PATRICIA S ZIBURSKI, Claimant/Petitioner

CASTFORCE INC, Employing Unit/Respondent

The claimant/petitioner performed services as a merchandiser for Castforce, Inc., (hereinafter "Castforce" or "the respondent"), a retail merchandising business, in the third calendar quarter of 2012, part of the base period for an unemployment benefits claim that she filed. She last performed services for Castforce on July 28, 2013. In the third calendar quarter of 2012, she earned $91 from Castforce.

Accordingly, the department investigated the claimant's employment status with Castforce, and issued a determination finding her to be an employee of Castforce for unemployment insurance benefits purposes.(1) After a hearing, the ALJ reversed the department's determination and found that the claimant was not Castforce's employee, but was an independent contractor, and the claimant timely filed a petition for commission review of the ALJ's decision.

The issue is whether the claimant performed services for Castforce as an employee or as an independent contractor during the base period of her benefits claim.

During the period at issue, the claimant performed merchandising services for 27 other businesses. She paid a membership fee to the Shadow Shopper, a website that posts information about retail merchandising job opportunities, and she provided her name to the National Association for Retail Marketing Services (NARMS) indicating her availability for work as a retail merchandiser for its members, retail merchandising businesses. She also received work through word of mouth, with supervisors referring her to other assignments.

Castforce, using a database from NARMS, obtained the claimant's name, and contacted her about joining Castforce. In November 2011, the claimant signed an agreement with Castforce, designated "INDEPENDENT CONTRACTOR AGREEMENT," to perform in-store merchandising or related services.

Castforce would send the claimant an email about work opportunities, or assignments, with businesses in her area, and the claimant would either accept or decline those assignments online. Castforce would provide instructions on what its client wanted done, and in what manner, as well as a general timeframe for completion of the assignment. At the time that she began performing services for Castforce, the claimant was fully trained as a retail merchandising agent, having performed this work for 15 years, and she was not provided any training by Castforce. She was required to perform the work herself, and was not permitted to subcontract the work to any other person. Upon completion of an assignment, she would send Castforce an invoice, including answers to questions about the assignment and pictures of the completed assignment. Her pay was typically $11 per completed assignment.

The claimant incurred travel expenses, and expenses in the use of her personal cell phone, as well as her landline telephone, computer (with internet access), and printer located in her home. She did not have a home business office. She performed the specific merchandising services at Castforce's clients' locations, sometimes with tools she received from the client. If her work was unsatisfactory and she returned to redo the work, she would not be paid extra for correcting the work.

In her petition for commission review, the claimant argues that the ALJ made several errors in his findings. The commission addresses the claimant's arguments in its analysis below, and notes that commission review of a decision of an administrative law judge is not appellate in nature, but instead a de novo review of the factual record and the parties' arguments. See Dane Cnty. Hockey Officials Ass'n, UI Dec. Hearing No. S9800101MD (LIRC Feb. 22, 2000). Accordingly, the commission review is not confined to analysis of only those factors or conditions with which the petitioner disagrees. Its review encompasses each of the applicable statutory factors and conditions.

Substantive changes were made to the statutory definition of "employee" in Wisconsin unemployment insurance law by 2009 Wisconsin Act 287, enacted on May 12, 2010, and applicable to services performed after December 31, 2010. Since the base period quarter at issue is the third calendar quarter of 2012, the analysis of the claimant's employment status will use the applicable 2011 law.

The commission notes that, in its interpretation of the new law, it has looked, when appropriate, to the legislative history giving rise to the change in the statute, specifically a report to the Unemployment Insurance Advisory Council(2) dated June 25, 2009, by the committee appointed to study and to suggest changes to the definition of "employee" under § 108.02(12).(3) 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, 130, 50 N.W.2d 410 (1951).

Certain provisions in the law were left unchanged and are applicable both before and after December 31, 2010. These provisions include specific conditions from the old law that were considered by the committee to remain useful and were retained in the new law, as well as the general provisions that are cited below:

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

(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 . . .

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 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 six or more of nine specific conditions relating to economic independence and entrepreneurial risk.

