STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)
MICHAEL SHILLING, Applicant
PREMIUM COATINGS CO, Employer
WIS WC UEF, Insurer
WORKER'S COMPENSATION DECISION
Claim No. 1999-025933
The applicant filed an application for hearing, seeking compensation for an injury sustained on November 20, 1998. The employer and the Uninsured Employers Fund (collectively, the respondent) conceded that the applicant sustained an accidental injury on November 20, 1998, but assert that the injury is nonetheless noncompensable under Wis. Stat. ch. 102. The parties have stipulated to an average weekly wage of $500. The parties also agreed to hold the record open, after the hearing, to allow submission of additional medical bills and information concerning the social security reverse offset under Wis. Stat. § 102.44(5).
A hearing was held before an administrative law judge (ALJ) for the Worker's Compensation Division of the Department of Workforce Development in this matter on May 16, 2000. The issues in dispute before the ALJ were whether the named employer was the applicant's "employer" under the Wisconsin workers compensation law on November 20, 1998; whether the applicant was an "employee" of the named employer under the workers compensation law at that time; whether the applicant sustained an accident causing injury which arose out of employment while performing services growing out of and incidental to his employment with the named employer on November 20, 1998; the nature and extent of disability; and the liability of the named employer and the Uninsured Employers Fund for payment of temporary disability benefits from November 20, 1998 to the date of the hearing (and ongoing), as well as liability for medical treatment expense.
The ALJ issued her decision on June 21, 2000. The named employer and the Uninsured Employers Fund each filed petitions for review. The commission has considered the petitions 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
1. Facts.
The applicant was born in 1961. He was injured on November 20, 1998, when he was electrocuted while painting a building, and fell 20 to 30 feet to the ground. He suffered electrical burns, and dislocated his hip. As a result, he has sustained considerable disability and incurred considerable medical expense.
The applicant performed the painting job on which he injured as part of an ongoing relationship with Richard S. Schaefer, a/k/a Scott Schaefer. On appeal to the commission, the primary issue is whether the applicant was an employee of Mr. Schaefer's when injured, or an independent contractor excluded from the definition of "employee" for the purposes of workers compensation laws.
In 1997 and 1998, Scott Schaefer operated a painting business under the trade name Premium Co. (a/k/a Premium Coatings Co.) Mr. Schaefer himself did some painting in this business, he also hired painters as employees and-he asserts-as independent contractors.
In 1997, the applicant began painting buildings for Mr. Schaefer. In that year, Mr. Schaefer testified, the applicant worked for him for only a few days. Mr. Schaefer paid the applicant on an hourly basis in 1997 (transcript, page 67), though the applicant did not punch a time clock (transcript, page 86.) Mr. Schaefer considered the applicant an "employee" in 1997. Transcript, page 86.
That arrangement changed at Mr. Schaefer's instance in 1998. Transcript, pages 63 and 87. The two men "talked it over" and the applicant agreed he would start his own business and subcontract with Mr. Schaefer. Transcript, page 63. The applicant obtained a bank account and an 800 telephone number. The applicant also had his own general liability insurance contract, though it appears the applicant's brother-in-law may have actually paid for the policy as part of another business. Transcript, pages 39-40, 46, and 64.
The applicant also adopted his own trade name "MGPC" which evidently stood for "Mike's General Contracting" or "Mike's General Painting." According to the applicant, he used his trade name to apply for a federal employer identification number (FEIN). The applicant never incorporated MGPC as a separate legal entity. Transcript, pages 12-13. The applicant testified-without contradiction from Mr. Schaefer-that Mr. Schaefer suggested he obtain the FEIN to facilitate payments made from Schaefer to the applicant. Transcript, page 8.
The applicant continued to paint buildings for Mr. Schaefer after this conversation. The applicant worked on several such projects in calendar year 1998 before his injury on November 20, 1998. These projects are memorialized in the "independent contracting agreements" at exhibit 1. For example, the applicant and Mr. Schaefer together painted a green stripe around a building in early 1998. The applicant also painted some stairwells, a hallway, and some other rooms in a chicken-processing plant. Mr. Schaefer would contact the applicant about the jobs, and pay him in cash upon completion
Upon completion of a job, the two men would normally execute "Independent Contracting Agreements," using their trade names. Transcript, page 66 and exhibit 1. These documents, naming "Premium Co." as the contracting party and "MGPC" as the independent contractor, specified a dollar amount to be paid. The dollar amount was derived by some portion of the profits, depending on the amount of work the applicant did; the percentage varied from job to job. Transcript, page 34-35.
