JULIE A MARTIN, Claimant

MADISON NEWSPAPERS INC, Petitioner

An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued an appeal tribunal 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 agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own, except that it makes the following modifications:

1. In the third full paragraph on page 1 of the FINDINGS OF FACT and CONCLUSIONS OF LAW, replace the fifth sentence with the following:

This agreement provided that the claimant would provide articles to the employer in exchange for publication fees, as described in Schedule 1, attached. That schedule was not included in the record.

2. In the third full paragraph on page 2 of the FINDINGS OF FACT and CONCLUSIONS OF LAW, replace the second sentence with the following:

The practice between the employer and the claimant was that the employer would contact the claimant with information about an article to be written, including which person(s) to interview, the context of the story, and the gist of the story to be written. The claimant would then research and draft the article, using her discretion, means and methods. The employer would then review the claimant's article, and might require changes (potential edits) for the claimant to make.

3. In the third full paragraph on page 4 of the FINDINGS OF FACT and CONCLUSIONS OF LAW, delete the fifth sentence through the remainder of that paragraph, and replace that portion of the paragraph with the following:

The claimant was required to redo unsatisfactory work, as determined by the employer, and she received no additional compensation for that additional work, given that she was being paid $.16 per published word. The claimant does not have recurring business liabilities or expenses.

The appeal tribunal decision, as modified, is affirmed. Accordingly, the claimant is eligible for benefits based upon the wages she earned from Madison Newspapers, Inc. during the applicable base period, as set forth in the department's determination.

Dated and mailed October 10, 2013

BY THE COMMISSION:

/s/ Laurie R. McCallum, Chairperson

/s/ C. William Jordahl, Commissioner

/s/ David B. Falstad, Commissioner

The petitioner, Madison Newspapers Inc., (hereinafter "petitioner" or "Madison Newspapers"), is a corporation that publishes various newspapers, including a weekly agricultural newspaper, Agri-View, distributed throughout Wisconsin and parts of the Midwest. The claimant filed a claim for unemployment benefits after her full-time job with a marketing agency ended. She had also provided services for Madison Newspapers during the fourth calendar quarter of 2011, and the first three calendar quarters of 2012, the base period of her unemployment benefits claim, and had been paid $1,000.33 for those services.

Accordingly, the department investigated the claimant's employment status with Madison Newspapers, and issued a determination finding her to be an employee of Madison Newspapers for unemployment insurance benefits purposes.(1) After a hearing, the ALJ affirmed the department's determination, and Madison Newspapers timely filed a petition for commission review of the ALJ's decision.(2)

In its petition for commission review, Madison Newspapers asked, citing Wis. Admin. Code § LIRC 1.04(5), that a transcript of the hearing be prepared, rather than a synopsis. It based its request on the "fact intensive nature of the independent contractor status cases." However, Wis. Admin. Code § LIRC 1.04(5) states that the commission may, on its own motion, base its review on a transcript of a hearing in addition to a synopsis. This provision gives the commission authority to obtain a transcript, but does not require one. The commission utilized its normal procedure in which a synopsis of the hearing was prepared and sent to both parties. The petitioner prepared its own transcript and submitted it with its post-hearing brief, as Appendix 2. However, the petitioner does not argue that the synopsis prepared by the commission was incomplete or inaccurate in any way. Accordingly, the commission has reviewed this matter utilizing the synopsis.

In its petition and supporting briefs, Madison Newspapers agrees with the ALJ's decision that the claimant performed her services free from control or direction by Madison Newspapers, and argues that each of the nine separate conditions in the second test (entrepreneurial risk and economic independence) are met, establishing that the claimant performed her services as an independent contractor. In addition, Madison Newspapers argues that the written contract between the parties expressly memorialized the fact that the claimant was performing services as an independent contractor and not as an employee. The commission notes its concern that the agreement presented by the petitioner and admitted into the record did not include an attachment, Schedule 1, referred to in the agreement. Per the language of the agreement, that attachment includes provisions relating to potential reimbursement for actual expenses and a schedule of publication fees. Whenever a document is presented in an incomplete form, questions arise as to what may have been omitted.

The commission addresses the petitioner'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 County 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.

APPLICABLE LAW

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. The claimant's base period includes calendar quarters after December 31, 2010. Therefore, 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(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, 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:

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 . . .

