not met.
g. The individual may realize a profit or suffer a loss under contracts to perform such services.
This condition is identical to condition 8 under the old test, and warrants the same finding - that this condition is not met. See discussion of condition 8 of the old test.
h. The individual has recurring business liabilities or obligations.
This condition is identical to condition 9 under the old test, and warrants the same finding - that this condition
is not met. See discussion of condition 9 of the old test.
i. The individual is not economically dependent upon a particular employing unit with respect to the services being performed.
This condition replaces condition 10 under the old test - "The success or failure of the individual's business depends on the relationship of business receipts to expenditures". The new condition focuses on the economic dependence of the individual. The committee appointed by the UI Advisory Council notes in its report that condition 10 has puzzled UI lawyers and ALJs, and that it is hard to justify decisions made under its language. Therefore, the committee chose to replace the condition with one that focuses on economic independence, noting that the commission and the courts have seen this as an important factor in the test applicable to government and nonprofit employees. The committee's report states:
The Commission has held that an individual is economically dependent if the services that individual is performing for the particular employing unit are a majority of that type that the individual performed for all employing units combined that have retained such services from that individual.
The committee report goes on to say that this construction by the commission is a common sense and highly relevant criterion that should be included in the test. In this case, the claimant's video production services for Life Quotes are a majority of the work of that kind that the claimant has performed since he began performing these services for employing units after being laid off from his previous fulltime job. This condition is not met.
In sum, only one of the nine conditions in the second part of the new test is met. Therefore, since the new Wis. Stat. § 108.02(12)(bm) requires that at least six of the nine conditions in the second part of the test be met for the claimant to be considered an independent contractor, the claimant must be considered an employee, not an independent contractor, and must continue to report his wages earned from Life Quotes on his weekly unemployment claims.
The decision of the administrative law judge is modified to conform to the above findings of fact and conclusions of law and, as modified, is affirmed. Accordingly, the wages paid to the claimant by the non-subject employing unit (Life Quotes, Inc.) shall be reported by the claimant to the department as they are earned. The claimant was ineligible for benefits he received in weeks 25 through 37 of 2010. The claimant is required to repay the sum of $624 to the Unemployment Reserve Fund. This decision also results in an overpayment of federal additional compensation (FAC) benefits that must be repaid. The employee will receive, or may have received, a separate "UCB-25 Notice of Federal Additional Compensation Overpayment" regarding the amount of FAC benefits that must be repaid.
Dated and mailed August 19, 2011
BY THE COMMISSION:
/s/ Robert Glaser, Chairperson
/s/ Ann L. Crump, Commissioner
/s/ Laurie R. McCallum, Commissioner
jenseo2 : 120 : 5
cc:
Life Quotes, Inc.
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