STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)
DANE COUNTY HOCKEY OFFICIALS ASSOCIATION, INC, Employer
UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Account No. 373886, Hearing No. S9800101MD
An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.
The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission makes the following:
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Petitioner Dane County Hockey Officials Association, Inc. (hereinafter, "DCHOA") is a tax-exempt non-profit membership organization. Its members perform hockey officiating services for teams sponsored by amateur/youth hockey leagues and associations. DCHOA as an organization is involved in these hockey activities in that, in certain situations, it works with leagues and associations to schedule officials for games and collects the officials' fees from the leagues and associations and then disburses the fees to the officials who were scheduled to officiate the games.
Amateur hockey is organized at the local, state and national level by a number of connected organizations. The national organization is "USA Hockey". The Wisconsin affiliate of this organization is the "Wisconsin Amateur Hockey Association" (WAHA). At the local level, in Wisconsin, there are a number of local associations which sponsor league play. In addition to the "Dane County Youth Hockey Council", there are in the Dane County area a number of local associations or leagues, affiliates of the Wisconsin Amateur Hockey Association and affiliated with or subject to the Dane County Youth Hockey Council. In addition, organized interscholastic hockey play is sponsored by schools; the Wisconsin Interscholastic Athletics Association (WIAA) is the organization that oversees this form of organized hockey activity.
The governing national organization (USA Hockey), imposes requirements on member leagues and associations concerning who can officiate games. Hockey officials are ranked by a system established by USA Hockey, according to experience and skill level, so that officials at different levels may officiate games at different levels. In connection with this, USA Hockey has established subsidiary organizations for officials, which they must be members of in order to be able to officiate at hockey games played in the leagues and associations affiliated with USA Hockey. In Wisconsin, the statewide organization of this type is "Wisconsin Hockey Officials Association", which is associated with WAHA. DCHOA is a local- level affiliate of Wisconsin Hockey Officials Association. DCHOA has approximately 167 member-officials.
There are a number of different ways in which DCHOA's member-officials come to officiate particular hockey games. The practice followed in the case of schools, is that the schools merely obtain a list of DCHOA/WHOA members from DCHOA, then contact the officials directly to arrange for them to attend and officiate at particular matches, and the schools then pay the officials directly at the time of the match. In these situations, DCHOA does nothing except to provide a list, and it does not charge the schools anything for doing so. Hockey organizations, associations or leagues are also free to and sometimes do contact DCHOA/WHOA members directly to arrange for their services, in which cases they pay them directly at the time of the match and DCHOA is not involved. In addition, some organizations contact DCHOA and request it to schedule an official to officiate at a match, but there will also be a written contract between the official and that organization and the organization will pay the official directly at the time of the match.
However, another practice is one in which the organizations sponsoring the games not only provide DCHOA with schedules of their games and ask it to schedule or assign officials for those games, but also have DCHOA bill it for the fees of officials thus scheduled. In these cases, DCHOA performs the scheduling function by collecting information from its members on the times and days on which they are available to officiate; this information is then entered by DCHOA into a computer database, which it uses to schedule officials for games according to the game schedules given it leagues and local associations. DCHOA then sends schedules to its member-officials indicating the games for which they have been scheduled.
DCHOA bills organizations which use this scheduling system, on a monthly basis, for an amount equal to the appropriate per-game fee for each scheduled match, as well as for a $2.50/game service fee to compensate DCHOA for its service of scheduling and handling the payments. Once the organizations have paid these bills, DCHOA will then distribute the amounts representing the officiating fees to the officials, at the next regularly scheduled monthly meeting of DCHOA, held on the third Monday of each month. DCHOA does not pay the officials anything for games they were assigned to officiate unless and until it is paid by the leagues or associations involved for those games. The amounts sent by the leagues to DCHOA for officiating fees are distributed without any deduction. DCHOA retains only the $2.50/game service fee which it charges, and the organization subsists entirely on these service fees and the members' annual dues.