Wisconsin Stat. § 108.02(12)(a) was not substantively changed by the new law(4). 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 Cnty. Hockey Officials Ass'n, cited previously; Quality Communications Specialists, Inc., UI Dec. Hearing Nos. S0000094MW, S0000095MW (LIRC July 30, 2001).

Therefore, since the record shows that the claimant performed services for Castforce in 2012 for pay, Castforce has the burden to rebut the presumption that she did so as a statutory employee. It must establish that she operated free from its control or direction and that she met at least six of the nine conditions set forth in the statute.

The commission notes that the parties signed an agreement entitled "INDEPENDENT CONTRACTOR AGREEMENT." However, it has been a longstanding tenet of unemployment law in Wisconsin that the claimant's status as an independent contractor or a statutory employee is determined by statute, and not by the terms of a private agreement. Roberts v. Indus. Comm'n, 2 Wis. 2d 399, 86 N.W.2d 406 (1957). See also Knops v. Integrity Project Mgmt., UI Dec. Hearing No. 06400323AP (LIRC May 12, 2006).

Furthermore, the statutory provision at issue, Wis. Stat. § 108.02(12)(bm), specifically states that an employing unit must meet the statutory criteria in the two subdivisions "by contract and in fact". In other words, a contract (or agreement) between the parties is not sufficient alone to establish that independent contractor criteria are met. A hearing in which questions are asked and employment circumstances described is the proper setting to determine the actual facts of the employment.

Finally, the unemployment statute specifically states, at Wis. Stat. § 108.12, that "[n]o agreement by an employee to waive the employee's right to benefits or any other rights under this chapter shall be valid." In sum, the claimant's status as an independent contractor or an employee, for unemployment insurance purposes, is determined by statute, and not by any agreement or understanding between the parties.

Analysis of Conditions

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 her 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 factor looks at whether the individual is free from the employing unit's direction to comply with instructions concerning how to perform the services. In this case, the client provided instructions to Castforce about what was required for each project, and then Castforce relayed that information to the claimant, who worked independently in performing the services. The commission has held, in cases involving condition 4 of the previous law and the issue of control, that instructions imposed by a client, even if they are communicated by the employing unit, are not the kind of control contemplated by the statute. See, e.g., Nations Carelink LLC, UI Dec. Hearing No. S0800037MD (LIRC Dec. 17, 2008). That analysis is equally applicable to this factor in the new law. Therefore, the commission finds that this factor is met.

b. Training - This factor looks at whether the individual is free from training by the employing unit with respect to the services performed. Here, the evidence demonstrated that the claimant received no training from Castforce related to the services she performed. This factor is met.

c. Personal performance - This factor looks at whether the individual is free from the requirement of personal performance of the services. The evidence demonstrated that the claimant was required to personally perform her services, and could not hire someone else to do the work for her. This factor is not met.

d. Services at times or in a particular order or sequence - This factor 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. In this case, the claimant had a window of time within which she was expected to perform each assignment. However, within that window of time, the work could be done at times and in whatever sequence she chose. This factor is met.

e. Oral or written reports - This factor looks at whether the individual is free from the requirement of making oral or written reports to the employing unit on a regular basis. The ALJ found that this factor was met. He concluded that the claimant was not required to make or submit reports other than an invoice at the end of each project, and that an invoice is not the kind of report that the statute contemplated.

In her petition, the claimant claims that the ALJ's conclusion is not accurate, and that she had to submit pictures of work accomplished, answer an online survey, and submit an invoice signed by the store department manager. With her petition, the claimant has attached two documents in support of her argument. However, the commission's rules provide that review by the commission shall be based on the record of the case including the evidence previously submitted at hearing before the department. Wis. Admin. Code § LIRC 1.04. The commission cannot consider factual assertions made in the petition for review, or documents submitted with the petition for review, that were not also made or submitted at the hearing. Therefore, the commission cannot consider the two documents since they were not presented at the hearing. However, there is evidence in the record relating to these documents that the commission may consider. The claimant testified that she submitted invoices to Castforce at the end of each assignment, and that each invoice form included questions that she answered. She also testified that, with the report, she uploaded onto the website pictures of the work that she did.