Signing the contracts at the end of the job was evidently Mr. Schaefer's standard
operating procedure because he paid the applicant a percentage of the amount remaining
after deduction of expenses, and that could not be determined until the job was done. Mr.
Schaefer indicated he might not pay the applicant until he himself was paid, and that
could take a month. Transcript, pages 62-63. Mr. Schaefer's testimony indicates that he
and the applicant normally would not negotiate the percentage, let alone the lump sum
derived by applying the percentage to the "profit" from the job, until after the
job was over. Transcript, pages 62-63.
Comparing exhibits 1 and 2, it is evident that Mr. Schaefer's business paid the applicant
the following amounts for work performed in Wisconsin in 1998:
The checks were drawn from the account of Mr. Shaefer's business, Premium Co., to the order of the applicant's trade name, MGPC, and on one occasion to the order of the applicant's mother after the applicant closed his business account.
The applicant admitted that in 1998 he was usually paid on a percentage-of-profit basis in a cash lump sum at the end of a project. Transcript, pages 32-36. However, the applicant testified that for the last project of the year, the one on which he was injured, he was paid at an hourly rate. Transcript, pages 36-39. He has no documentation to explain why this job would be different from any of the others, and admits that, despite claiming he was to be paid on an hourly basis, he never submitted time sheets. Mr. Schaefer, for his part, denies ever paying the applicant for any job on an hourly basis in 1998. Transcript, page 78.
The applicant normally used Mr. Schaefer's equipment (transcript, page 20), though he may have used a brush or two of his own on occasion (transcript, page 30). Mr. Schaefer testified that the applicant had his own ladder, but could not say if the applicant ever used it in any of the projects he and the applicant contracted for. Mr. Schaefer admits giving the applicant an extension pole, and that the applicant was injured while standing on his (Schaefer's) father's ladder. He did testify that the applicant used his own equipment, but his testimony on this point is vague. Transcript, pages 68-70; 90-91.
Everyone agrees that Mr. Schaefer supplied the paint the applicant used on the various jobs. Indeed, Mr. Schaefer testified he always provided the paint, but "not always" the brushes. Transcript, page 96. The paint comprised between 5 and 25 percent of the expense of doing the work; the labor expense was much greater. Transcript, page 76-77.
There is a conflict in testimony about the extent to which Mr. Schaefer controlled the details of the work performed by the applicant under the contracts. The applicant testified that on some jobs, anyway, Mr. Schaefer would instruct him as to technique, specifically telling how much paint to put on, and which way to paint. On the roofing painting job he was injured on, Mr. Schaefer just told him to paint the roof, to be careful, and to not get any paint on the house itself. Transcript, pages 43-44.
Mr. Schaefer testified he allowed the applicant to use his own technique, though he may have showed him a better or quicker way to do something on occasion (transcript, page 76). Mr. Schaefer also testified that if, upon inspection, he would see something was not going right, "I would have to correct it." Transcript, page 75. He then stated, though, that he would expect the applicant to make the corrections.
The commission construes Mr. Schaefer's testimony on this point, given on direct examination by the respondent's attorney, to mean that Mr. Schaefer would check the work and tell the applicant to make corrections. On cross examination, Mr. Schaefer followed up on this remark, and testified that if a customer with whom he had contracted to have the customer's building painted was not satisfied, Mr. Schaefer would take care of it; i.e., Mr. Schaefer "would finish it, do it right, refinish it, whatever." Transcript, page 94. He also testified that if preparatory work (like pressure cleaning and scraping) was not done satisfactorily, the applicant would have to do it over, and that Mr. Schaefer decided whether the work was done properly. Transcript, page 95.