Officials may arrange to have another official take games to which they have been assigned, as a substitute, and it is not necessary for them to obtain DCHOA's permission for this, or to even notify DCHOA in such a case. DCHOA always issues checks in the name of the official it scheduled to a particular game, without regard to whether or not that official actually ended up officiating the game.
If DCHOA learns that an official failed to appear or to obtain a substitute for a game to which they were assigned, it will "fine" the official involved in an amount equal to twice what the fee for officiating the game would have been. It is not disclosed in the record whether this fine is simply withheld from payments otherwise due the official, or if instead the official is simply expected to give DCHOA the amount of the fine.
If a league or association has decided that they do not wish to have a particular official assigned, they may "blacklist" the official by notifying DCHOA that they do not wish to have particular officials assigned. DCHOA then incorporates this information into its scheduling system, so that those officials are not assigned to games in that league or association. DCHOA does not decide on its own that it will limit the assignment of particular officials, for any other reason than that the official ceases to be a member of DCHO, WAHA, or USA Hockey.
The rate at which officials are paid, for games to which they are scheduled by DCHOA, is set according to the rate schedule adopted by the league or association involved. DCHOA is involved to some extent in negotiating with Dane County Youth Hockey Council about their rate schedule. In some circumstances, officials may also negotiate different rates.
An Initial Determination issued by the department in this matter found that all of the member-officials of DCHOA performing hockey officiating services were employes for the period of January 1, 1996 forward. DCHOA appealed, asserting that the reporting of those individuals as employes for 1996 and 1997 was incorrect. Following a hearing, an administrative law judge reversed the Initial Determination in part and affirmed it in part. She found that 16 officials (1) were not employes in certain time periods; however, she affirmed as to all of the other hockey officials whose status was at issue, holding that all of those other officials who were performing services for DCHOA during 1996 and 1997, performed their services as employes. The department appealed.
The issue for decision is whether the officials were providing services as "employes" of DCHOA within the meaning of Wis. Stat. § 108.02(12). That statute provides:
(12) EMPLOYE. (a) "Employe" means any individual who is or has been performing services for an employing unit, in an employment, whether or not the individual is paid directly by such employing unit; except as provided in par. (b) ...
(b) Par. (a) does not apply to an individual performing services for an employing unit ... if the employing unit satisfies the department that:
1. The individual:
a. Holds or has applied for an employer identification number with the federal internal revenue service; or
b. Has filed business or self-employment income tax returns with the federal internal revenue service based on such services in the previous year; and
2. The individual meets 6 or more of the following conditions:
a. The individual maintains a separate business with his or her own office, equipment, materials and other facilities.
b. The individual operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means and method of performing the services.
c. The individual incurs the main expenses related to the services that he or she performs under contract.
d. 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.
e. The individual receives compensation for services performed under a contract on a commission or per-job or competitive-bid basis and not on any other basis.
f. The individual may realize a profit or suffer a loss under contracts to perform services.
g. The individual has recurring business liabilities or obligations.
h. The success or failure of the individual's business depends on the relationship of business receipts to expenditures.
Stats. 1995-1996, eff. January 1, 1996. (2)
(12)(a) test - "Performing services for" -- If a person is or has been "performing services for an employing unit, in an employment" within the meaning of Wis. Stat. § 108.02(12)(a), then this creates a presumption of employe status. The presumption is not merely that the person is an employe, but also that the person is an employe of the entity for which the person performs services. See, All Payments New York Inc. (LIRC, January 13, 2000); Kevin J Ford (LIRC, May 29, 1998). To apply (12)(a), it is therefore necessary to determine not only whether a person is performing services in an employment, but also who they are performing services for.
When the administrative law judge engaged in a preliminary discussion to clarify the issues in this matter, the department asserted that it was its position that when they were officiating hockey games, the hockey officials whose status is in question were performing services for DCHOA Responding to this, DCHOA told the administrative law judge that it was its position, that the hockey officials were not performing services for DCHOA. It asserted that it believed the officials were instead performing services for the leagues and other hockey groups conducting the games which the officials officiated.