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(5). 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 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 Madison Newspapers in 2011 and 2012 for pay, Madison Newspapers 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 petitioner argues that the written contract between the claimant and the petitioner,(6) entitled "INDEPENDENT CONTRACTOR AGREEMENT FOR NEWS CORRESPONDENT SERVICES," is clear and unambiguous that the claimant performed her services as an independent contractor. 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. Industrial Comm., 2 Wis. 2d 399, 86 N.W.2d 406 (1957). See also Knops v. Integrity Project Management, 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 addition, Wis. Stat. § 108.24(3) prohibits anyone from attempting to induce an employee to refrain from claiming benefits or waiving any right under the unemployment insurance laws of the state of Wisconsin. The agreement drafted by the petitioner includes such provisions, and the commission notes its concern that these provisions may violate the statute.

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 requirement to comply with instructions concerning how to perform the services. The ALJ found that this factor was met, and the commission agrees. Madison Newspapers did not instruct the claimant as to how to write her articles, but relied on her experience and skill in performing those services. 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. The ALJ found this factor met, and the commission agrees. The claimant received no training from Madison Newspapers with respect to writing her articles. 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 claimant testified that the parties' contract permitted her to engage someone else to help her perform her services, although she never did so. However, the contract provisions do not, in fact, address that issue. In addition, given the nature of the services provided, the commission is not persuaded that this factor is met. Madison Newspapers chose the claimant to write certain articles because she had the education, experience, and skill necessary to do so. Therefore, in the absence of credible evidence that the claimant was free to delegate her work to others, the commission finds that 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. The ALJ found this factor met, and the commission agrees. Although the claimant was given a general deadline, Madison Newspapers did not require that she research and write her articles at any particular times, or in any particular order or sequence. 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. The ALJ found this factor met, and the commission agrees. The claimant was not required to make any oral or written reports, such as progress reports, to Madison Newspapers on a regular basis. This factor is met.

No other factors were raised on the issue of whether the claimant was free from control or direction by Madison Newspapers, and the commission does not note any other relevant factors. Given that four of the five factors were met, Madison Newspapers has established that the claimant performed her services free from its control or its direction.

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 Madison Newspapers has established that six of the nine 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, several of the conditions (conditions a., f., and i.) are the same or substantively similar to the current conditions in the "employee" test applicable to non-profit and governmental organizations, and commission decisions and case law relating to those conditions would be equally applicable in this context.

In its brief to the commission relating to these nine conditions, the petitioner quotes Larson v. LIRC, 184 Wis. 2d 378, 516 N.W.2d 456, 461 (Ct. App. 1994), as follows: "The weight and importance of these factors varies according to the specific facts of each case, and the guidelines are not to be applied mechanically." However, the petitioner's reliance on Larson for that proposition is misplaced in the instant case. In 1994, an entirely different statutory test was being used to determine "employee" status, and the Larson court was specifically referring to the five so-called Keeler factors, enunciated by the court in Keeler v. LIRC, 154 Wis. 2d 626, 632-633 (Ct. App. 1990) (integration, advertising or holding out, entrepreneurial risk, and economic dependence) for use in that particular test. The Keeler court, in devising these five factors, stated that the weight and importance of each factor varies with the specific facts of each case.

In contrast, in this case there is a different statutory scheme that specifically requires that six of nine different conditions be met for a worker to be considered an independent contractor for unemployment insurance purposes. Although the case law that has developed since Keeler and Larson has fleshed out the interpretation of that older test and those five factors, which remain applicable to the "employee" test applicable to non-profit and governmental organizations (as noted above), that is not the proper test for this case involving a private corporation.

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 taking some kind of action to make the public aware of her business and her services. This can take the form of advertising her services as a business, such as through business cards available to the public, posting notices in the newspaper or elsewhere regarding her services, or having an actual place of business. There must be some kind of affirmative action taken by the claimant in which she holds herself out to the public as being in a particular kind of business.

The petitioner argues that this condition is met because the claimant testified that she is a sole proprietor, which is a recognized business entity in Wisconsin, and she held herself out to the Internal Revenue Service as being in business by filing taxes using 1099 forms and deducting business expenses. The commission is not persuaded. Although the petitioner might have been told by unspecified "advisors and mentors" that she was a sole proprietor, she did not initially mark that box on the questionnaire that was provided to her by the department, apparently not considering that she operated a business as a sole proprietor at that time. See Exhibit 1, at 3. The fact that she has been told subsequently by persons unidentified that she is a sole proprietor, or even that she now believes herself to be one, does not necessarily make it so. More importantly, it has no bearing on whether she advertised or affirmatively held herself out as being in business. In addition, Madison Newspapers supplied the 1099 tax forms to her, so she used them in filing her taxes. She did not, however, file business or self-employment income tax returns, and her income tax returns, including any business expenses she may have deducted, are not public documents, were not prepared to advertise her services as a writer, and are not evidence that she affirmatively held herself out as a business.

