TROY L COX, Claimant

YMCA OF NORTHERN ROCK COUNTY INC, 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:

The claimant worked for about three years as a basketball referee for the YMCA of Northern Rock County, Inc. (hereinafter "the petitioner" or "the YMCA"), a nonprofit community organization. His last day of work for the YMCA was June 22, 2011 (week 26).

The issue to be decided is whether, in performing his services as a basketball referee for the YMCA, the claimant, as of week 27 of 2011, is an employee of the YMCA for purposes of determining unemployment insurance benefit eligibility.

The YMCA provides numerous services, including a sports program, a fitness center, a preschool, and other community programming. As part of its sports program, the YMCA offers basketball leagues for all ages. The claimant was a member of the YMCA, having played basketball games in leagues there. He believed that he could be a good referee, and talked to the sports director about
refereeing basketball games there. The YMCA required that he obtain certification as a basketball official from the Wisconsin Interscholastic Athletic Association (WIAA), for a general licensing fee of $20 and an additional $10 per certified sport. For scheduling officials for its games, the YMCA typically would release its schedule of games by email, and the claimant would sign up to work selected games. At other times, the YMCA might call the claimant and ask if he could referee a particular game or series of games.

The claimant provided his own whistle, uniform, and paid for his officiating certification from the WIAA. Other than scheduling the games, suggesting a referee uniform, and instituting some slight changes in the rules of basketball for younger children, the YMCA exercised very little control over the claimant's refereeing services. The rules for officiating the games were provided by the WIAA. The YMCA did not schedule meetings or review the claimant's officiating. If the claimant could not referee a game for which he was scheduled, he could find his own properly certified replacement.

During the time at issue, the claimant did not have an office or place of business, nor did he advertise his services as a referee. He was paid a set amount for each game he refereed at the YMCA, most recently $20 per game. He also worked as a cook for another business during the time he refereed games for the YMCA. In addition, although he has not done other refereeing for pay, he has refereed on a volunteer basis for several other entities during the last several years.

Legal analysis

A two-step analysis is used to determine whether an individual is an employee. Goldberg v. DILHR, 168 Wis. 2d 621, 484 N.W.2d 568 (Ct. App. 1992). The first step is to determine whether the individual has been performing services for an employing unit for pay. Wis. Stat. § 108.02 (12)(a). There is no dispute that the claimant performed services for pay for the YMCA.

A presumption arises, therefore, that such services were performed as an employee. See Eichman v. Wisconsin Technical College System Foundation, UI Hearing No. 06003528JV (LIRC Jan. 18, 2007). Accordingly, the burden shifts to the YMCA to establish that the claimant is excepted from employee status by some statutory provision.

The petitioner YMCA is a nonprofit organization. Accordingly, the statutory provision applicable here is Wis. Stat. § 108.02(12)(c) which provides:

Paragraph (a) does not apply to an individual performing services for a government unit or nonprofit organization, or for any other employing unit in a capacity as a logger or trucker if the employing unit satisfies the department:

1. That such individual has been and will continue to be free from the employing unit's control or direction over the performance of his or her services both under his or her contract and in fact; and

2. That such services have been performed in an independently established trade, business or profession in which the individual is customarily engaged.

Control or Direction

The commission agrees with the ALJ that the claimant was free from the control or direction of the YMCA in the performance of his services as a basketball official. The only elements of control imposed by the YMCA were to schedule the games, require a uniform, and apply some minor changes to the WIAA rules for basketball games involving younger children. Otherwise, the claimant was required to follow the rules for basketball games set out by the Wisconsin Interscholastic Athletic Association ("WIAA"), not by the YMCA. He also relied on his own skills and expertise, developed over the years as a player and a sports official, to officiate the games as he deemed appropriate.