One of the few cases that discusses the issue of how it is to be determined what entity a person is performing services "for" within the meaning of (12)(a), is Princess House v. DILHR, 111 Wis. 2d 46, 330 N.W.2d 169 (1982). The court, discussing the argument that the individual dealers were not providing services "for" Princess House within the meaning of (12)(a), focussed on the fact that the dealers' re-sales of Princess House's products benefited Princess House and that without that resale function the sales of Princess House would be reduced by 90%. The court noted, "[s]ervice is, essentially, aiding the principal in the regular conduct of business." 111 Wis.2d at 64.
How to apply the teaching of Princess House on this issue to the case of DCHOA is a difficult question. Among the issues it raises, are the issue of what exactly the "business" of DCHOA is. For example, it might be considered to be the business of providing hockey officiating services, for hockey leagues and associations. On the other hand, the business of DCHOA might be considered to be providing a scheduling or "booking" service, and a billing service, for hockey officials.
It is evidently the view of the department, that it is highly significant if not in fact determinative, that some money which officials receive for performing the service of officiating hockey games comes to them from (or at least through) DCHOA. (3) The commission does not necessarily agree that this can be considered determinative, especially since (12)(a) states that a person may satisfy the standard of performing services for an employing unit, in an employment "whether or not the individual is paid directly by such employing unit" (emphasis added). However, this does not necessarily mean that the question of who persons are "paid directly by", may not be considered at all.
The most important factor in the commission's ultimate decision on this issue, is the fact that when DCHOA made its arguments to the commission, it abandoned the position it had taken before the administrative law judge. In its Brief to the commission, DCHOA did not argue or even mention its earlier assertion that the hockey officials in question had not been performing services "for" DCHOA within the meaning of (12)(a). Instead, its focus was on arguments about whether the tests of (12)(b) were satisfied. The commission considers that by failing to make any argument to it that the officials were not performing services "for" it, DCHOA has waived this argument and has acceded to the implicit holding of the administrative law judge that the hockey officials were "performing services for" DCHOA within the meaning of the applicable statutory language.
For the reasons discussed above, the commission finds that the officials whose status is in question were performing services for DCHOA, in an employment, within the meaning of Wis. Stat. § 108.02(12)(a). Thus, there is a presumption that they were the employes of DCHOA, and DCHOA has the burden of establishing the existence of conditions of Wis. Stat. § 108.02(12)(b) adequate to overcome that presumption.
(12)(b)1. tests - FEIN or federal business tax return -- The administrative law judge decided that the great majority of the officials whose status is at issue in this case did not satisfy either one of the two alternative tests in (12)(b)1., and on that basis she held that they had to be treated as employes. DCHOA argues in its Brief that the administrative law judge thus committed error because, it asserts, the issue was not properly before her and it did not have adequate notice that the issue would be decided by her. It asks the commission to reverse the administrative law judge's decision in part, on that basis.
There is a threshold question as to whether the commission should even consider this argument. DCHOA did not file a petition for review from the administrative law judge's decision. It is making its argument for partial reversal of the administrative law judge's decision in its Brief in reply to the brief filed by the only petitioner, the department.
Commission review of a decision of an administrative law judge is not appellate in nature, but is instead a de novo decision-making process. Any petition for commission review from any party brings the entire case before the commission. However, the commission has determined as a matter of policy that it will generally not exercise its plenary review authority to address an issue that has not been at least implicitly raised by a petition for review. See, Robert J Sanders v. Krukowski Construction Inc. (LIRC, 2/3/99); see also Forman v. Cardinal Stritch College (LIRC, 06/08/92, Equal Rights decision), Crosby v. Intertractor America Corp. (LIRC, 05/21/93, Equal Rights decision), Neuman v. Hawk of Wisconsin (LIRC, 03/12/93, Equal Rights decision), Dude v. Thompson (LIRC, 11/16/90, Equal Rights decision). When a non-petitioning party raises an argument seeking partial reversal of an administrative law judge's decision in their brief to the commission, the commission's policy is to accord lesser weight to such an argument, as compared to arguments raised in a timely petition or cross- petition. Polakowski v. Clearview Nursing Home and Dodge County (LIRC, 12/17/97, Workers Compensation decision); see also, Robert Wilson v. Urban Artifacts Inc. (LIRC, 2/24/99, Workers Compensation decision).
