STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126
http://dwd.wisconsin.gov/lirc/

ANTONIE DAY, Claimant

WEL COMPANIES INC, Petitioner

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 13602608MW


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

The claimant performed truck driving services for WEL Companies, Inc. (hereinafter "WCI") as an acknowledged employee between February 2, 2012, and April 18, 2012. The claimant's duties and responsibilities as an over-the-road truck driver were to pick up loads on time and deliver them in good condition, following federal Department of Transportation ("DOT") regulations and company policies. The claimant was hired, dispatched, and paid out of WCI's corporate office in De Pere, Wisconsin. He was dispatched either via phone or people-net communications.

In April 2012, the claimant asked WCI about becoming an independent lease purchase operator. He was interested because he thought that he could make more money as an independent operator than as a company driver. The claimant met with Cliff Carr, WCI's driver retention manager, who also runs the lease purchase program. After speaking with Carr and looking at a truck that was on site, the claimant signed papers to lease purchase the truck.

On April 19, 2012, the claimant and WEL Truck Leasing, LLC entered into an eight-page "Vehicle Lease Agreement." The agreement provided for a term of 108 weeks, during which time the claimant would make weekly payments. At the end of the term, the claimant could exercise the option to purchase the truck for a predetermined price. Gloria Srenaski, WCI's Director of Safety, signed the "Vehicle Lease Agreement" on behalf of WEL Truck Leasing, LLC.

Under the terms of the agreement, the claimant was responsible to pay for the repair and maintenance of the truck, taxes, fuel costs, and other costs associated with operating the truck. He was also required to acquire and pay for any licenses necessary to operate the truck and to pay any and all employment-related taxes, insurance, benefits, assessments, worker's compensation insurance or benefits, payroll taxes, and the like. In addition, the claimant agreed to enter into an operating lease agreement with WCI for the purposes of providing transportation services in interstate and/or intrastate commerce.

A copy of an operating lease agreement between the claimant and WCI was not presented to the ALJ during the hearing in this matter and, consequently, is not in the record.(1) During the parties' testimony, they referenced a contract between the claimant and WCI. The parties agreed that, after April 18, 2012, the claimant drove for WCI as a lease purchase operator. The claimant was paid 69 percent of the loads he transported for WCI. The claimant could decide what loads he wanted to haul, where he wanted to haul, and when he wanted to work. While the claimant provided trucking services as part of WCI's lease purchase program, he was not completely relieved of his obligations as a driver under WCI's employee handbook. He still had to follow some company policies. Either party could walk away from the contract. WCI was the only carrier for whom the claimant provided trucking services with his leased vehicle.

On January 28, 2013 (week 5), the claimant was involved in a DOT-reportable accident in Pennsylvania while performing services for WCI. As a result of that accident and a previous accident, WCI cancelled its contract with the claimant.

The claimant initiated a claim for unemployment benefits on February 8, 2013 (week 6). The base period for this claim consists of the fourth calendar quarter of 2011 and the first, second, and third calendar quarters of 2012.

Following an investigation into the claimant's eligibility for unemployment benefits, the department issued a determination finding that all of the services the claimant performed for WCI were as an employee and that the claimant had base period wages usable to determine his benefit entitlement based on work for WCI in the following amounts: $0.00 for the fourth quarter of 2011; $5,835.12 for the first quarter of 2012; $2,999.32 for the second quarter of 2012; and $41,077.10 for the third quarter of 2012. The determination found that the total amount of base period wages from WCI was $49,911.54.
The ALJ affirmed the department's finding that all of the services the claimant performed for WCI were as an employee. However, the ALJ found that the claimant had base period wages from WCI in the amount of $41,077.10.

WCI filed a petition for commission review. WCI contends that the claimant provided independent trucking services as of April 19, 2012. It objects to the amount of wages reported by the department for the claimant for the third calendar quarter of 2012.

The issue is whether amounts paid by WCI to the claimant for services he performed during his base period should be treated as wages for benefit computation purposes because the claimant performed these services as an employee.

Applicable Law

Wisconsin Stat. § 108.02 states, in relevant provisions, as follows:

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 ...

(12) EMPLOYEE.

(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).

(c) 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.

(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.

(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..." Since the record shows that the claimant performed services for WCI for pay during the relevant base period, the claimant would qualify as a statutory employee, both before and after April 19, 2012, unless one of the exceptions set forth in Wis. Stat. § 108.02(12)(a) applies.