Mr. Schaefer had had statutory employees in the past (including as set out above the applicant), but was tired of that arrangement and wanted to go to all independent contractors. Transcript, page 59-60. Mr. Schaefer did not carry worker's compensation insurance when the applicant was injured in reliance on his belief the applicant was an independent contractor, though he had obtained worker's compensation insurance in the past when he could not get independent contractors to do the work and had to rely on statutory employees. Transcript, page 60-61.
Mr. Schaefer also testified, without contradiction, that the applicant was paid considerably more than he would have paid an employee. For example, the applicant got $2,500 for a project in Beloit that took four ten-hour days; while 40 hours at $12.50 per hour (the going rate for painting as a statutory employee) would have been only $500. Transcript, page 78.
In addition, the applicant could bring a helper to the jobsite, transcript, page 70 and 84. The applicant did, on one occasion, arrange for a helper on a job in Maple Grove, Minnesota. Transcript, page 70. The helper was paid half by Mr. Schaefer and half from the money that Mr. Schaefer paid to the applicant. Transcript, page 70-71. Mr. Schaefer admitted, however, he knew in advance that the applicant intended to hire a helper, and had worked out the details of payment in advance. Transcript, page 92.
Sometime in 1998, Mr. Schaefer told the applicant about the painting job the applicant eventually performed when he was injured in November 1998. The applicant never contacted the building owner about the job. The applicant used equipment supplied by Mr. Schaefer and Schaefer's father, including paint rollers, brushes, an extension pole, and a ladder. The applicant began the job, and apparently was electrocuted when he touched a power line with the extension pole while standing on Schaefer's father's ladder. Transcript, page 24.
2. Applicable law.
The first question in this case is whether Scott Schaefer's business, Premium Co., was an employer subject to the Wisconsin workers compensation law under Wis. Stat. § 102.04(1)(b) at the time the applicant was injured. If Mr. Schaefer's business is an employer, the next question is whether the applicant is an "employee" as defined in Wis. Stat. § 102.04(7)(a) and so covered under Wis. Stat. ch. 102, or a non-covered independent contractor under Wis. Stat. § 102.07(8)(b). The relevant statutory sections provide as follows:
"102.04 Definition of employer. (1) The following shall constitute employers subject to the provisions of this chapter, within the meaning of s. 102.03:
"(b) 1. Every person who usually employs 3 or more employes, whether in one or more trades, businesses, professions or occupations, and whether in one or more locations.
"2. Every person who usually employs less than 3 employes, provided the person has paid wages of $500 or more in any calendar quarter for services performed in this state. Such employer shall become subject on the 10th day of the month next succeeding such quarter.
"102.07 Employe defined. `Employee' as used in this chapter means:
(4)(a) Every person in the service of another under any contract of hire, express or implied, all helpers and assistants of employes, whether paid by the employer or employe, if employed with the knowledge, actual or constructive, of the employer, including minors, who shall have the same power of contracting as adult employes, 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 employe 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.
"(8) (a) Except as provided in par. (b), every independent contractor is, for the purpose of this chapter, an employe of any employer under this chapter for whom he or she is performing service in the course of the trade, business, profession or occupation of such employer at the time of the injury.
"(b) An independent contractor is not an employe of an employer for whom the independent contractor performs work or services if the independent contractor meets all of the following conditions:"1. Maintains a separate business with his or her own office, equipment, materials and other facilities.
"2. Holds or has applied for a federal employer identification number with the federal internal revenue service or has filed business or self-employment income tax returns with the federal internal revenue service based on that work or service in the previous year.
"3. Operates under contracts to perform specific services or work for specific amounts of money and under which the independent contractor controls the means of performing the services or work.
"4. Incurs the main expenses related to the service or work that he or she performs under contract.
"5. Is responsible for the satisfactory completion of work or services that he or she contracts to perform and is liable for a failure to complete the work or service.
"6. Receives compensation for work or service performed under a contract on a commission or per job or competitive bid basis and not on any other basis.
"7. May realize a profit or suffer a loss under contracts to perform work or service.
"8. Has continuing or recurring business liabilities or obligations.
"9. The success or failure of the independent contractor's business depends on the relationship of business receipts to expenditures."