Having considered all of the circumstances here, the commission has decided that it will address the issue of whether the (12)(b)1. tests were properly before the administrative law judge in this matter, but that it will give less weight to the DCHOA's arguments than it might have had they been directly raised in a petition for review filed by DCHOA.
DCHOA is arguing that because the issue of whether the persons at issue satisfied the tests set out in Wis. Stat. § 108.02(12)(b)1. was not expressly addressed in the Initial Determination and was not specifically identified on the Notice of Hearing, the administrative law judge should not have reached it. It also argues that since the department did not appeal the Initial Determination, the tests must be deemed satisfied for all of the persons at issue.
The argument made by DCHOA is not persuasive. The Initial Determination did not state, that any of the persons whose status was at issue had satisfied the tests in 108.02(12)(b)1., nor can it fairly be said that it implied this. Furthermore, the Notice of Hearing stated that the hearing would be held to take evidence on the question of "whether, for the time period stated in the Initial Determination, individual(s) described as employes in the Initial Determination or the Summary of Proposed Audit Adjustments are employes of the appellant", and it also stated, "Section 108.02(12), Wis. Stats., applies". In order to determine an issue of whether persons are employes of a putative employer under Wis. Stat. § 108.02(12), it is always necessary to look both at the tests in 108.02(12)(b)1., and at the tests in 108.02(12)(b)2. Therefore, the Notice of Hearing encompassed both issues.
In any event, the commission believes that DCHOA waived any objection it may have had to having this issue addressed at hearing, both by failing to raise the objection, and by agreeing to a procedure whereby evidence on that issue could be introduced after the hearing by way of "questionnaires" to be completed and mailed in by the persons whose status was at issue.
At the beginning of the hearing, the administrative law judge initiated a discussion of the scope of the issues for hearing. While counsel for DCHOA indicated that it had been his understanding that the issue under 108.02(12)(b)1. was resolved or was not being contested by the department, he never raised anything which would constitute an "objection" to consideration of the issue, even after the administrative law judge responded by stating that the hearing would be a hearing de novo and that she considered it to be DCHOA's burden to meet both tests (i.e., 108.02(12)(b)1. and 108.02(12)(b)2.). When the matter was discussed again at the close of the hearing, there was still nothing from DCHOA that was recognizable as an objection. Furthermore, counsel for DCHOA entered into an agreement with counsel for the department for the submission of evidence on the issue after the close of the hearing, by way of "questionnaires". The commission considers that, entirely apart from what had (or had not) preceded it, this agreement was a waiver of any objection that the issue was not properly before the tribunal and should not be considered.
For the reasons given above, the commission therefore concludes that the 12(b)1. issue was properly before the ALJ in this case.
DCHOA does not challenge the substantive correctness of the ALJ's decision, that as to all but 16 of the persons at issue there was no showing that either of the (12)(b)1. tests were met. The Department does not challenge the administrative law judge's decision that, as to the 16 persons identified in her decision, and as to the time periods stated therein, the tests were satisfied. Therefore, the ALJ's findings on this issue are affirmed.
Thus, the remaining issues in the case involve only the 16 persons identified by the administrative law judge as having satisfied the (12)(b)1. tests.
(12)(b)2. tests - There are 8 tests under Wis. Stat. § 108.02(12)(b)2. of which 6 must be shown by the putative employer to have been satisfied, or the person(s) involved must be found to be employes.