One of these exceptions, which relates to "truckers," is set forth in Wis. Stat. § 108.02(12)(c). "Trucker" is defined by Wis. Stat. § 108.02(25e) as "a contract operator with a trucking carrier." "Carrier" is defined in Wis. Admin. Code § DWD 100.02(8):

(8) "Carrier" means a person engaged in the hauling of passengers or freight by motor vehicle and includes a person engaged as a "common motor carrier," under s. 194.01 (1), Stats., as a "contract motor carrier," under s. 194.01 (2), Stats., or as a "private motor carrier," under s. 194.01 (11), Stats.

The record shows that WCI qualifies as a motor carrier within the meaning of Wis. Stat. § 194.01. Consequently, WCI would qualify as a carrier, within the meaning of Wis. Admin. Code § DWD 100.02(8).

The term "contract operator" is defined in Wis. Admin. Code § DWD 100.02(12) as "an individual who contracts to lease a motor vehicle to a carrier for use in the carrier's business."  Although an operating lease agreement between the claimant and WCI for the purposes of providing commercial transportation services is not in the record, the parties do not dispute the existence of such an agreement. It is reasonably implicit from the record's reference to a contract between the claimant and WCI, as well as a vehicle lease agreement signed by the claimant requiring the same, that the claimant entered into a separate agreement to lease the truck back to WCI. See Owens v. K & J Transporting Inc., UI Dec. Hearing No. 10604896MW (LIRC Jan. 14, 2011).

Therefore, the claimant would qualify as a contract operator, within the meaning of Wis. Adm. Code § DWD 100.02(12). Since WCI qualifies as a carrier, and the claimant as a contract operator, the claimant satisfies the statutory definition of "trucker."

The next step is to determine whether, within the meaning of Wis. Stat. § 108.02(12)(c), the claimant performed his driving services free from WCI's direction or control. This determination is governed by Wis. Admin. Code § DWD 105.03, which provides as follows:

DWD 105.03 Contract operators; direction and control.

(1) The department shall examine the factors enumerated in this section to determine, both under contract and in fact, whether the contract operator is free from a carrier's direction or control, while the contract operator performs services for the carrier. The department shall determine whether:

(a) The contract operator owns the motor vehicle or holds the vehicle under a bona fide lease arrangement with any person other than the carrier;

(b) The contract operator is responsible for the maintenance of the motor vehicle;

(c) The contract operator bears the principal burden of the motor vehicle operating costs including such items as fuel, repairs, supplies, insurance and personal expenses while on the road;

(d) The contract operator supplies, or is responsible for supplying, the necessary personal services to operate the motor vehicle;

(e) The contract operator determines the details and means of performance, namely, the type of equipment, assignment of driver, loading, routes and number of stops to be made during the haul, as well as starting, completion and elapsed times;

(f) The contract operator may refuse to make a haul when requested by the carrier;

(g) The contract operator may terminate the lease at any time after reasonable notice; and

(h) The contract operator is compensated on a division of the gross revenue or by a fee based upon the distance of the haul, the weight of the goods, the number of deliveries, or any combination of these factors.

(2) If the department determines that all of the factors under sub. (1)(a) to (h) are present in the relationship between the contract operator and the carrier, the contract operator shall be deemed to be free from the carrier's direction and control in the performance of services under s. 108.02(12) (c)1., Stats. If one or more of the factors under sub. (1)(a) to (h) are not present in the relationship between the contract operator and the carrier, the department shall consider additional factors of the relationship, both under contract and in fact, including whether:

(a) The contract operator may negotiate with the carrier to determine the method, frequency and regularity of payments made to the contract operator;

(b) The contract operator has the authority to discharge any driver whom he or she employs;

(c) The carrier requires decals, lettering, signs, emblems or other markings on the contract operator's motor vehicle for the purpose of advertising the carrier's name or business;

(d) The carrier requires the contract operator to submit reports;

(e) The carrier requires the contract operator to obey any work rules or policies; and

(f) The carrier requires any deductions from payments owing to the contract operator for federal or state income taxes or taxes under the federal insurance contributions act.

(3) If the contract operator is found to be under the carrier's direction or control under subs. (1) and (2), the contract operator shall be deemed to be an employee of the carrier under s. 108.02(12)(c)1.,  Stats.

Wis. Admin. Code § DWD 105.03(1)

The record shows that the claimant met six of the eight factors in the first part of the direction or control test stated in Wis. Admin. Code § DWD 105.03(1)(a) through (h). The claimant was responsible for all maintenance on the truck. (1)(b). He bore the principal burden of the truck's operating costs, (1)(c), and supplied the personal services to operate the truck. (1)(d). The claimant could refuse to make a haul, (1)(f), and could terminate his contract with WCI. (1)(g). Lastly, the claimant was compensated on a division of the gross revenue. (1)(h).