The commission has considered the claimant's argument and these kinds of reports, and has concluded that these documents do not constitute reporting on a "regular" basis, within the meaning of the statutory language. Webster's Third New International Dictionary(5) defines "regular" as "returning, recurring, or received at stated, fixed or uniform intervals." In the instant context, the term "regular" connotes reporting at the end of a specified time interval, regardless of whether the individual job is completed by that date. The commission considers the communication of information at the close of an assignment to be a typical requirement of most working relationships, whether the individual performing the services is an employee or an independent contractor. Accordingly, the commission agrees with the ALJ, and finds that this factor is met.

No other factors were raised by either party on the issue of whether the claimant was free from control or direction by Castforce, and the commission does not note any other relevant factors. Given that four of the above five factors have been met, the commission finds that the claimant performed her services free from control or direction by Castforce. Accordingly, 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 Castforce has established that 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 entrepreneurial risk

Several of these conditions, in whole or in part, are the same as conditions contained in the previous law. As noted previously, the committee recommending the changes in the law chose not to change these particular provisions due to their continuing relevance and usefulness. Accordingly, the commission decisions and case law relating to these conditions under the previous law would retain their applicability. In addition, three of the conditions (conditions a., f., and i.) are the same or substantively similar to the current conditions in the "employee" test applicable to nonprofit and governmental organizations, and commission decisions and case law relating to those two conditions would be equally applicable in this context.

a. The individual advertises or otherwise affirmatively holds himself or herself out as being in business.

This condition can be met if it is established that the individual is advertising her services, such as through business cards, posting notices in the newspaper or elsewhere regarding her services, or having an actual place of business. It can also be met if the individual is affirmatively holding herself out as being in business or performing particular services, by taking some kind of action to make the public, in particular those entities who would be interested in her services, aware of her availability to perform those services. See, e.g., Keeler v. Labor & Indus. Review Comm'n, 154 Wis. 2d 626, 631, 453 N.W.2d 902 (Ct. App. 1990) (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); Wis. Soccer Ass'n v. Labor & Indus. Review Comm'n, No. 08-CV-102 (Wis. Cir. Ct., Milwaukee Cnty. July 22, 2008) (offering, advertising or holding out of services to multiple members of the relevant economic community strongly indicates the existence of an independent, established trade or profession); Milwaukee Kickers Soccer Club, Inc., UI Dec. Hearing No. S0600023MW (LIRC Oct. 23, 2008) (referees held themselves out to potential customers or clients as available for refereeing work, by putting their names on a list maintained by the State Referee Committee, accepting offers and making inquiries as to open positions for tournaments, and shopping around for games); Eichman v. Wis. Technical Coll. Sys. Found., UI Dec. Hearing No. 06003528JV (LIRC Jan. 18, 2007) (individual who presented emergency preparedness workshops to students and staff in public school districts was well known within the emergency preparedness community and highly regarded there as a trainer, held himself out to this community as a professional instructor).

The ALJ found that this condition is met, and the commission agrees. Although the claimant did not advertise in the traditional sense, she did provide her name to NARMS, the trade association for retail marketing, to share with its members, those organizations in the business community who would be interested in her services. She also made her availability known in the retail merchandising community through the many assignments she performed and the good reputation she established.

The commission notes that had the claimant simply gone to one or more websites to see what jobs were available, even if she paid for the privilege (as with Shadow Shopper), then she would not be "holding herself out" as a retail merchandiser, but would simply be looking for a job.(6) In addition, if in providing her name to a website, she indicated that she was looking for a position as an employee of a business or her work experience consisted of work as an employee and not as an independent contractor, she would not be holding herself out as being in business. See, e.g., Rohland v. Go2 IT Grp., UI Dec. Hearing No. 12202959EC (LIRC Feb. 14, 2013), aff'd sub nom. Career Connections Staffing Servs., Inc. v. Labor & Indus. Review Comm'n, No. 13-CV-179 (Wis. Cir. Ct. La Crosse Cnty. Oct. 23, 2013) (posting of resume online for purposes of obtaining employment, not as advertisement or holding himself out as being in business).