Independently established trade, business, or profession

In Keeler v. LIRC, 154 Wis. 2d 626 at 632-634 (1990), the Wisconsin Court of Appeals adopted a five-factor method of analyzing the question of whether a worker's services are performed as part of an independently established trade, business, or profession in which the worker is customarily engaged. These factors were described by the court as follows:

1. Integration. This factor is best explained by example as the court did in Moorman Mfg. Co. v. Industrial Comm'n, 241 Wis. 200, 5 N.W.2d 743 (1942). The court illustrated this factor by using the example of a tinsmith called upon to repair a company's gutters when the company is engaged in a business unrelated to either repair or manufacture of gutters. Because the tinsmith's activities are totally unrelated to the business activity conducted by the company retaining his services, the services performed by the tinsmith do not directly relate to the activities conducted by the company retaining these services and these services were therefore not integrated into the alleged employer's business.

2. Advertising or holding out. This factor cited in Princess House [Inc. v. DILHR], 111 Wis. 2d at 46; 330 N.W.2d at 169 [(1983)], deals with the concept that a truly independent contractor will advertise or hold out to the public or at least to a certain class of customers, the existence of its independent business.

3. Entrepreneurial risk. The supreme court in Princess House noted that a truly independent businessman will assume the financial risk of the business undertaking. Id.

4. Economic dependence. If an examination of the economic relationship establishes that the alleged employee is independent of the alleged employer, performs services and then moves on to perform similar services for another, it is proof of an independent trade or business. On the other hand, if the economic relationship shows a strong dependence by the alleged employee on the alleged employer, the public policy behind the Unemployment [Insurance] Act would suggest that the dependent person have access to unemployment compensation benefits. Id.

5. Proprietary interest. In Transport Oil [Inc. v. Cummings], 54 Wis. 2d at 256, 195 N.W.2d at 649 [(1972)], the factor of whether the alleged employee had a proprietary interest in his business is used to determine whether the business was independently established. While the factor includes the ownership of various tools, equipment, or machinery necessary in performing the services involved, it also includes the more sophisticated concept of proprietary control, such as the ability to sell or give away some part of the business enterprise.

The Keeler factors are not to be mechanically applied. Rather, the weight and importance of each factor varies according to the specific facts of each case. The five factors should be applied in a manner consistent with the purpose of the statute. i.e., "to effect unemployment compensation coverage for workers who are economically dependent on others in respect to their wage-earning status." Larson v. LIRC, 184 Wis. 2d 378, 516 N.W.2d 456 (Ct. App. 1994).

Integration - As noted by the ALJ, the services provided by the claimant were integral to the YMCA's sports programming, since the games required an official. As such, the claimant's services were integrated into the typical activities of the YMCA, specifically its sports and recreational events. This factor supports a conclusion that the claimant is an employee.

Advertising or holding out - The evidence does not establish that the claimant has been active in soliciting new work or has done anything overtly to promote himself as a referee for basketball games. Instead, he talked to the YMCA's sports director about the possibility of officiating at basketball games there, and obtained the certification necessary to perform those services. In addition, although he also refereed on a volunteer basis for other entities, he chose to do that only for those entities, and did not advertise or hold himself out to the public as a volunteer referee.

This case is clearly distinguishable from two recent cases in which this factor was deemed to be met, Wisconsin Soccer Association v. LIRC and DWD, No. 08-CV-000102 (Wis. Cir. Ct. Milwaukee County July 22, 2008) and Milwaukee Kickers Soccer Club, Inc., UI Dec. Hearing No. S0600023MW (LIRC Oct. 23, 2008). In Wisconsin Soccer Association, the circuit court noted "overwhelming evidence of significant holding out or advertising via word of mouth, internet, email, person to person - 'hustling' of referee assignments." In Milwaukee Kickers Soccer Club, Inc., the names of referees appeared on a list maintained by a state referee committee, and that list was made available to organizations that were looking for referees. There is no evidence of such activity by the claimant in this case. This factor supports the conclusion that the claimant is an employee.