The record does not show that the claimant met the factor in (1)(a). The claimant did not own the motor vehicle which he used to perform services for the carrier (WCI), and it was not established that the claimant held the vehicle under a bona fide lease arrangement with any person other than the carrier. The ownership of WEL Truck Leasing, LLC is not known. The individuals with whom the claimant met to lease a truck, Cliff Carr and Gloria Srenaski, were employees of the carrier. Ms. Srenaski signed the vehicle lease agreement on behalf of WEL Truck Leasing, LLC. The name of that entity appeared at the top of the first page of the vehicle lease agreement and then again on the final page and attached schedules, but no one referenced WEL Truck Leasing, LLC during the course of the hearing or identified it as an entity separate from WCI.(2)

To the contrary, WEL Truck Leasing, LLC and WCI were treated throughout the hearing as a single entity. Ms. Srenaski testified that the vehicle lease agreement was signed by the claimant when he "leased the truck from us to sign on as an independent contractor," that he made payments "to us, to WEL Companies," that the truck "was still titled under WEL Companies" while the claimant had it financed, and that WEL owned the vehicle. (Emphases added.) If the claimant had kept the truck after WCI terminated its contract with him, had kept making the payments under the lease, and had driven for other companies, Ms. Srenaski explained that "the WEL Companies only would have received the lease payments" from the claimant.

Furthermore, the department sent WCI an Employment Status Questionnaire to complete in connection with the claimant's application for benefits. Ms. Srenaski completed the form on behalf of WCI. Despite being asked pointedly whether the claimant owned the truck he drove or held it under a bona fide lease arrangement with any person other than WCI, Ms. Srenaski did not answer the question. The commission finds such an omission significant. See Jeffers v. C R England Inc., UI Dec. Hearing No. 08401585AP (LIRC Sept. 19, 2008).

Finally, it was not shown that the claimant met the factor present in (1)(e). Due to the absence of an operating lease agreement between the claimant (the contract operator) and WCI (the carrier), it is not known whether the claimant determined the details and means of performance, including the assignment of driver, both under contract and in fact.

Therefore, because all of the factors under Wis. Admin. Code § DWD 105.03(1) were not present in the relationship between the claimant and WCI, the next step is to determine whether additional factors under Wis. Admin. Code § DWD 105.03(2) were present in their relationship.

Wis. Admin. Code § DWD 105.03(2)

It was not established that any of the factors under Wis. Admin. Code § DWD 105.03(2) were present in the relationship between the claimant and WCI, both under contract and in fact. As noted earlier, an operating lease agreement between the claimant and WCI is not in the record. Thus, it is not known whether the claimant could negotiate with WCI the method, frequency and regularity of payments made to him, (2)(a); whether the claimant had the authority to discharge any driver whom he employed, (2)(b); whether WCI required decals, lettering, signs, emblems or other markings on the claimant's vehicle for the purpose of advertising the carrier's name or business, (2)(c); whether WCI required the claimant to submit reports apart from those regularly associated with driving a commercial truck and transporting freight, (2)(d); or whether WCI required any deductions from payments owing to the claimant for federal or state income taxes or taxes under the federal insurance contributions act, (2)(f). There was no testimony on these issues.

It was established at the hearing established that the factor under Wis. Admin. Code § DWD 105.03(2)(e) was not present. WCI's safety directory testified that the claimant was required to follow some of WCI's policies after becoming a lease purchase operator.

Because WCI did not establish through competent evidence that the claimant was free from its direction or control while performing trucking services for the company, it is not necessary to determine whether the claimant performed his trucking services in an independently established trade, business, or profession in which he was customarily engaged. By the plain terms of Wis. Admin. Code § DWD 105.03(3), the claimant was an employee of WCI under Wis. Stat. § 108.02(12)(b)1. See DWD v. LIRC and Dunham Express Corp., 2010 WI App 123, 329 Wis. 2d 67, 792 N.W.2d 182.

Base Period Wages

The final issue that must be addressed concerns the amount of wages earned by the claimant as an employee of WCI.

The department determined that the claimant has base period wages from WCI usable for benefit entitlement purposes in the following amounts: $0.00 for the fourth quarter of 2011; $5,835.12 for the first quarter of 2012; $2,999.32 for the second quarter of 2012; and $41,077.10 for the third quarter of 2012. The total amount of wages earned by the claimant from WCI during his base period was $49,911.54.

The accuracy of the claimant's reported wages was not addressed during the hearing in this matter. The ALJ summarily found that the claimant had earned wages from WCI for services performed during the applicable base period in the amount of $41,077.10.