However, in this case, the claimant provided her name to a trade association for the purpose of obtaining multiple assignments providing retail merchandising services to retail merchants, and she did not indicate that she was looking for a position as an employee. The commission concludes that, by her actions, she is holding herself out to the relevant economic community as someone who is in the trade or profession of retail merchandising.(7) Accordingly, this condition is met.(8)

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.

This two-part condition requires that an individual maintain her own office or choose where to perform her services, and that she use her own equipment or materials in performing the services. The ALJ found that this condition was not met, and the commission agrees.(9) In this case, there is no evidence that the claimant had her own office, nor is there evidence that she chose where to perform her services. In that regard, in its explanation of this changed condition, the committee of the Unemployment Insurance Advisory Council notes in its report that the old requirement of an office was too narrow a concept for many workers who are highly mobile and do not maintain an office, such as consultants, writers, and programmers. Such individuals might serve customers through the internet with a computer and telephone, perhaps from a library or coffee shop. That is not the case here, where the services to be performed must be performed in a particular location, one that is not chosen by the claimant. Therefore, since both parts of this condition must be met, and the first part is not met, this condition is not met.

c. The individual operates under multiple contracts with one or more employing units to perform specific services.

This condition is similar to condition 4 under the old test, retaining the first part of that condition relating to multiple contracts. Therefore, cases analyzing the multiple contracts part of the old test are applicable under the new test. The ALJ found that this condition is met and, in her petition, the claimant does not dispute that this condition is met.

As noted in Thomas Gronna dba The Floor Guys, UI Dec. 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 Fin. of Wis., Inc., UI Dec. Hearing No. S0600240MW (LIRC Oct. 23, 2008); Zoromski v. Cox Auto Trader, UI Dec. Hearing No. 07000466MD (LIRC Aug. 31, 2007) (a single, continuing relationship with conditions dictated by the putative employer does not satisfy the multiple contracts requirement). See also Dane Cnty. Hockey Officials Ass'n, cited previously (condition not met, officials do not negotiate and renegotiate pay rates with DCHOA, but accept rates provided for matches to which they are assigned).

The multiple contracts requirement is not met by the claimant's services for Castforce, even though she may perform different assignments for Castforce at different times. In VanPelt v. Quality Controlled Substances, UI Dec. Hearing No. 07200634EC (LIRC Aug. 31, 2007), the commission found that regardless of whether the relevant contract involved there was a single written contract between the company and the claimant, or multiple agreements created by the claimant's acceptance of specific jobs posted online, the "multiple job-specific agreements" with the company's retail clients were not negotiated at arm's length and, therefore, the multiple contracts requirement was not met. In this case, although the claimant obtained information from Castforce about potential assignments, there were no arm's length negotiations about the terms and conditions of each assignment. As in VanPelt, the claimant either accepted the job or did not take it, but she relied on her continuing relationship with Castforce to obtain the assignments, and she remained subject to provisions contained in the one continuing services agreement with Castforce.

However, the claimant testified that she provided merchandising services for 27 other business entities and, in the worker status questionnaire (Exhibit 5), she indicated that she was an acknowledged or reported employee for only three of them(10). Under these circumstances, given the sheer number of other companies for whom she performed similar services and the lack of evidence that her relationship with most of them was as an employee, the commission is persuaded that there is sufficient evidence in the record to find that this condition is met.

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 cases analyzing condition 5 are applicable to this condition under the new test. Applying this condition 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 Fin. of Wis., Inc., cited previously; J Lozon Remodeling, UI Dec. Hearing No. S9000079HA (LIRC Sept. 24, 1999). In that regard, the commission has consistently held that, without a quantification of these expenses or an obvious conclusion as to the expenses borne by the respective parties, it must be found that this condition has not been met. See, e.g., Gustavson v. Carpenters, Inc., UI Dec. Hearing No. 09400168AP (LIRC April 30, 2009).