The administrative law judge found that the tests in subsections c., d. and e. were met. In its Brief to the commission, the department has expressly indicated that it does not challenge the administrative law judge's decision on these three tests. Because no issue has been raised, either in a petition for review or in a brief, regarding the correctness of the administrative law judge's decision on these tests, the commission will not disturb the administrative law judge's decision in that respect. See the discussion of scope of issues on LIRC review, supra at pp. 6-7.
While DCHOA is arguing in its brief that the decision of the administrative law judge that the test in subsection g. was not met should be reversed, it did not file a petition for review making that (or any other) assertion. As was discussed above, failure to file a petition for review can lead the commission to give less weight to such arguments. However, the "6-out-of-8" structure of the Wis Stat. § 108.02(12)(b)2., which allows either party (i.e., putative employer or department) to prevail even if they lose on some individual tests, creates a somewhat unusual situation in which there is reason to take a flexible approach on the question of considering issues which are addressed in argument even though not raised in a petition. The commission considers that in this situation, arguments raised in a brief concerning whether particular tests have been met should be fully considered, whether or not they were raised in a petition for review. The commission therefore concludes that the issues which need to be addressed in this case are those described in Wis. Stat. § 102.12(b)2. a., b., f., g., and h. As noted above, these issues are limited in their applicability to the 16 persons found by the administrative law judge to have satisfied the tests in (12)(b)1. during certain periods. (4)
(12)(b)2.a. test - Does the individual maintain a separate business with his or her own office, equipment, materials and other facilities?
The focus of this test is really on the question of whether the persons involved have a "separate business". The attributes mentioned (office, equipment, materials, etc.) are illustrative of things which will be found in the case of a real, separate business. They are not necessarily an exclusive list of the factors which indicate the existence of a real business separate from the activities of the putative employer.
There is no evidence that any of the officials have offices. While it does appear that they have "materials and equipment" in the form of the equipment needed to participate in hockey games as an official, even for a person purchasing "top-of- the-line" equipment (which not all officials have) it does not appear that the initial cost would exceed $1,000, and it is probably less in most cases. While certain pieces of equipment may need periodic replacement as they wear out, the highest estimate of the actual expense for maintenance and replacement of worn equipment, was $300-$600 per year.
The commission considers, that a degree of economic independence is an attribute of a separate business. It is therefore an important question, whether the officials at issue are significantly dependent on DCHOA for the work they get officiating hockey games. Certainly, they are entirely dependent on their membership in DCHOA, since they cannot officiate anywhere unless they are members of the organization. Turning to the question of whether they are significantly dependent on DCHOA for the actual work assignments, while the record shows that all of the 16 officials whose status was at issue here did some officiating for which they were paid other than through DCHOA, there is little evidence as to how much of this kind of "outside work" was done. (5) DCHOA, as the putative employer, had the burden of proof with respect to establishing that the applicable tests were met. Its failure to show how much income the officials obtained from officiating other than through DCHOA, was a failure to show that those officials had any significant amount of officiating income outside of DCHOA.
Given that the officials do not have offices and have only a minimal investment in equipment and materials, and given the lack of quantitative evidence on the amount of officiating work the officials did for which they were paid other than through DCHOA, the commission concludes that DCHOA did not meet its burden to establish that these officials had "separate businesses" - i.e., officiating "businesses" separate from their reliance on being scheduled through DCHOA -- within the meaning of this test.
(12)(b)2.b. test - Does the individual operate under contracts to perform specific services for specific amounts of money and under which the individual controls the means and method of performing the services?
The department argues that under Advanced Engines Development Corp. (LIRC, July 15, 1999), it is significant under this test if a person performs their services pursuant to an ongoing relationship with one entity rather than pursuant to a series of contracts with entities for clients. The commission agrees. In its view, condition b., which by its terms looks to the existence of multiple contracts, evidences a legislative recognition that the existence of multiple contracts 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.
