Wis.LIRC UC Decision: Pony - January 30, 1998 - EE 410 - Independent Contractor or Employe - building cleaning and maintenance; EE 410.03 - ownership of equipment used in another activity and not related to the services at issu, not relevant; EE 410.05 - cost of travel to workplace not an expense related to services performed

STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

PONY INC QUEENSWAY LAUNDRY, Employer

UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Hearing No. S9700354MD, Account No. 362719

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 agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own, except that it makes the following modification:

Paragraph d. on the third page of the administrative law judge's FINDINGS OF FACT AND CONCLUSIONS OF LAW is deleted and the following paragraph is substituted therefor:

"d. He is not responsible for the satisfactory completion of the services that he contracts to perform and is not liable for a failure to satisfactorily complete the services. He has no contractual obligation to satisfactorily complete a specific job and there is no reason to believe that he can be held liable for failure to do so. To the contrary, the appellant indicated that if Mr. Sherven failed to satisfactorily complete work on some occasion it would redo the work itself and, if it was not satisfied with Mr. Sherven's work in the long term, it would discharge him and find a replacement."

DECISION

The decision of the administrative law judge, as modified, is affirmed. Accordingly, the appellant is liable for contributions with regard to payments made to Jerry Sherven under the Wisconsin unemployment insurance statutes.

Dated and mailed: January 30, 1998
ponyinc.smd : 164 : 8 EE 410 EE 410.03 EE 410.05

David B. Falstad, Chairman

Pamela I. Anderson, Commissioner

James A. Rutkowski, Commissioner

MEMORANDUM OPINION

In its petition for commission review the employer argues that Jerry Sherven meets seven of the eight criteria necessary to be considered an independent contractor under � 108.02(12)(b)(2) of the statutes, the seven factors being those listed in subsections (a) through (g). The commission has considered the employer's arguments regarding these seven factors, but finds them unpersuasive.

First, the employer maintains that Mr. Sherven satisfies subsection (a) in that he owns lawn mowers, snow blowers and other tools and cleaning implements. The employer asserts that, just because Mr. Sherven's contract with the employer only requires the use of a rag and mop does not negate the ownership of and maintenance of a separate business. However, the equipment cited by the employer is not related to the services which Mr. Sherven performs for the employer and the commission is unconvinced that Mr. Sherven's ownership of lawn maintenance equipment is sufficient to establish that he maintains a separate cleaning business, in satisfaction of the statute.

Next, the employer contends that Mr. Sherven operates under a specific individual contract to clean the employer's laundromat for a sum certain and that he controls his hours of work and works without supervision. The employer, therefore, maintains that subsection (b) has been satisfied. The commission disagrees. Mr. Sherven has no contract to perform specific services for the employer, but works on an ongoing basis with no clear ending point to the relationship and is salaried at the rate of $95 per week. Further, although Mr. Sherven may well control the means and method of performing his services, given that his services basically consist of mopping floors and wiping off wash machines, this fact is not necessarily indicative of independent contractor status.

With respect to subsection (c), the employer contends that Mr. Sherven incurs expenses related to his work for the employer including travel, liability insurance, and any monies paid to assistants. The commission remains unpersuaded that Mr. Sherven satisfies subsection (c) of the statute. First, the cost of travel to the workplace is not considered an expense related to the services performed. Virtually all employes are required to pay for their own travel to and from the workplace and this factor is in no way an indicator of independent contractor status. Moreover, the employer's assertions that Mr. Sherven has expenses related to the hiring of assistants are unsupported by any evidence in the record. Finally, while the commission agrees that liability insurance could be considered a business expense in satisfaction of this factor, it is unclear from the record whether the employer also carries liability insurance covering Mr. Sherven's services, nor is it clear whether or why it is necessary for Mr. Sherven to bear the expense of maintaining liability insurance with respect to his services for the employer. Consequently, the commission does not believe that the employer has met its burden of establishing that this statutory factor is satisfied.

Next, with respect to subsection (d), the employer argues that Mr. Sherven bears the risk for satisfactory completion in that, if he does not clean the laundromat, he does not get paid. However, the fact that Mr. Sherven only gets paid when he works does not distinguish him from any other employe and is clearly not what the statute contemplates. Rather, the question to consider is whether Mr. Sherven has any contractual obligation to satisfactorily complete a specific job and whether he could be held liable for a failure to do so. The record contains nothing to suggest that this is the case. To the contrary, the employer's witness testified that if Mr. Sherven failed to satisfactorily complete work on some occasion the employer would redo the work itself and, if it was not satisfied with Mr. Sherven's work in the long term, it would discharge and replace him, as it would any other employe.

The employer then argues that Mr. Sherven satisfies subsection (e) in that he receives compensation on a per-job basis and is paid $95 a week. However, the evidence indicates that Mr. Sherven is not paid on a per-job basis, but on a weekly basis for a set amount of work performed each day. While the employer also argues that if Mr. Sherven does not clean he does not get paid, as stated above, this fact does not distinguish Mr. Sherven from an ordinary employe, as very few employes get paid when they do not work.

The employer contends that Mr. Sherven also satisfies subsection (f), because if he cleans he profits and if he does not clean he does not profit. This argument fails. The evidence provides no reason to believe that Mr. Sherven has any profit potential with respect to his work for the employer, nor any risk of loss. Once again, the fact that Mr. Sherven sacrifices salary when he does not work is unavailing, as it does not set him apart from any other employe.

Finally, the employer maintains that Mr. Sherven meets the requirements of subsection (g) because he maintains tools of a maintenance business and incurs his own liability insurance costs. As stated above, the commission does not consider Mr. Sherven's snow blowers and lawn mowers to be a recurring business liability related to his work for the employer and is unconvinced that Mr. Sherven's liability insurance is an obligation necessary for the performance of his services for the employer.

The employer concludes by arguing that the appeal tribunal decision does not make sense, and that the appeal tribunal's attempt to split Mr. Sherven's maintenance business into fragments according to individual contracts is absurd. The employer asserts that the department ought not be able to contort individuals' rights to contract for services. The commission assumes that the employer is referring to the appeal tribunal's decision not to consider Mr. Sherven's snowplowing and lawn care equipment when deciding whether he maintains a separate business with his own office, equipment, materials, and other facilities, and in deciding whether he has recurring business liabilities or obligations. The commission does not consider the appeal tribunal's analysis unreasonable, given that Mr. Sherven does not maintain any office, equipment, materials or facilities related to his services for the employer and was not shown to incur ongoing business liabilities with respect to those services. Moreover, even if the commission were to agree with the employer's `unified business' theory and decide those factors in favor of the employer, this would not alter the outcome of the case since Mr. Sherven would nonetheless fail to meet the requisite six of eight enumerated factors. Finally, with respect to the employer's suggestion that the department should not be permitted to "contort" individuals' rights, the commission notes that the decision in this matter has no affect on the rights of an individual to contract for services. Rather, the decision relates only to the question of whether Mr. Sherven performed his services for the employer in the capacity of an employe such that the employer is subject to the provisions of the law based upon his services. Because the commission agrees with the appeal tribunal that he did, the appeal tribunal decision is affirmed.

NOTE: The appeal tribunal found that Mr. Sherven satisfied � 108.02(12)(b)(d) of the statute. The decision contains no explanation for this finding and, for the reasons set forth in this memorandum opinion, the commission sees no basis for such a conclusion. The commission has, therefore, modified the appeal tribunal decision in accordance with this opinion.

cc: ATTORNEY PETER W ZEEH
ENFORCEMENTS SECTION

ATTORNEY DONA J MERG
MERG & ANDERSON SC

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