DAVID BAILEY, Applicant

KAE DEVELOPMENT CORP, Employer

WIS WC UEF, Insurer

An administrative law judge (ALJ) for the Worker's Compensation Division 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 agrees with the decision of the ALJ, and it adopts the findings and order in that decision as its own.

The findings and order of the administrative law judge are affirmed.

Dated and mailed October 25, 2010
baileyd . wsd : 101 : 1 ND6 2.7; 2.11; 2.12

/s/ James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner

1. Posture.

The applicant was seriously injured while attempting to repair a piece of construction equipment, a Caterpillar "CAT 977", on August 21, 2002. The main issues in this are whether he was performing services as an employee at the time of his injury and, if so, whose employee he was.

The ALJ, in a thoroughly detailed decision written after six days of hearing, found that the applicant was injured in the course of his employment for a joint venture engaged in by Levi Mews and KAE Development Corp. He found that the joint venture was subject to the Wisconsin worker's compensation act because it regularly employed three or more employees. The ALJ also that the applicant had an average weekly wage of $520 at the time of his injury. Finally, he found that the applicant was permanently and totally disabled as a result of the injury.

The Uninsured Employer's Fund is involved as a party in this case because neither Mr. Mews nor KAE Development carry worker's compensation insurance. On appeal, the Uninsured Employer's Fund argues that the applicant was not an employee when he was injured. Specifically, the Fund asserts that the applicant was not in the service of Mr. Mew, KAE Development, or a joint venture between them when he was injured, but rather was merely examining the Caterpillar in the hope of being hired to perform repair services. Alternatively, the Uninsured Employer's Fund argues that if the applicant was an employee, the ALJ correctly found he was an employee of a joint venture between Mr. Mews and KAE Development. KAE Development, by contrast, argues that the applicant would have been the employee of Mr. Mews alone.

2. Discussion.

a. Performing services under a contract of hire.

The first question is whether the applicant was an employee of either Mews or KAE Development. The commission notes first that the record establish that the applicant is an independent contractor who is not an employee under Wis. Stat. § 102.07(8)(b). Indeed, the evidence in this case establishes that few of the necessary factors set out in the statutory exclusion are met. Rather, the Fund's main argument turns on the claim that, as of the time of his injury specifically, the applicant was not "performing services under a contract of hire."

The general statutory definition of employee under the worker's compensation law is found in Wis. Stat. § 102.07(4), which provides:

(4) (a) Every person in the service of another under any contract of hire, express or implied, all helpers and assistants of employees, whether paid by the employer or employee, if employed with the knowledge, actual or constructive, of the employer, including minors, who shall have the same power of contracting as adult employees, but not including the following:

1. Domestic servants.

2. Any person whose employment is not in the course of a trade, business, profession or occupation of the employer, unless as to any of said classes, the employer has elected to include them.

(b) Par. (a) 2. shall not operate to exclude an employee whose employment is in the course of any trade, business, profession or occupation of the employer, however casual, unusual, desultory or isolated the employer's trade, business, profession or occupation may be.

In Kress Packaging Co. v. Kottwitz, 61 Wis. 2d 175, 182 (1973), the supreme court set out a two-part test for determining the existence of an employment relationship in worker's compensation cases. The Kress court held that the primary test is whether the employer has the right to control the details of the work and that the secondary test requires consideration of various conditions including remuneration, the direct evidence of the right to control, putative employer's furnishing of tools and equipment and its right to fire and hire.

The commission is satisfied that the Kress standards for an employee-employer relationship have been met in this case. The record establishes that Mr. Mews controlled the details of the work performed by the applicant (as evident from Mews' dissatisfaction with the way the applicant hung siding), that Mr. Mews or KAE Development furnished most of the equipment used to do the work and all the material used in the work, and that Mr. Mews exercised the right to fire and hire workers (such as Mike Smith) providing services similar to those provided by the applicant.

The commission concludes that the applicant performed services under Mr. Mews' direction on regular basis, doing including electrical and automotive repair, machine maintenance, construction work, and various other odd jobs. Mr. Mews' testimony to the contrary lacks credibility. After first trying to assert that the applicant did only a little electrical and siding work for him, Mr. Mews later admitted the applicant did other construction-related tasks as well when they specifically asked about them.