The ALJ found that this condition was met because the claimant incurred continuing expenses, including travel and office-related expenses, and Castforce did not bear any of the expenses. The commission disagrees. In this case, the claimant's expenses are not quantified in the record. Castforce also had expenses related to the administrative costs of operating and updating its online database, communicating with its client and the claimant about assignments, approving the claimant's reports, and compensating the claimant for her services. In addition, Castforce's clients presumably had expenses associated with the services the claimant was performing in their stores, including the expenses of tools provided to the claimant on occasion. Since these expenses are not quantified in the record and it is not obvious that the claimant's expenses would necessarily exceed those of Castforce and its clients, the commission finds that this condition is not met.

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."

The ALJ found this condition met and, in her petition, the claimant does not disagree. The claimant is obligated to redo unsatisfactory work for no additional compensation, and that satisfies the new condition. This condition is met.

f. The services performed by the individual do not directly relate to the employing unit retaining the services.

This condition relates to the "integration" of the individual's services into the kind of work done by the employing unit. The committee of the Unemployment Insurance Advisory Council notes in its report that this is one of the factors currently used by the courts and the commission for government and nonprofit employers, citing the case of Keeler v. Labor & Indus. Review Comm'n, cited previously. 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, as a merchandiser, performs services that are integrated into the business of Castforce, a retail merchandising business. The commission agrees with the ALJ that 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, which requires a finding that an individual 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). Therefore, cases analyzing condition 8 under the old test are applicable to this condition of the new test.

The test is whether, over the term of the agreement between the claimant and Castforce, there is a realistic possibility that the claimant could realize a profit or suffer a loss. See, e.g., Zabel v. Snyder's of Hanover, UI Dec. Hearing No. 10000988MD (LIRC Sept. 2, 2010) (even though claimant suffered losses during certain weeks, there was no realistic possibility of loss over term of agreement); Alsheski v. Codeworks, Inc., UI Dec. Hearing No. 09403672AP (LIRC Feb. 26, 2010) (proper test is whether there is a realistic possibility of loss if individual successfully completes services).

The ALJ found that this condition was met since the claimant admitted that she could have suffered a loss if she did not do an assignment correctly. The commission disagrees that the claimant's testimony supports a finding that this condition is met. As noted in Alsheski, cited above, the proper test in this condition assumes successful completion of the services performed. The claimant also testified that she received a flat fee for each assignment, and if she performed the assignment properly, she would make money.

The commission agrees that, although the claimant might realize a profit by earning more than she had to spend in expenses, it is not likely that she would suffer a loss. Although her expenses were not quantified, it does not appear that they were substantial. There was no "unpredictability inherent in the business enterprise," that risk of loss that exists in a real business, as described in Dane Cnty. Hockey Officials Ass'n, cited previously. This condition is not met.

h. The individual has recurring business liabilities or obligations.

This condition is identical to condition 9 under the old test, and the cases analyzing that condition under the old law are applicable to this condition in the new law. This test requires proof of a cost of doing business that the claimant would incur even during a period of time she was not performing work for Castforce. The commission has interpreted the "recurring business liabilities and obligations" in this condition to involve overhead types of expenses, such as expenses for liability insurance, continuing education expenses, membership dues and other business costs that are of a continuing or recurring nature, regardless of whether a claimant is performing services at the time. See, e.g., MSI Servs., Inc., UI Dec. Hearing No. S0600129AP (LIRC Sept. 5, 2008); Clear Choices, Inc., UI Dec. Hearing Nos. S0300202EC, S0300203EC (LIRC Oct. 26, 2005) (expenses that are incurred regardless of the level of actual business activity); Gamble v. Am. Benefit LTD, UI Dec. Hearing No. 04004847MD (LIRC Feb. 15, 2005) (overhead expenses that cannot be avoided by ceasing to perform services).