In order to be an excluded independent contractor, the worker must meet all of the conditions set out in Wis. Stat. § 102.07(8)(b)1-9. In other words, if only one of the nine conditions does not apply, the applicant is a covered employee under Wis. Stat. § 102.07(8)(a). Jarrett v. B&D Motors, Inc., WC claim no. 96041644 (LIRC, March 12, 1998), affirmed Jarrett v. LIRC, 2000 WI App. 46 17, 233 Wis. 2d 174, 185 (Ct. App. 2000). (1) In this case, the presiding ALJ concluded that the applicant did not meet all the conditions under Wis. Stat. § 102.04(8)(b), and so is an "employee" covered under Wis. ch. 102.
3. Discussion.
The ALJ properly found, and the record establishes, that while Mr. Schaefer's business usually employed fewer than three employees, he paid more than $500 in wages for services performed in Wisconsin in the third quarter of 1998. Consequently, Mr. Schaefer's business was an "employer" subject to Wisconsin's worker's compensation law by October 10, 1998, at the latest. Indeed, on appeal, this finding is not contested.
The next question is whether the applicant meets the definition of "employee" under Wis. Stat. § 102.07(4). The respondent, of course, contends that the applicant meets all nine factors under Wis. Stat. § 102.04(8)(b), and thus fits that exclusion to the definition of employee. The first condition requires the worker to "maintain a separate business with his or her own office, equipment, materials and other facilities." The phrase "office, equipment, materials and other facilities" is conjunctive, not disjunctive. The commission has held that a formal office is not required for a truck driver who maintained his own truck, and who kept his records (including DOT logbooks) and the truck at his home. Jarrett v. B&D Motors, Inc., WC claim no. 96041644 (LIRC, March 12, 1998), affirmed Jarrett v. LIRC, 2000 WI App. 46 19-20, 233 Wis. 2d 174, 186-189 (Ct. App. 2000). Nonetheless, the commission reads the first condition to mean that, at a minimum the applicant must maintain some space somewhere that resembles an office or "facility." James v. B & P Drywall, WC Claim no. 1999-051348 (LIRC, July 28, 2000).
However, in the case now before the commission, the applicant at most kept some tools at his home and had an 800 telephone number. It does not appear, though, that he had a space anywhere where he maintained business records. The commission cannot, on this record, find "a separate business with an office, equipment, materials, and other facilities." The first condition is not satisfied.
The second condition requires the worker to either have a federal employer identification number or to have filed a business or self-employment income tax return (such as an IRS 1040 Schedule C) in the preceding year. The applicant had a federal employer identification number; he meets this requirement.
The third condition requires the worker to operate under contracts to perform specific services or work both for specific amounts of money and under which the independent contractor controls the means of performing the services or work. The record indicates that the applicant provided his services under a kind of ongoing oral agreement to perform the work. However, the parties agree that the written contracts specifying the amounts to be paid were generally not signed until after the work was done. No written contract specifying the amount to be paid was ever signed with respect to the project the applicant was injured on.
Thus, while there may have been an underlying oral contract to provide services for payment of some percentage of the profits, the actual percentage (let alone the specific amount of money) was not determined until after the work was done. Beyond that, whatever the terms of the after-the-fact form contracts at exhibit 1, there is considerable testimony that it was Mr. Schaefer who determined how the paint was to be applied, what techniques were to be used in application, and when the preparatory work was satisfactorily completed. The third condition is not satisfied.
The fourth condition requires the worker to incur the main expenses related to the service or work that he or she performs under contract. As the commission has noted in a prior case, application of this condition may be problematic. (2) On the one hand, separating out the labor expense, the main expense of the painting jobs the applicant performed was the cost of the paint, and Mr. Schaefer bore this expense. On the other hand, the respondent argues that the services performed under the contract were just that, services; that labor is the main component of those services; and that consequently the applicant, who provided the labor, bore the main expense. Even if the labor cost is discounted from the equation, the respondent continues, travel would be the main expense, and the applicant bore that expense.
However, similar reasoning would apply whenever the putative employer supplies the materials and arranges for someone to perform services to apply the material. Of course, having procured the materials, the only real expense left under the contract is the performance of services, and of course the person providing the services bears the burden or expense of providing the services. But persons providing services only, who do not obtain or supply any of the materials necessary to perform those services, seem more like employees and less like independent trade persons.