Multiple contracts that an individual enters into with multiple businesses are most indicative of the individual's economic independence from a particular putative employer. Multiple contracts that an individual enters into sequentially with a single entity may satisfy this test, if the contracts are negotiated "at arm's length"; in such cases, a genuine independent contractor relationship will typically result in terms that vary over time depending on what services are being provided.
While there is some evidence that most of the officials do some officiating other than through DCHOA, there is little if any evidence as to how much such outside work is done. Also, while there is evidence that in some cases (in which they have made arrangements to officiate a game directly with a league or association) some officials negotiate fees that exceed those in the general fee schedule adopted by the Dane County Youth Hockey Council, the record does not allow a determination of how common it is for the officials to contract for officiating assignments outside of the framework of the DCHOA system. The fact that there might be some independent negotiation of rates in these cases in which there are contracts directly with leagues, therefore has little weight, since the extent of such contracting is not established. Thus, there is insufficient evidence of multiple contracts with multiple businesses.
The ongoing relationship the officials have with DCHOA also does not involve multiple contracts entered into sequentially in an "arm's length" fashion. The officials do not negotiate and re-negotiate rates with DCHOA; they accept what is given as the going rate for matches assigned through DCHOA. There are also no separate contracts; instead, there is a continuing relationship which is more similar to employment. The terms of the ongoing relationship do not vary over time.
In addition, this test involves the question of whether the persons at issue control the means and methods of performing the services. The commission agrees with the department, that the officials are subject to significant controls in terms of the means and methods of performing their services. One such control is the fact that if officials fail to show up (or provide a substitute) for games for which they have been scheduled, DCHOA will "fine" them twice the amount which they would have been paid for the game. Showing up and performing the services (or seeing to it that they are performed) is quintessentially a matter of the means and methods of performing the services. That the sanction is imposed not by the "client" (i.e., school or league sponsoring the match) but by the DCHOA, demonstrates a direct kind of control that is inconsistent with finding this test satisfied. Another form of control is DCHOA's involvement in sponsoring and conducting training seminars for officials, extending even to oversight of how officials officiate their games.
In general, it appears that the influence which DCHOA has in terms of the means and methods by which the services are provided, is more significant than would be seen in a genuine independent contractor situation. For this reason, as well as the other reasons discussed above, the commission finds that DCHOA failed to meet its burden to establish that this test was satisfied.
(12)(b)2.f. test - May the individual realize a profit or suffer a loss under contracts to perform services?
The department argues, in effect, that the potential for an official's expenses to exceed income is marginal and is not significant enough to view as something which satisfies this test. The commission agrees. The only fixed expenses involved in the officiating are the initial investment in equipment, and the $100 in annual membership fees to DCHOA, WHOA and USA Hockey. The only other expenses - periodic replacement of equipment which becomes worn past the point of utility by actual use, and associated expenses such as travel to distant matches -- are connected to actually performing services on particular assignments, which means that in those cases the receipt of income for the particular assignment is assured.
It is true, as DCHOA argues, that if a official decides to accept only a few officiating assignments, they will not "break even" on their costs versus income. However, there is virtually no activity involving providing service for someone or something, that does not require incurring some kind of outright expense. That can be just as true in the case of an acknowledged employe, who may incur expenses such as work clothes, buying and maintaining a car to be able to get to work, etc. If a person who has incurred such expenses then makes the choice not to do work which is available to them, they may well end up "out-of-pocket", but that does not necessarily constitute a "loss" such as is contemplated in the case of a business. In a real business, genuine risk of loss frequently accompanies contracts to provide particular services not because the person makes a choice not to do anything at all, but because of the unpredictability inherent in the business enterprise. The businessperson who develops a bid to do a particular job for a particular sum, must anticipate variations in prices of supplies, in the availability of time and conditions allowing fulfillment of the contract, and other matters. If they are skilled, they may correctly anticipate these things and fix a price which will generate a profit for them when, at the end of the job, the columns are all tallied. If they are not so skilled, or if unforeseen events occur that prevent the fulfillment of the contract under the conditions they anticipate, then they may suffer a genuine business loss. This is simply not descriptive of the situation of these hockey officials. When they agree to accept an assignment to officiate a match, the income they will receive is already determined, the fact that they will receive it if they go to the match is determined, and the expenses they will incur are determined.