The record further establishes that on the day of injury, Mr. Mews specifically told the applicant to help Gifford with the CAT 977. The applicant so testified, and Mr. Gifford testified that Mr. Mews asked the applicant to come to the building to help Gifford try to figure out what was wrong with the CAT 977. The commission cannot accept Mr. Mews' contention that the applicant was acting in some kind of kind of independent affiliation with Mr. Spiegelberg and Mr. Gifford, in which the three men were trying to bid out a repair job in some independent capacity when the applicant was injured. That would assume that the men somehow divide the responsibility and pay they received for the job, if they determined they could do it. Yet there is no credible testimony to this effect. Further, the argument that the applicant only hoped to be hired to fix the CAT 977 is undercut by his substantial ongoing employment under Mr. Mews direction in the months preceding the injury.

Based on the record, then, the commission agrees with the ALJ that the applicant was an employee--that is, that he was in the service of another under an express or implied contract of hire--when he was injured.

b. Applicant as employee of a joint venture

The next question is whether the applicant was an employee of Mr. Mews alone, or of Mr. Mews and KAE Development as a joint venture, when he was injured. The commission has previously recognized situations where joint venturers are both considered employers. Subbert v. Treebus Constructions, WC Claim No. 2003-045783 (LIRC, July 27, 2010). On the question of whether two entities are operating as a joint venture, the court stated in Bulgrin v. Madison Gas & Electric Co., 125 Wis. 2d 405, 373 N.W.2d 47 (1985):

A joint venture exists when two or more parties agree to contribute money or services in any proportion towards a common objective, exercise joint ownership and control and share profits but not necessarily losses.

Further, in Sussmann v. Gleisner, 80 Wis. 2d 435, 444 (1977), the elements of a joint venture were described as follows:

(1) Contribution of money or services; (2) joint or mutual control; (3) an agreement to share profits although not necessarily the losses; and (4) a contract establishing the relationship.

Finally, control need not be shared equally between members of a joint venture but may be delegated to one member. Bulgrin, at 125 Wis. 2d 412.

Like the ALJ, the commission concludes the applicant was in the service of a joint venture between Mr. Mews and KAE Development when he was injured. Mr. Mews and KAE Development acted together in the development of property and the ownership of construction machines used to develop property. The more credible evidence in the record indicates that Mr. Mews was paid a percentage of the profits of the developed buildings. See May 5, 2008 transcript, pages 92 et seq. As set out above, Mr. Mews controlled many of the day-to-day aspects of the applicant's job. However, the commission infers that while Mr. Mews exercised the day-to-day supervision of the workers, he did so by delegation from the joint venture.

Further, the record establishes that the applicant was providing services to the joint venture when he was injured. Most of the work the applicant did was on development projects undertaken by Mr. Mews and KAE Development. On the day of injury, he was working on a piece of heavy equipment that was apparently owned by KAE Development and being transferred to Mr. Mews. To pay for the equipment transfer, KAE Development would withhold sums coming due on the development work that KAE Development and Mr. Mews did together. Regardless of the status of that payment arrangement on the day of injury, the commission is satisfied that the work the applicant was doing when injured--repairing the CAT 977--was performed as an employee of the joint venture between Mr. Mews and KAE Development.

c. Are the Mr. Mews and KAE Development subject to the Act?

The last significant question on appeal is whether the joint venture was a subject employer under the Wisconsin worker's compensation statutes. Again, an employer is subject to the Act if (1) it usually employs more than three persons or (2) it has paid any one employee more than $500 in the prior quarter. See Wis. Stat. § 102.04(1)(b). Because the commission concludes that the applicant was performing services as an employee and paid as he testified, the second test was satisfied in the quarter preceding the date of injury and several preceding quarters. Further, as the ALJ held, the activities of Mr. Gifford, Mr. Spiegelberg, and the other workers who were in the service of Mr. Mews and KAE Development establish that the alternative first test is satisfied as well, and had been going back at least to September 2001. On this point, the commission notes, again, that the record falls well short of proving that the applicant, Mr. Gifford, Mr. Spiegelberg and the other workers were excluded independent contractors under Wis. Stat. § 102.07(8)(b). The commission thus agrees with the ALJ that the joint venture between Mr. Mews and KAE Development was subject to the worker's compensation act.

cc: Attorney Daniel Draper
Attorney Jeffrey J. Strande

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