WCI's human resources coordinator wrote a letter to the commission, objecting to the wages reported by the department for the claimant for 2012. This letter was treated as WCI's petition for commission review. WCI stated that the wages reported for the second and third calendar quarters of 2012 were correct. WCI objected to the wages reported for the third quarter of 2012, based upon its contention that the claimant was performing services as an independent contract operator after April 18, 2012.(3)

The record in this matter lacks sufficient information upon which the commission can resolve the issue concerning the claimant's base period wages. As a result, pursuant to the authority granted in Wis. Stat. § 108.09(6)(d), the commission sets aside that part of the appeal tribunal decision which addresses the claimant's base period wages and remands that issue to the department for further consideration.

The commission therefore finds that, during the base period consisting of the fourth calendar quarter of 2011 and the first, second, and third calendar quarters of 2012, the claimant performed trucking services for WEL Companies, Inc. as an employee, within the meaning of Wis. Stat. § 108.02(12)(c) and Wis. Admin. Code Ch. DWD 105.

The commission further finds that the record in this matter concerning the claimant's usable base period wages from work for WEL Companies, Inc. is insufficient and remands that issue to the department.

DECISION

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 in part. Accordingly, all of the services performed by the claimant for WEL Companies, Inc. during his base period were performed as an employee. The issue concerning the amount of wages earned by the claimant in that employment usable to calculate benefit entitlement is remanded to the department.

Dated and mailed September 20, 2013

BY THE COMMISSION:

/s/ Laurie R. McCallum, Chairperson

/s/ C. William Jordahl, Commissioner

/s/ David B. Falstad, Commissioner

MEMORANDUM OPINION

WEL Companies, Inc. ("WCI") petitioned for commission review of the adverse appeal tribunal decision, which found that the claimant had performed all of his work for the company as a statutory employee. WCI argued that the claimant was no longer an employee after he stopped driving a company truck in April 2012 because he was an independent contract operator. For the reasons stated in its decision, supra, the commission is not persuaded.

"In looking for evidence bearing on the question of whether a contract operator is an independent contractor or an employee of a carrier, what is relevant is 'the relationship between the contract operator and the carrier.'" Crossroads Express Inc., UI Dec. Hearing Nos. S0800185WR and S0800019WR (LIRC Oct. 22, 2009). The carrier bears the burden of establishing through competent and credible evidence that a contract operator is not an employee of the carrier under Wis. Stat. § 108.02(12)(c). WCI did not meet its burden in this case. WCI failed to establish that the claimant, as a contract operator, performed his services for the company free from WCI's direction or control, in contract and in fact. The relevant terms of the relationship between WCI and the claimant are not known. Their operating lease agreement is not in the record.

The commission notes that WCI attempted to introduce the missing evidence by attaching an affidavit and three exhibits to its brief to the commission. However, the hearing was WCI's opportunity to present evidence in this matter. The hearing notice sent to WCI contained the following warning: "This hearing is your only opportunity to present documents and testimony as evidence in this case. Any future review of this case is based upon the record made at this hearing." Therefore, the commission has not considered the factual assertions made by WCI which are not supported by the record. See Owens v. K & J Transporting, Inc., UI Dec. Hearing No. 10604869MW (LIRC Jan. 14, 2011)(further hearing to permit the carrier the opportunity to offer the operating lease agreement and other documents into the record is not merited).

The commission agreed with the ALJ's finding that the claimant provided services for WCI after April 18, 2012, as an employee. The commission wrote its own decision in order to more fully reflect its conclusions as to which factors were present in the relationship between the claimant and WCI based on the evidence in the record.


dayan_urr . doc : 152 : EE 421

cc: ATTORNEY ANNIE EIDEN
GODFREY & KAHN SC

 

 

 

 


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Footnotes:

(1)( Back ) WCI attempted to supplement the record by attaching an affidavit and exhibits, including a copy of the operating lease agreement, to its brief to the commission. The commission did not consider the affidavit or the attached exhibits. Pursuant to Wis. Admin. Code § LIRC 1.04, the commission's review shall be based on the record of the case including the evidence previously submitted at hearing before the department.

(2)( Back ) Contrast the case of Crossroads Express Inc., UI Dec. Hearing Nos. S0800185WR and S0800019WR (LIRC Oct. 22, 2009), in which there was testimony at the hearing that the truck leasing company and the carrier were different entities.

(3)( Back ) Although not part of the record, two of the exhibits WCI attached to its brief concern this issue. One exhibit is a W-2 showing that in 2012 the claimant was paid wages by WCI totaling $8,834.44. The second exhibit is a Form 1099 showing that in 2012 the claimant received nonemployee compensation from WCI totaling $123,231.32. Given that the claimant was paid differently by WCI after April 18, 2012, which was only three weeks into the second quarter of 2012, it appears that the claimant's wages for that quarter are grossly underreported. In addition, the accuracy of the claimant's third quarter wages cannot be ascertained based on the limited information in the record.