Wisconsin Labor and Industry Review Commission --
Summary of Wisconsin Court Decision relating to Unemployment Insurance

Subject: Wisconsin Soccer Association  v. LIRC and Department of Workforce Development, Case No. 08-CV-102 (Wis. Cir. Ct., Milwaukee Co., July 22, 2008)

Digest Codes:  EE 411 EE 413 - Independent Contractor / Employee - "independently established"

The (tax) LID concluded that individuals performing services as soccer referees for Wisconsin Soccer Association (“WSA”) in WSA-sponsored state cup semi-final and final matches, did so as employees of WSA rather than as independent contractors. The LID also concluded that other individuals who performed services as soccer coaches in the WSA-sponsored “Olympic Development Program” and in WSA-sponsored clinics, did so as employees of WSA.

The ATD affirmed the decision as to the coaches, but concluded that the referees performed their services as independent contractors.

DWD filed a petition for review from the decision as to referees, and WSA filed a petition for review from the decision as to coaches.

LIRC's decision affirmed the ATD as to the coaches, but reversed as to the referees and concluded that they too performed their services as employees. It agreed that it had been shown that the referees performed their services free from the direction and control of WSA, but concluded that it was not shown under the 5-part “Keeler” test that they performed their services in an independently established trade, business or profession in which they were customarily engaged.

WSA sought judicial review of the decision as to the referees (in its brief to the court, WSA dropped its objection to the decision as to the coaches).

Held: LIRC’s decision as to the referees is reversed. While the court agrees that LIRC’s decision is due “great weight” deference, it reverses the decision because it concludes that no reasonable analysis of the Keeler factors and statutory standard could lead to the conclusion that the referees were employees of WSA.

There was no dispute that the referees’ activities were integrated with the activities of WSA, and this factor thus favored finding them to be employees. As to the remaining 4 Keeler factors, though, the court found otherwise.

LIRC did not specifically address what actions the referees took to advertise or hold themselves out, but instead concluded that “any actions the referees may take to hold themselves out to WSA or its member clubs as willing and able to provide refereeing services,” did not affect who officiated the semi-final and final matches of the State Cup because of the method of selection used (the referees were selected for these matches by assignors hired by the WSA, and the WSA itself had no say in who would referee the matches). LIRC erred in narrowing the analysis of this factor to only advertising or holding out that was directed specifically at the WSA, rather than the public or a class of customers. The Keeler court recognized, if not emphasized, the obvious; offering, advertising or holding out of services to multiple members of the relevant economic community strongly indicates the existence of an independent, established trade or profession. There is overwhelming evidence in the record of significant holding out or advertising via word of mouth, internet, email, and person to person both by the vast majority of referees who worked the State Cup games and the soccer referee community at large. This factor strongly supports a conclusion that the referees are not employees of WSA.

LIRC also demonstrated an unwarranted and unsupported singular focus in regard to the entrepreneurial risk factor; referencing solely potential income from State Cup refereeing and surmising that resultant income could not defray the proportional expenses related to those assignments. The record is quite clear that State Cup and other referees incur significant expense as a pre-condition of working games - State Cup and a myriad of others - and being remunerated for those services. Among those expenses are training and certification costs; transportation, and uniform and equipment costs. The record is also clear that referees run significant risk of loss -- particularly those who do not successfully “hustle” assignments.

The nature of the services in issue necessarily entail somewhat nominal reward and related risk. However the magnitude of the risk is not determinative, and the LIRC has often recognized this principal. Eichman v. Wisconsin Technical College Foundation (January 18, 2007); Williams v. MTEC (November 21, 2007).

Unquestionably, referees incur significant risk in the form of expenses necessarily incurred to secure game assignments. The “significance” of those expenses is in recognition of the limits of the potential reward in view of the nature of the services at issue. This factor strongly supports the conclusion that the referees are not employees of the WSA.

LIRC appears to acknowledge that referees were not economically dependent on the WSA State Cup matches but it minimizes this factor by stating that the same pattern might be seen in “individuals who engage in concurrent employment for a number of different employers....” However, the record indicates that the State Cup matches were a small proportion of the overall refereeing work available, and that they were a small proportion of the work normally performed by the referees. In addition, the referees in question routinely performed services for the WSA and then moved on to perform similar services for other soccer entities; the essence of this Keeler factor and a significant indicator of an independently established trade or profession.

The proprietary interest factor also supports to some degree a conclusion that the referees were independent contractors. Even accepting LIRC’s finding that referees did not have the ability to unilaterally transfer the right to officiate a match to another referee, this factor does not foreclose independently established business status from all individuals whose businesses depend on their own particular talents and not upon an extensive personnel pool or equipment inventory.

LIRC’s reliance on the absence of ownership of significant tangible assets is illogical given the nature of the services in issue. The sole product offered by the referees are their creative services rendering the traditional view of proprietary interest being dependent upon saleable tangible assets as virtually inapplicable and an inappropriate premise of the LIRC’s decision.

Thus, Keeler factors 2, 3, and 4 strongly support the conclusion that the referees were not employees, and factor 5, when considered in light of the service nature of the trade or profession also supports that conclusion. Only factor 1 (integration) supports a conclusion that they were employees. LIRC’s decision is accordingly reversed.

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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