The situation here does not appear to be significantly different from a situation in which a person who provides services as an employe has certain fixed, predictable expenses of employment, which are more than offset by the income they can earn through employment, if they engage in that employment. Of course it is true, that if they then chose not to work very much, they will be out some quantity of money. However, the commission believes that this does not involve a situation of risk of business profit or loss such as is anticipated by this test. Therefore, it finds that DCHOA did not meet its burden to establish that this test was met.
(12)(b)2.g. test - Does the individual have recurring business liabilities or obligations?
This test is, the commission believes, intended to encompass what is commonly referred to as "overhead". Some examples of recurring business liabilities or obligations that might satisfy condition g. would be items such as monthly rent for a place of business, or regular payments on a financed purchase of equipment, or the regular depreciation of equipment that declines in value over time irrespective of the level of its actual use. Such expenses are all recurring in nature and are incurred whatever the level of actual business activity.
DCHOA argues that officials have recurring business liabilities or obligations in that they have a need to replace equipment which wears out, they must perform all games they are currently scheduled for in order to avoid fines, and they must pay their annual dues to DCHOA and other organizations. These arguments are unpersuasive. The hockey officials in this case simply do not have any significant "overhead" of the type contemplated by this test. While the need to replace pieces of their officiating equipment will arise from time to time depending on use, this is more reasonably characterized as an occasional expense rather than a regularly recurring business liability or obligation. Moreover, that equipment can lie idle without generating any costs that could be reasonably characterized as recurring business liabilities or obligations, so the expense does not recur regularly in the way the business overhead expenses do. For the same reason, the commission believes that the fact that an official must perform their services for the matches they have accepted an assignment to officiate, or face a "fine", is not the kind of recurring business liability or obligation which this standard looks to.
While the need to maintain memberships in DCHOA, WHOA and USA Hockey is a recurring financial obligation necessary to continuing the activity of officiating hockey games, it is, in addition to being de minimis ($100/year), not the kind of "business" liability or obligation that is contemplated by this standard. There are a number of occupations in which membership in certain dues-requiring organizations is required for anyone who wants to engage in that occupation, whether they are self-employed or acting as an employe of another. The fact that a person incurs such an expense is not necessarily an indication that they are engaged in an independent business.
For these reasons the commission finds that DCHOA did not meet its burden to establish that this test was met.
(12)(b)2.h. test - Does the success or failure of the individual's business depend on the relationship of business receipts to expenditures?
The commission believes that this test contemplates the existence of a genuine business or endeavor. In an entrepreneurial enterprise, a significant investment is put at risk and there is thus the potential for real "success", in the sense of the growth of the value of the investment, or "failure", in the sense of the actual loss of the investment. The potential for financial "success" or "failure" of any significance simply does not exist in the case of these hockey officials, because the level of their "investment" is so small, because there is no real risk of loss of their investment apart from wear-and-tear "on the ice", and because there is no goal to achieve "success" by increasing the capital value of the business. In addition, even the potential for occasional expenses to outweigh income is so limited. Apart from the $100 in annual memberships, the only expenses which could contribute to such a loss are incurred in connection with officiating work, which generates corresponding income. The situation is not very different from that of an employe who incurs some expenses of employment, but who by having such employment always earns wages to offset those expenses. The commission does not believe that such a situation was what was in the legislature's contemplation when it spoke of "success or failure of [a] business".
More importantly, the commission is satisfied from the evidence in this case, that the persons engaged in the hockey officiating which is the focus of this case, do so principally as recreational and enjoyable hobby. To the extent that the activity succeeds in satisfying that purpose, then it is a "success", even though it may, from time to time, involve incurring more expense in the form of necessary expenditures than it generates in income. Thus, the "success" or "failure" of the activity is not principally dependent on those financial considerations.