The ALJ found that this condition was not met, and the commission agrees. Any travel expenses of a business nature would not exist if she was not performing merchandising services, i.e., would not be recurring, and the only other potentially recurring costs she might have would be for her cell phone, landline, computer and printer maintenance, and internet access. However, the claimant also used these items for personal purposes. The commission has consistently held that such costs must be for business purposes alone or they do not qualify as business liabilities or obligations. See, e.g., Start Renting, Inc., UI Dec. Hearing No. S0800059MD (LIRC May 15, 2009); Kunst v. Energy Marketing Servs., UI Dec. Hearing No. 08400750AP (LIRC July 31, 2008).

However, the commission notes that the claimant does pay a membership fee to the Shadow Shopper, a website that posts information about retail merchandising job opportunities. In this case, though, there is no evidence that these dues are obligatory in the performance of the claimant's merchandising services. As noted in Martin v. Madison Newspapers Inc, UI Dec. Hearing No. 13001922MD (LIRC Oct. 10, 2013), individuals may have memberships in various organizations in which they are interested, and the claimant is clearly interested in working in the retail merchandising field. However, the commission does not believe that simple membership in an organization to which an individual pays dues (and that is in some way related to the services performed) automatically qualifies as a business liability or obligation under this condition. Without more evidence that these dues are a business liability or obligation, the commission finds that this condition is not met.

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 Unemployment Insurance Advisory Council committee report states that "[f]or many years, economic independence has been acknowledged by the Commission and the courts as an important factor in the test applicable to government and nonprofit employers."

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., Schumacher v. Spar Marketing Servs., Inc., UI Dec. Hearing No. 11203182EC (LIRC Mar. 21, 2012), and other cases cited therein. In four of those cases - involving, respectively, an instructor, an emergency preparedness workshop presenter, a percussionist, and a bassoonist - 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 contrast, in other cases in which an individual has performed services for multiple entities, the commission has considered whether the individual performed such services as part of an independently established business rather than as an employee, recognizing that individuals may work as acknowledged employees, holding several part-time jobs, or a part-time job and a full-time job. See, e.g., Schumacher v. Spar Marketing Servs., Inc., cited previously, and cases cited therein involving, respectively, a Spanish interpreter, a caregiver, and a sports referee.(11)

Accordingly, in interpreting the new law, the commission has taken an approach that recognizes these various rationales. For example, in Bentheimer v. Bankers Life & Casualty, UI Dec. Hearing No. 10006546JV (LIRC Aug. 16, 2011), the claimant worked full-time for Bankers Life, an insurance company, and was clearly economically dependent on that business, as the commission found. Although she might move on to perform services for another insurance company if her relationship with Bankers Life ceased to exist, taking her skills and experience with her, she would not be doing so as an independently established business, but as an individual employee.

The commission notes that analysis of this condition must be made on a case-by-case basis, taking into consideration each claimant's circumstances and whether there are the characteristic signs of a viable independently established business. In this case, the claimant had skills and expertise as a merchandiser and she has worked as a retail merchandiser for other entities for which she was not an acknowledged employee. Accordingly, she was not economically dependent upon Castforce. If the employment relationship ended with Castforce, which it did, the claimant's ongoing work as a merchandiser would survive. Accordingly, the commission finds that this condition is met.(12)

In sum, only four of the nine conditions in the second part of the new test are met. Therefore, although the claimant is free from Castforce's control or direction, the second part of the test, requiring at least six of the nine conditions to be met for the claimant to be considered an independent contractor, is not met. Therefore, the claimant must be considered an employee of Castforce, and her earnings from Castforce shall be included in the department's computation of her base period wages.

Dated and Mailed November 22, 2013

BY THE COMMISSION:

/s/ Laurie R. McCallum, Chairperson

/s/ C. William Jordahl, Commissioner

/s/ David B. Falstad, Commissioner

NOTE: The commission has reversed the decision of the ALJ in this case not based on a differing view of the credibility of the witnesses, but due to a differing conclusion as to what the hearing record in fact established and a differing interpretation of the
relevant law.

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(1)( Back ) Department records indicate that Castforce will not be charged for benefits for which the claimant may be eligible during this claim even if the claimant is determined to be its employee, because less than 5% of her total base period earnings are attributable to Castforce. See Wis. Stat. § 108.07(3m).