Entrepreneurial risk - The evidence established very few expenses by the claimant in this case, specifically his uniform, his whistle, and his $30 licensing fee. Given that he was being paid $20 per game, there was no showing that the claimant could lose money performing his officiating duties, or that there was any entrepreneurial risk associated with his officiating activities. Given the evidence provided in the record, this factor supports the conclusion that the claimant is an employee.

Economic dependence - The economic dependence factor was addressed and interpreted in a published Court of Appeals decision, Larson v. LIRC, 184 Wis. 2d 378, 392, 516 N.W.2d 456 (Ct. App. 1994), as follows:

[E]conomic dependence is not a matter of how much money an individual makes from one source or another. Instead, it refers to the survival of the individual's independently established business if the relationship with the putative employer ceases to exist.

The commission has relied on that reasoning in numerous subsequent cases. See, e.g., Williams v. MTEC, UI Dec. Hearing No. 07604021MW (LIRC Nov. 21, 2007) (instructor); Eichman v. Wisconsin Technical College System Foundation, UI Dec. Hearing No. 06003528JV (LIRC Jan. 18, 2007) (emergency preparedness workshop presenter); Ristau v. Fox Valley Symphony Orchestra Association Inc., UI Dec. Hearing No. 06401057AP (LIRC Aug. 23, 2006) (percussionist); Seftar v. Waukesha Symphony Inc., UI Dec. Hearing No. 01609181WK (LIRC April 25, 2002) (bassoonist). In each of these cases, if the individual's relationship with the employing unit at issue ceased to exist, the individual's business would continue. The commission looked at the specialized skills and/or investment in equipment that the individual had, supporting an ability to perform specific services for others, as well as the fact that the individual did such work for others, demonstrating the independence of the individual's work from that of the employing unit at issue.

In this case, the claimant had specialized skills and made the necessary investment in clothes, a whistle, and a license to be able to referee basketball games for other employing units, and he did referee basketball games for other entities, albeit on a volunteer basis.

The commission believes that this demonstrates an independence from the YMCA, at least with regard to the claimant's officiating activities, that supports the view that the claimant's refereeing activity would survive even if his relationship with the YMCA ended. Although a close case, the commission concludes that the claimant is not economically dependent on the YMCA.

Proprietary interest - The claimant had no business that could be sold or given away, nor did he have equipment, other than a whistle. He possessed an officiating license from the WIAA and had built up officiating expertise, but could not transfer either to another person. However, this proprietary interest factor may be considered inapplicable in cases in which the "absence of ownership of significant tangible assets" is typical given the nature of the services at issue. Larson, cited above, at 395. Accord, Wisconsin Soccer Association (sole product offered by referees are their creative services, rendering the traditional view of proprietary interest involving saleable tangible assets inapplicable), cited above; Milwaukee Kickers Association, cited above. The commission finds this factor similarly inapplicable in this case.

In sum, the claimant's services as a basketball official were integrated into the business of the YMCA; the claimant did not advertise or hold himself out to the public as a sports official; and the evidence showed minimal, if any, entrepreneurial risk as a sports official. Although the claimant was not economically dependent upon the YMCA as a sports official and the proprietary interest factor is inapplicable in this case, the other factors support the conclusion that the claimant did not perform his officiating services in an independently established trade, business or profession in which he was customarily engaged.

Accordingly, since both parts of the statutory test were not met, the YMCA has not established that the services the claimant performed for it, as of week 27 of 2011, were performed as an independent contractor, and not as an employee.

The commission therefore finds that, as of week 27 of 2011, the claimant performed his services for the YMCA as an employee, within the meaning of Wis. Stat. § 108.02(12)(c).

BY THE COMMISSION:

/s/ Robert Glaser, Chairperson

/s/ Ann L. Crump, Commissioner

/s/ Laurie R. McCallum, Commissioner

coxtroy : 120 : 1

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