For these reasons, the commission finds that DCHOA did not meet its burden to establish that this test was met.
Conclusion - For the reasons given above, the commission finds that all of the individuals performing services as officials for DCHOA during 1996 and 1997, performed their services as its employes, within the meaning of Wis. Stat. § § 108.02(12) and 108.02(26).
The decision of the administrative law judge is reversed as to the 16 persons noted above in footnote 1, and is otherwise affirmed. Accordingly, Dane County Hockey Officials Association, Inc. is required to report payments made to the individuals identified in the Initial Determination in this matter in 1996 and 1997 for hockey officiating services, as wages for Unemployment Insurance purpose.
Dated and mailed February 22, 2000
hockeyo.srr : 110 : EE 409 EE 410.03 EE 410.04b EE 410.08 EE 410.09 PC 713 PC 749
/s/ Pamela I. Anderson, Commissioner
/s/ James A. Rutkowski, Commissioner
NOTE: The commission had no disagreement with the administrative law judge as to credibility of any witness. The commission has arrived at a different result because of different views on governing legal standards.
Attorney Jorge L. Fuentes
Attorney Harry E. Van Camp
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(1)( Back ) Krista M. Knight, Glen Bostedt, Robert A. Zinkel, Louis J. Smith, David J. Ferwerda, Miles Tokheim (spelled "Tokhein" in the ALJ's decision), Paul Johnson and R. B. Hemberger for both 1996 and 1997; Brian K. Keith, Brad A. Roethlisberger, Troy Jacobson (spelled "Jacobsen" in the ALJ's decision), Michael J. Ryan, Chad Wiener (spelled "Weiner" in the ALJ's decision), Jeffrey S. Kiel, Peter Bergenske and William Conybear for 1997.
(2)( Back ) This provision was subsequently amended, effective January 4, 1998. Because the focus of this case has been on 1996 and 1997, only the language effective during that period is relevant.
(3)( Back ) See, for example, the Brief of the Department to the ALJ in this matter, in which it is argued, "[t]here is no dispute that the appellant paid individual referees for services and that therefore, pursuant to § 108.02(12)(a), Stats., the presumption of employe status exists". The commission would note that, of course, Wis. Stat. § 108.02(12) does not provide that a presumption of employe status arises when a putative employer pays persons for services; it arises when persons are "performing services for" a putative employer, irrespective of whether they are paid directly by that putative employer.
(4)( Back ) The commission notes the argument made by the department, that "any findings beyond the mandatory test with respect to any other persons other than Krista Knight, Glen Bostedt, and Bryan Keith are based on absolutely nothing". Department's Brief to LIRC, p. 3. It appears that the department may be taking the position, that the testimony offered by the three persons who testified cannot be taken as representative of the other officials who did not testify, so that in effect there is no evidence in the record as to whether those other officials satisfied the statutory tests. However, the commission also notes that in its Reply Brief, DCHOA asserted, "[a]ll of the above facts were undisputed at the hearing and all parties agreed that having 150+ officials testifying was cumulative, as the facts were similar for all officials", DCHOA Brief to LIRC, p. 5, and that in its subsequent Reply Brief, the department did not take issue with that assertion. To the extent that there is a dispute in this case as to how "representative" the evidence is as to the persons at issue who did not testify, the commission resolves that dispute by giving the testimony of the persons who testified some weight as an indication of the way in which the other persons whose status is at issue conduct their activities, to the extent that the evidence appears to be a reliable indication of general patterns in terms of how the officiating activity is conducted.
(5)( Back ) The only such evidence related to 2 of the officials who testified. Keith obtained approximately 70% of his 1998 officiating income through DCHOA. Knight's "Total $ Into Officiating Career" chart showed approximately 24% of her officiating income in 1998 came through DCHOA. The potential for variability here makes this an area in which the commission is not willing to allow limited evidence about individuals to serve as "representative" for all whose status is in question.