The petitioner also argues that an article the claimant wrote held her out as being in business because she had a byline that read: "By Julie Martin, Special to Agri-View." The petitioner also argues that there was unrebutted testimony from the claimant that such a byline is typical of the bylines that would be used for articles by freelance contractors. However, no evidence was presented that the claimant requested this byline in order to advertise her services or to hold herself out as being in business. The petitioner's decision to display the claimant's article in that manner has little weight in deciding whether this condition is met.

The petitioner makes a potentially more compelling argument that the claimant is holding herself out to the public as a freelance writer by her use of a LinkedIn profile on the internet.(7) However, the claimant specifically testified that she did not advertise anywhere and did not do anything to promote herself to other businesses regarding her availability for writing or to edit editorials. In addition, she testified that she first established a LinkedIn profile in college, and she described LinkedIn as a social media and, at work, a way to share with fellow colleagues one's past experiences and one's current position. These facts indicate that the claimant was not using LinkedIn to advertise her position as a freelance writer or as a means to affirmatively hold herself out as having a separate business, but simply as a social media site with a professional focus.

In addition, the commission notes that, although the LinkedIn posting contained in the record included a description of the claimant as a "Freelance Writer" and a "Freelance Journalist", the claimant testified that she made those entries in mid-April 2013, after she lost her fulltime employment and well after the period of time (her base period) applicable to this case.(8) The commission is not persuaded, in light of the claimant's specific testimony that she did not advertise or affirmatively hold herself out as being in business, that this condition is met.(9) The commission agrees with the ALJ that 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 petitioner argues that this condition is met. The commission agrees. The new law changed the requirements in the previous condition 3(10) to reflect the changing times in which "consultants, writers, programmers and others" are very mobile, do not maintain their own office, and sometimes do not perform their services in an office. As noted in the committee report, under the new law "those who do not maintain their own office but perform most of their services at locations that they select would satisfy [this] factor". In this case, the claimant chooses where to do her work, and typically writes her articles at home using her own equipment and materials, including a laptop computer, printer, voice recorder, camera, and paper. The commission finds that this condition is 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 pre-2011 test, retaining the first part of that condition relating to multiple contracts. As noted in Gronna v. 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 Financial of Wisconsin, Inc., UI Dec. Hearing No. S0600240MW (LIRC Oct. 23, 2008), and cases cited therein; VanPelt v. Quality Controlled Substances, UI Dec. Hearing No. 07200634EC (LIRC Aug. 31, 2007) (not met when multiple job-specific agreements not negotiated at arm's length).

The petitioner argues that the claimant performed services for Madison Newspapers at the same time that she was working for the marketing agency as a full-time employee, thereby satisfying this condition requiring multiple contracts. The commission disagrees.

The claimant worked as an employee for the marketing agency. That kind of employment relationship, as an acknowledged employee, is not the kind of "contract" contemplated by this statutory provision. Such a relationship is not customarily one in which a working agreement has been negotiated at arm's length; nor is it one with terms that very over time and vary depending upon the specific services covered by the contract. The commission has never accepted the proposition that employment as an employee with another business would constitute a contract satisfying this provision. Furthermore, an additional relationship as an "employee" would not support a finding of independent contractor status. It is the individual's history of entering into multiple contracts as an independent business that is what this condition contemplates. Accordingly, the commission finds that this condition is not 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 pre-2011 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. 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, Schumacher v. Spar Marketing Services, Inc., UI Dec. Hearing No. 11203182EC (LIRC March 21, 2012), and other cases cited therein.

The petitioner argues that this condition is met because the parties' contract provided that the claimant would pay for all of her taxes and the cost of treatment for any injuries she might sustain performing her services, as well as providing her own equipment, materials, and administrative needs; and the claimant testified that she was responsible for all expenses related to her services. The commission disagrees, noting again that each condition must be met "by contract and in fact."

Although it is true that the claimant had expenses in performing her services, it does not appear that her expenses were substantial. She had travel expenses associated with her interviews, expenses in maintaining her car, computer, printer, and voice recorder(11), and costs of office supplies. However, she also used her car and her equipment for personal purposes and, except for her estimate of $20 to $30 per year in office supplies, there is no quantification of her other expenses attributable to performing her services for Madison Newspapers. In addition, Madison Newspapers had expenses, including the administrative costs of securing the claimant's services, communicating with her about the substance of her articles, proofreading and reviewing her articles, providing her with any corrections (potential edits) required and performing a final proofreading of the article, if necessary, and compensating her for her services. Without any quantification of these expenses or an obvious conclusion as to the expenses borne by the parties, it has not been established that the claimant incurred the main expenses of performing her services(12). Accordingly, 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 pre-2011 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." In its report, the committee of the Unemployment Insurance Advisory Council notes that its revision of the condition is based on its concerns that the phrase "liable for a failure to satisfactorily complete the services" in the older law invited controversy as to its proper interpretation. The report states that the revised condition "best reflects the decisions by the Commission and limits the range of doubt and controversy in the future."