Further, of course, the statutory criteria refers to the main expense "related to the service or work that [the asserted independent contractor] performs under the contract. [Italics added.]" The use of the words "related to" implies that the statutory test is not meant to be confined to the actual labor expenses of a service contract, and in fact may be meant to exclude them. In Jarrett, for example, when the court discussed the expenses related to the services provided by an independent contractor-trucker, the court referred to the expenses of maintaining the truck owned by the trucker, on-the-road repairs, and road taxes, not the labor expense of driving the truck. See Jarrett, 2000 WI App 46 3-5, 19, 233 Wis. 2d 178-79, 187. By the same token, when someone contracts to have his house painted, the main expense related to the performance of the service contract will usually be the paint, brushes and rollers. (3) The commission concludes the fourth criterion, too, was not met.
The fifth condition is that the worker is responsible for the satisfactory completion of work or services that he or she contracts to perform and is liable for a failure to complete the work or service. Mr. Schaefer's testimony is not clear on this point. He inspected the applicant's work, and testified that he might have to finish it himself, or if he noted a problem before the project was completed, he would have the applicant redo it. The commission concludes that Mr. Schaefer was liable to the home or building owner with whom he contracted, while the applicant might be viewed as liable to Schaefer. Again, though, that arrangement seems akin to the situation that arises in a standard employer-employee relationship, though perhaps a distinction arises from the testimony that the applicant would not be paid more to complete unsatisfactory work. While this is a close call, the commission concludes that Mr. Schaefer, ultimately, is responsible for the satisfactory completion of the work. The fifth condition is not met.
The sixth condition is that the worker receives compensation for work or service performed under a contract on a commission or per job or competitive bid basis and not on any other basis. The applicant is paid on a per job basis. This condition is met.
The seventh condition is that the worker may realize a profit or suffer a loss under contracts to perform work or service. Under the arrangement he has with Mr. Schaefer, the applicant cannot realistically be expected to incur a loss. If he shows up and works he gets paid. If he does a poor job, he might have to redo his work without pay, but that is not the same as operating at a loss. If the customer does not pay Mr. Schaefer, and Mr. Schaefer fails to honor his contract with the applicant, the applicant might not be paid. However, the risk of nonpayment is borne under any contact, including contracts under which statutory employees work. The seventh condition, to have meaning, must apply to situations where the worker is paid under the contractor, but still sustains a loss. The commission concludes that the seventh condition also does not apply.
The eighth condition requires that the worker have continuing or recurring business liabilities or obligations. The applicant has no office expense, to speak of other than an 800 number, a business checking account, and the liability insurance policy that the ALJ concluded his brother-in-law paid for. Even after the checking account was closed, however, Mr. Schaefer was able to pay the applicant by writing a check to his mother. Other than that, all the applicant has is the cost of occasionally getting a new brush or two, and the commission has previously declined to hold that "the cost of maintaining tools rises to a `continuing business liability or obligation.'" Stanley James v. B & P Drywall, WC Claim no. 1999-051348 (LIRC, July 28, 2000). The eight condition does not apply.
The ninth condition is that the success or failure of the worker's business must depend on the relationship of business receipts to expenditures. The applicant really has no business expenditures, again except for the minor expenses related to a few brushes, and the everyday employment cost a worker incurs in getting himself to work. Those expenses cannot be said to play a role in the success or failure of the applicant's business. The ninth condition, too, is unmet.
In sum, then, the commission concludes that the third criterion clearly is not met because the contracts specifying the payment were executed only after the completion of the job. The second, fourth, fifth, seventh, eighth and ninth conditions-while more subjective in nature-also were not met. Since a worker is treated as a statutory employee if only one condition is unmet, the applicant is an employee of Mr. Schaefer's business, Premium Co., for the purposes of Wis. Stat. ch. 102.
The final issue is whether the applicant sustained a compensable injury arising out of his employment with Mr. Schaefer's business, while performing services growing out of and incidental to that employment, and if so, the amount of compensation due. The ALJ's findings in this regard are not challenged on appeal, and the commission restates them entirely.
