Wisconsin Labor and Industry Review Commission --
Summary of Wisconsin Court Decision relating to Unemployment Insurance
Subject: Broyhill Furniture Industries, Inc. v. Jim Haugen, LIRC, and DWD, Case No. 03-CV-3585 (Wis. Cir. Ct., Dane Co., March 24, 2005)
Digest Codes: ET 495 - Interstate or multi-state employment - localization of services; PC 752 Judicial Review, Scope of judicial review
The Department of Workforce Development-Unemployment Insurance Division issued an initial determination to appellant, Broyhill Furniture Industries, Inc (Broyhill) assessing it for unpaid unemployment insurance taxes for 2000 and 2001 based on the services of Jim Haugen.
Haugen had a sales territory for Broyhill that consisted of Wisconsin and the Upper Peninsula of Michigan. Only about 10 to 20 percent of his time and sales volume came from the Upper Peninsula. He made sales calls on customers in that territory. Otherwise, his sales activities were in Wisconsin.
Haugen resided in Stevens Point, Wisconsin and had an office in his home. In the office, he contacted customers in his territory, made reports to his supervision in North Carolina, and placed orders on a computer line from his home, which line ran directly to Broyhill's factories. In addition he kept catalogs, price lists and samples for the Broyhill merchandise in his home. Finally, he received instructions from Broyhill at his home.
In addition to his time in the Upper Peninsula of Michigan and Wisconsin, Haugen was in North Carolina about three weeks per year to attend Marketing meetings in which he dealt primarily with customers from his normal territory in showing them new products and trying to solicit orders for new products. Also during this time, he would be in meetings with his supervision. Broyhill appealed the initial determination contending that Mr. Haugen services were not in Wisconsin employment, but were in instead in North Carolina employment.
After a hearing, an appeal tribunal decision issued affirming the initial determination. The appeal tribunal reasoned that because of the relatively small amount of services performed by Haugen in the Upper Peninsula of Michigan, his services were localized in Wisconsin, and that, even if they were not, it was clear his base of operations for performing his services was in Wisconsin. Broyhill petitioned the Labor and Industry Review Commission for review of the appeal tribunal decision.
LIRC affirmed the appeal tribunal decision but held the services were not localized in Wisconsin. This disagreement was based on the fact that somewhere between 15 and 20 percent of Haugen's sales were derived from activities in the Upper Peninsula, and therefore those services were not insignificant nor were they incidental to the services in Wisconsin. It ruled that the question whether the base of operations for an individual's services in Wis. Stat. §108.02(15)(b)l, focused on what was the base of operations for the worker rather than the employer. Given that Mr. Haugen's residence at Stevens Point was more than a mere residence, but was a place from which he contacted customers and Broyhill for any number of purposes related to his sales activities and departed from there for sales calls, it was his base of operations. Accordingly, his services were deemed to be Wisconsin employment.
Broyhill commenced an action for judicial review in Dane County Circuit Court, making the argument that base of operations of Mr. Haugen's services was not in any state in which he performed services and therefore since his services are directed or controlled from North Carolina, his employment should be held to be North Carolina employment.
Held: Judicial review was of the LIRC decision and not that of the administrative law judge. Whether facts fulfill a statutory standard is a question of law, and based upon the Wisconsin Unemployment Insurance Handbook for Employers, the court held LIRC's legal conclusions in this matter were entitled to due weight. The court held the handbook reflected some experience and expertise by LIRC in interpreting the statutory provisions involved, even though the handbook referred to is published by the Department of Workforce Development.
The statutory criteria of where is the base of operations for services focuses on the employee's base of operations. In this case that was the home office in Stevens Point from where he communicated with Broyhill and his customers regarding orders, new products, sales reports, appointments and departed for sales calls. In addition, his computer was connected directly to the employer's computerized ordering system, and he retained samples and catalogs in his home office. Therefore, the home in Stevens Point was not a mere residence but instead was a true base of operations where services were performed and from where he traveled to see his customers. Thus the Labor and Industry Commission decision was affirmed in all respects.
Please note that this is a summary prepared by staff of the commission, not a verbatim reproduction of the court decision.
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