The petitioner argues that this condition is met because the claimant was required to redo work that was unsatisfactory (potential edits), and she did not receive extra compensation for that additional work. She was simply paid $.16 per word, based upon the final word count of her published articles. The commission agrees. Although there was not a specific agreement between the parties to the effect that the claimant was obligated to redo unsatisfactory work for no additional compensation, the compensation agreement between the parties limited the claimant to a per-word arrangement. If her work was unsatisfactory in some way and Madison Newspapers required that she change her articles, she was not given additional compensation for those changes. This condition is met.

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

The committee of the Unemployment Insurance Advisory Council notes in its report that this condition is one of the factors currently used by the courts and the commission for government and nonprofit employers, citing 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.

The petitioner argues that this condition is met because the claimant's business was separate from the petitioner's business and neither party was dependent upon the other. However, the petitioner misunderstands this condition.

The claimant, as a writer of articles related to agriculture, performs services that are directly related to, and integrated into, the business of Madison Newspaper's weekly publication, Agri-View, a weekly agricultural publication. See, e.g., Elie v. City Business USA LLC, UI Dec. Hearing No. 11608771MW (LIRC March 28, 2012). The commission finds 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 pre-2011 test, specifically 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). The test is whether, over the term of the contract between the claimant and Madison Newspapers there was 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), and cases cited therein.

The petitioner argues that this condition is met because the claimant "clearly" bore the risk of loss in running her freelance writing business(13). The commission disagrees. The claimant testified that she never suffered a loss under the contract with the petitioner, and it is unlikely that she would suffer a loss since it appears that her expenses were not substantial and she received payment (per word published) for every article that she wrote for the petitioner. See also Elie v. City Business USA LLC, cited previously.

The claimant's testimony that she might suffer a loss if her computer crashed and she was required to buy a new computer is not persuasive. As noted in Alsheski v Codeworks, Inc., UI Dec. Hearing No. 09403672AP (LIRC Feb. 26, 2010), in assessing whether a realistic possibility of loss exists, the proper evaluation is whether there is a genuine business risk if the services are completed as contracted, and "not whether, given the universe of possibilities, something could occur that could result in a loss." However, even if such a loss occurred, since she also used her computer for personal purposes, the effect of such a loss would be difficult to calculate in terms of a profit/loss scenario. Given that this condition analyzes whether a realistic possibility of loss exists over the entire term of the agreement, the commission concludes that such a possibility does not exist. Therefore, this condition is not met.

h. The individual has recurring business liabilities or obligations.

This condition is identical to condition 9 under the pre-2011 test, and requires proof of a cost of doing business that the claimant would incur even during a period of time that she was not performing work for Madison Newspapers, such as office rent, liability insurance, or professional fees. See, e.g., MSI Services Inc., UI Dec. Hearing No. S0600129AP (LIRC Sept. 5, 2008); Gamble v. American Benefit LTD, UI Dec. Hearing No. 04004847MD (LIRC Feb. 15, 2005) (overhead expenses that cannot be avoided by ceasing to perform services).

The petitioner argues that the claimant had recurring business obligations, including the monthly cost of paying for an Internet services provider and a cell phone provider, and the cost of her annual membership dues to the National Agri-Marketing Association (NAMA). However, 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 Services, UI Dec. Hearing No. 08400750AP (LIRC July 31, 2008). The claimant uses the Internet and her cell phone for personal purposes, as well as for performing services for the petitioner. Therefore, these expenses do not satisfy this condition.

As to the claimant's annual NAMA membership dues, this is a closer question. However, there is no evidence that these dues are obligatory in the performance of her services. Individuals may have memberships in all sorts of organizations in which they are interested, and the claimant is clearly interested in agricultural matters. However, there is no evidence that Madison Newspapers has required her to maintain that membership, nor is it necessary in order for her to perform her services for Madison Newspapers. 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 pre-2011 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 Services, Inc., cited previously, 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 Services, Inc., cited previously, and cases cited therein involving, respectively, a Spanish interpreter, a caregiver, and a sports referee.(14)

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 has skills and expertise as a writer on agricultural topics, but she has never worked for other entities as a writer in the capacity of an independent contractor. Therefore, if her relationship with Madison Newspapers ended, the claimant would not be expected to move on to perform similar services on an independent basis for another business, as she has not done so in the past. Therefore, this condition is not met.