Based upon the record, the commission finds that the applicant sustained a serious compensable injury arising out of his employment with Mr. Schaefer's business, Premium Co., while performing services growing out of and incidental to that employment. He is entitled to payment of the following benefits: (subject to the social security reverse offset under Wis. Stat. § 102.44(5)) temporary total disability benefits for the periods November 20, 1998 to May 1, 1999 (23 weeks at $266.67 a week, totaling $6,133.41) and May 1, 1999 to May 16, 2000 (54 weeks and 3 days at $276.01 a week, totaling $15,042.55) plus attorney's fees (for the first period at $66.67 a week, totaling $1,533.41, and for the second period at $55.21 a week, totaling $3,008.95) and payment of the claimed treatment expenses (as identified within applicant's Exhibits C and D, the two post-hearing bills, which are incorporated herein by reference) all of which were reasonable and necessary to cure and relieve him of the effects of his injury. Future treatment may be necessary.
An interlocutory order is appropriate in this matter to preserve the applicant's right to make any and all additional claims as a result of his accident, including but not limited to claims for additional temporary disability, functional permanent partial disability, vocational rehabilitation retraining, and possible loss of earning capacity benefits (since the nature and extent of his injuries has not been fully identified yet and may include a nonscheduled injury as well as the scheduled injuries indicated to all four extremities and one hip) and future treatment expenses, consistent with the decision.
The applicant approved a 20% attorney's fee, but no costs were identified or approved.
Because Mr. Schaefer's business, Premium Co., is an uninsured employer as defined in Wis. Stat. § 102.01(2)(h), the compensation for which Mr. Schaefer's business, Premium Co., shall be paid from the Uninsured Employers Fund under Wis. Stat. § 102.81(1).
NOW, THEREFORE, the Labor and Industry Review Commission makes this
INTERLOCUTORY ORDER
The findings and order of the administrative law judge are modified to conform to the foregoing and, as modified are affirmed.
Within 30 days from the date of this decision, the Uninsured Employers Fund shall pay all of the following:
1. To the applicant, Michael S. Shilling, Twenty-one thousand one hundred seventy-five dollars and ninety-six cents ($21,175.96) in disability compensation.
2. To the applicant's attorney, Peter T. Waltz, Four thousand five hundred forty-two dollars and thirty-six cents ($4,542.36) in attorney fees.3. To Franciscan Skemp Healthcare, Three thousand one hundred twenty- six dollars and eighty cents ($3,126.80) in medical treatment expense.
4. To Skemp Clinic, Eighty-six dollars and no cents ($86.00) in medical treatment expense.
5. To Wisconsin Medical Assistance Program, One hundred sixty-eight thousand three hundred eighty-nine dollars and eighty-two cents ($168,389.82) as reimbursement of medical treatment expense.
Jurisdiction is reserved to issue further findings of fact, conclusions of law, and orders as are warranted, consistent with this decision.
Dated and mailed February 7, 2001
shillin.wrr : 101 : 6 ND § 2.13
/s/ David B. Falstad, Chairman
/s/ Pamela I. Anderson, Commissioner
/s/ James A. Rutkowski, Commissioner
MEMORANDUM OPINION
The body of this decision deals at length with the issues raised by Wisconsin Worker's Compensation Uninsured Employers Fund. However, the commission also gave careful consideration to the petition submitted by Mr. Schaefer. In addition to making several points regarding the application of Wis. Stat. § 102.04(8)(b), Mr. Schaefer asserts that the applicant did painting work on his own for other individuals. While there is evidence to that effect, the focus of the commission is on the manner in which the applicant provided services to Mr. Schaefer at the time of his injury.
Mr. Schaefer also makes several allegations going to the applicant's character, and states he lied under oath. However, most of the findings leading to the commission's conclusions in this case are based on Mr. Schaefer's own testimony or testimony from the applicant that is not disputed. Further, while Mr. Schaefer suggests the applicant is lawsuit-prone, it is clear that Mr. Schaefer had a working relationship with the applicant for at least two years, and that the applicant had a serious injury while under contract with Mr. Schaefer. Although Mr. Schaefer may understandably disagree with the law as it is written, the fact remains the applicant was the employee of Mr. Schaefer's business under the law.