(2)( Back ) This advisory council exists as a part of the original unemployment compensation law enacted in Wisconsin in 1932. It is made up of an equal number of members of labor and management, with a nonvoting department representative as its chairperson. The council meets regularly, and is charged with submitting recommended changes in the unemployment insurance law to the Wisconsin legislature. See Wis. Stat. § 15.227(3).

(3)( Back ) The committee's suggestions for changes to § 108.02(12)(bm) were adopted in the new law.

(4)( Back ) The only change in its language is the omission of obsolete subparagraph (b).

(5)( Back ) Webster's Third New International Dictionary 1913 (1993).

(6)( Back ) See, e.g., Cox v. YMCA of N. Rock Cnty., Inc., UI Dec. Hearing No. 11004406MW (LIRC March 29, 2012) (not active in soliciting new work nor done anything overtly to promote himself as a referee; simply talked to the YMCA's sports director about officiating and obtained certification to do so; chose certain other entities to perform refereeing services on a volunteer basis); Mitchell v. YMCA of N. Rock Cnty., Inc., UI Dec. Hearing No. 11003986MD (LIRC Jan. 30, 2012) (responded to internet ad placed by the YMCA to officiate at basketball games during the summer, just as an employee would; his officiating for several school districts was done as an acknowledged employee).

(7)( Back ) In contrast, the commission found, in Martin v. Madison Newspapers, Inc., UI Dec. Hearing No. 13001922MD (LIRC Oct. 10, 2013), that the claimant's membership in the LinkedIn website did not satisfy this condition due to her use of the website as a professional social site, rather than as an advertising vehicle.

(8)( Back ) The commission notes that factual circumstances vary in each case and that often the record is not fully developed on this issue. However, in analyzing each condition, it is important to keep in mind that the purpose of the statutory conditions is to determine whether the underlying facts support a finding of employee or independent contractor status.

(9)( Back ) In her petition, the claimant takes exception to the ALJ's factual finding that, in addition to performing the work at the customer's place of business, she worked out of her home. The commission has written its own decision, using different language. However, the commission notes that the claimant, presumably, obtained information about job opportunities and communicated about assignments from her computer at home, justifying the ALJ's factual findings. Nevertheless, the ALJ also concluded that the claimant did not have a home office or choose the place to perform the services, a conclusion with which the claimant agrees.

(10)( Back ) The commission has repeatedly stated that work for another entity as an employee does not constitute another contract under this condition, as that does not support a finding of independent contractor status.

(11)( Back ) In Wenzel v. Sch. Dist. of Stratford, UI Dec. Hearing No. 08202476EC (LIRC Mar. 26, 2009), the commission looked at the income earned by the individual from the employing unit at issue and compared it to income earned from his primary source of income in determining economic (in)dependence. The commission found that Wenzel had little or no economic dependence on the employer for the work he was engaged in because his pay as a referee was incidental to his primary source of income, and that this was more consistent with Wenzel being an independent contractor than an employee. This economic dependence analysis in Wenzel is at odds with the court of appeals' decision in Larson; however, this was harmless error as the commission ultimately found that Wenzel's work as a referee was as an employee and not as an independent contractor. The commission is bound by and follows Larson in its analysis of the economic dependence factor.

(12)( Back ) In her petition, the claimant disputes the ALJ's finding that she did not rely on the employing unit for her livelihood, arguing that she relies on each and every one of the multiple businesses for whom she provides services. The commission understands her argument and does not disagree. The issue presented by this condition, however, is whether she is economically dependent upon Castforce. Given the multiple other businesses for whom she also provides merchandising services, she cannot be considered dependent upon Castforce. 

zibumod_urr.doc:120 : EE 450 EE 450.01 EE 450.01a EE 450.01e EE 450.02a EE 450.02c EE 450.02h EE 450.02i

Decision is currently on appeal to circuit court, Douglas Co. Circuit Court Case No. 13CV401.

uploaded 2014/02/07