In sum, only two (b. and e.) of the nine conditions in the second part of the new test are met. Therefore, since the new Wis. Stat. § 108.02(12)(bm) requires that, first, the claimant be free from the control and direction of Madison Newspapers, and second, 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 her earnings from Madison Newspapers in the fourth calendar quarter of 2011 and the first three calendar quarters of 2012 shall be included in the department's computation of her base period wages.

cc: BRIGETTE BEST
1901 FISH HATCHERY RD
MADISON WI 53713

L MICHAEL ZINSER
ATTORNEY AT LAW
THE ZINSER LAW FIRM
414 UNION ST STE 1200
NASHVILLE TN 37219

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(1)( Back ) The commission notes that this determination relates to the claimant's benefits claim, and does not result in charges to Madison Newspapers' unemployment insurance account. In fact, department records indicate that Madison Newspapers 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 Madison Newspapers. See Wis. Stat. § 108.07(3m) (2011-2012).

(2)( Back ) In its petition for commission review, Madison Newspapers has attached a document purporting to be a petition for commission review from the claimant. That document does not appear in the record of the case, nor does it appear in the case file or in department records. Accordingly, the commission has not designated the claimant as a petitioner in the case. Nevertheless, the commission recognizes that the claimant has performed services for Madison Newspapers with the belief that she is an independent contractor, and not an employee of Madison Newspapers.

(3)( 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).

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

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

(6)( Back ) The agreement is between the claimant and Agri-View, a publication operating under the corporate umbrella of Madison Newspapers. The petitioner does not argue that the department has misidentified the proper employing unit, and the commission accepts the department's identification of Madison Newspapers as the proper employing unit.

(7)( Back ) The petitioner has included two additional documents relating to LinkedIn with its post-hearing brief. However, these documents were not presented at the hearing, and the commission is limited in its review to considering documents from the record of the hearing. See Wis. Admin. Code § LIRC 1.04. Accordingly, the commission has not considered these documents in its review.

(8)( Back ) The commission notes that, depending upon the condition being analyzed and the facts of a particular case, it may be appropriate to examine employment-related actions a claimant takes both before and after an applicable base period. For example, evidence of a claimant's ongoing performance of a similar kind of work as an independent contractor before her base period may establish the existence of multiple contracts. See, e.g., Nature's Pathways LLC, UI Dec. Hearing No. S0800258AP (LIRC Feb. 5, 2010); Fisher v. WisPolitics.com, UI Dec. Hearing No. 06004206MD (LIRC April 24, 2007). In addition, if there is clear evidence that a claimant takes ongoing action consistent with an existing business after her base period, the commission may take that into consideration in evaluating her employment status.

(9)( Back ) As to the petitioner's final argument relating to this condition, the claimant's testimony that she learned of a freelance opportunity through a website and that it was necessary to apply for such a position through a staffing agency is not evidence that she advertised or affirmatively held herself out as having her own business.

(10)( Back ) The previous law required that the individual maintain her own business office.

(11)( Back ) As noted by the commission in Clear Choices, Inc., UI Dec. Hearing Nos. 0300202EC, 0300203EC (LIRC Oct. 26, 2005), the initial purchase price of tools or equipment is not the kind of expense contemplated by this condition; it is the expense of maintaining them and of their periodic replacement due to wear and tear.

(12)( Back ) This case is distinguishable from Elie v. City Business USA LLC, UI Dec. Hearing No. 11608771MW (LIRC March 28, 2012), a case in which the commission found this condition to be met, and also found Elie to be an independent contractor. In Elie, there was evidence that, in addition to costs associated with the specific writing of her business articles, the claimant also had travel expenses, as well as food expenses if she met an interviewee for breakfast or lunch; and she participated in efforts to remain current in her understanding of the business climate, including attending networking meetings that required a payment to attend, and subscribing to a number of business magazines and periodicals.

(13)( Back ) The petitioner repeatedly refers to the claimant as a freelance writer, and the claimant has also used that term to describe herself. Although the term "freelance writer" may be a fairly elastic term, it does connote, at the least, a writer who submits articles to, and has articles published by, various different publications, and who operates fairly independently of those publications. The claimant does not fit into that category. She has written articles for publication for only one entity, the petitioner, and she receives specific writing assignments from the petitioner. The former managing editor testified that she contacted the claimant with information about the article to be written, including which person(s) to interview, the context of the story, and the gist of the story to be written by the claimant.

(14)( Back ) In Wenzel v. School District 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.

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