Finally, the commission considered the testimony that the applicant arranged for a helper on a job in Maple Grove, Minnesota, in light of Wis. Stat. § 102.07(8m). That section provides that a person who is an employer under the act cannot be the employer of another employer for whom the first employer performs services in the course of his business. The parties do not directly address Wis. Stat. § 102.07(8m) in their briefs. Moreover, even if the applicant hired a helper for the job in Maple Grove, Minnesota, the record does not establish that the applicant paid the helper $500 or more in wages and whatever wages were paid were for service in another state (transcript, page 70). See Wis. Stat. § 102.04(1)(b)3. Finally, Wis. Stat. § 102.07(4) by its terms contemplates that an "employee" may under certain circumstances hire and pay a helper but remain an "employee" where, as here, the helper is hired with the knowledge of the employer (in this case, Mr. Schaefer.)
cc: ATTORNEY PETER T WALTZ
BRANDAU & WALTZ LAW OFFICE
ATTORNEY JEFFREY J STRANDE
PIEHLER & STRANDE SC
WISCONSIN ASSISTANCE PROGRAM
Appealed to Circuit Court. Affirmed September 21, 2001. Appealed to Court of Appeals. Affirmed April 9, 2002 (unpublished summary affirmance)
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Footnotes:
(1)( Back ) In Jarrett, the court of appeals held that, after the enactment of Wis. Stat. § 102.07(8)(b), that statute provides the sole test for whether a worker is an independent contractor, replacing the common law tests. In other words, Wis. Stat. § 102.07 contemplates two classes of workers, employees and independent contractors, and Wis. Stat. § 102.07(8)(b) provides the test to determine if a worker is an independent contractor (and excluded) or an employee (and covered unless another exception applies.)
(2)( Back ) In Stanley James v. B & P Drywall, WC Claim no. 1999-051348 (LIRC, July 28, 2000), the commission observed: "The fourth condition requires the worker to incur the main expenses related to the service or work that he or she performs under the contract. This condition is a little problematic. The ALJ, noting that the applicant did not pay for the drywall, concluded the applicant did not incur the main expense of the operation. The respondent asserts that the point of the contract is not to actually procure and install the drywall, but only to install it. Thus, the respondent asserts, the only real expense other than the drywall screws are the wear and tear on the tools and equipment and the labor expense. Viewed in this light, the applicant did incur the main expenses of the operation." "The commission is not certain it may accept the respondent's view of the facts, however. In comparison with expenses of the truck driver in Jarrett who was responsible for the considerable expenses (including fuel, maintenance, road repairs, and road taxes) of operating the truck he owned, the expenses of the applicant in this case are quite trivial. One might also conclude that an "independent contractor" involved in home construction who incurs no expense other than his own labor may be the very type worker meant to be covered employe under Wis. Stat. § 102.07(8)(b)4. However, it is not necessary to resolve whether the applicant actually meets this condition."
(3)( Back ) Commission decisions under a similarly-worded unemployment insurance statute (Wis. Stat. § 108.02(12)(b)2c) indicate that some leeway may be warranted based on industry practice. Where a home remodelor contracted with a siding installer to put siding on home, and the remodelor supplied the siding, the commission found that the expense of the siding was not related to the services, apparently because of industry practice under which a general contractor such as the home remodelor always procured the siding. John A Lozon Remodeling, UI Account No. 385690, Hearing No. S9000079HA, (LIRC, September 24, 1999). On the other hand, where a roofing contractor procured roofing material and then hired a roofer to install them, the roofing materials were considered an expense related to the contract. David P Petrauski/Petrauski Roofing, UI Account No. 681945, Hearing No. S9800206MW (LIRC, May 29, 1999). These cases suggest that a distinction may be drawn in such cases between persons analogous to a home remodelor (or general contractor) who might procure a siding but lack the skills or is not in the business of installing siding specifically and so would contract with an installation tradesperson, and persons analogous to a roofing contractor who is in the business of installing roofs and hires individuals to perform the roofing work. To the extent industry practice is relevant, however, in the current case, the record shows a painting contractor, if he is a true independent contractor, bears the expense of the paint. Specifically, Mr. Schaefer himself is a painting contractor who also does painting.
uploaded 2001/02/12