STEPHEN E WINEGARDEN, Employee

JDC LOGISTICS INC, Employer

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 makes the following:

The employee worked as a truck driver for the employer, a trucking concern. He worked for approximately four and one-half years as an "employee" for the employer. On January 3, 2001 (week 1), the employee opted for independent contractor status, a situation in which he was under a lease agreement with the employer. On July 31, 2001 (week 31), the employer terminated its lease with the employee.

The initial issue to be decided is whether the employee quit or was discharged. If the employee quit, a secondary issue is whether the employee's quitting was for any reason that would permit the immediate payment of unemployment benefits. If the employee was discharged, a secondary issue is whether the employee's discharge was for misconduct connected with that employment.

The employee made a voluntary decision to change his status from an employee to an independent contractor. The employer did not require that the employee make the change. The employer uses both employees and independent contractors to perform motor carrier services. The parties' characterization of the relationship is not controlling. The commission must determine whether, under the Unemployment Insurance Law, the employee performed services as of January 3, 2001, as an independent contractor.

Wis. Stat. § 108.02(12)(a), defines an employee as an individual performing services for an employing unit, in an employment, for pay, unless excepted from the employee definition by another statutory provision. Wis. Stat. § 108.02(12)(bm), contains a list of conditions that must be established by the employing unit to rebut the presumption of employee status. Wis. Stat. § 108.02(12)(bm), is applied if work is performed other than as a logger or trucker. If work is performed as a logger or trucker, Wis. Stat. § 108.02(12)(c) is applied to determine if the individual performed services as an employee.

A "trucker" is defined as a "contract operator with a trucking carrier." Wis. Stat. § 108.02(25e). "Contract operator" in turn is defined as "an individual who contracts to lease a motor vehicle to a carrier for use in the carrier's business." Wis. Admin. Code § DWD 100.02(12). "Carrier" is defined as a person engaged in hauling passengers or freight, and includes a person engaged as a common motor carrier. Wis. Admin. Code § DWD 100.02(8).

On January 3, 2001, the employee purchased a tractor and leased the tractor to the employer. The employer is a motor carrier engaged in hauling freight. The employee and employer meet the definitions of "contract operator" and "carrier," respectively.

Wisconsin Statute § 108.02(12)(c), provides:

Paragraph (a) does not apply to an individual performing services . . . as a logger or trucker if the employing unit satisfies the department:

1. That such individual has been and will continue to be free from the employing unit's control or direction over the performance of his or her services both under his or her contract and in fact; and

2. That such services have been performed in an independently established trade, business or profession in which the individual is customarily engaged.

Wisconsin Administrative Code § DWD 105.03(1) sets forth the factors to be considered in determining whether the contract operator is free from the carrier's direction and control. Under Wis. Admin. Code § DWD 105.03(1), the commission must determine whether:

(a) The contract operator owns the motor vehicle or holds the vehicle under a bona fide lease arrangement with any person other than the carrier;
(b) The contract operator is responsible for the maintenance of the motor vehicle;
(c) The contract operator bears the principal burden of the motor vehicle operating costs including such items as fuel, repairs, supplies, insurance and personal expenses while on the road;
(d) The contract operator supplies, or is responsible for supplying, the necessary personal services to operate the motor vehicle;
(e) The contract operator determines the details and means of performance, namely, the type of equipment, assignment of driver, loading, routes and number of stops to be made during the haul, as well as starting, completion and elapsed times;
(f) The contract operator may refuse to make a haul when requested by the carrier;
(g) The contract operator may terminate the lease at any time after reasonable notice; and
(h) The contact operator is compensated on a division of the gross revenue or by a fee based upon the distance of the haul, the weight of the goods, the number of deliveries, or any combination of these factors.

If the contract operator meets all the factors in Wis. Admin. Code. § DWD 105.03(1), the commission must determine whether the contract operator performed services for the carrier in an independently established business in which the contractor operator was customarily engaged. Under Wis. Admin. Code § DWD 105.04(1), the commission must determine whether:

(a) The contract operator owns the motor vehicle or holds the vehicle under a bona fide lease arrangement with any person other than the carrier;
(b) The contract operator is free to hire another person as a driver in the performance of services for the carrier; and
(c) The contract operator is free to reject hauling a load offered by the carrier.

As of January 3, 2001, the employee was responsible for paying his own insurance costs. The employee was responsible for expenses associated with maintaining his tractor. The employee was also responsible for fuel, oil and other operating costs. The employee supplied services personally under the contract. The employer and the employee entered into a written lease agreement that could be terminated by either party with 30 days written notice or for cause. The employer did not dictate the means and methods of performing services beyond requiring that he comply with all regulatory requirements. The employee was free to reject loads. The employee was compensated at a rate of 80 cents per mile.

Based on the above, the commission determines that the employee satisfied all factors listed under Wis. Admin. Code § DWD 105.03(1). Accordingly, the employee performed services free from the employer's direction and control.

The employee owned the tractor he used to perform services for the employer, was free to hire another worker to perform services, and was free to reject hauling a load offered by the employer. The commission determines that the employee satisfies all factors under Wis. Admin. Code § DWD 105.04(1). Accordingly, the employee performed services in an independently established business in which he was customarily engaged.

The employee seeks unemployment benefits from the employer's account. However, the employment relationship changed as of week 1 of 2001 when the employee opted for independent contractor status. He was no longer an "employee" of the company. As a result, it must be concluded that the employee effectively quit his employment as an "employee" when he opted for independent contractor status in week 1 of 2001.

The final issue is whether the employee's quitting falls within a statutory exception which would allow for the immediate payment of benefits.

When a worker voluntarily terminates his or her employment, there is a legal presumption that the worker is ineligible to receive unemployment insurance benefits. Wis. Stat. § 108.04(7)(a). Wis. Stat. § 108.04(7) lists a number of statutory exceptions which allow for the immediate payment of benefits when a quitting occurs. These listed exceptions include circumstances such as when a worker quits due to sexual harassment, when a worker quits for "good cause" attributable to the employer, or when a worker quits because he or she is physically unable to perform work for the employer.

The employee essentially quit his position as an "employee" in order to take advantage of independent contractor status. While the employee may have made a valid personal decision to change his employment status, his reason for quitting does not fall within a statutory exception which would allow for the immediate payment of benefits.

The commission therefore finds that as of week 1 of 2001, the employee performed services for the employer as a contract operator within the meaning of Wis. Admin. Code ch. DWD 105, and was not an employee of the employer under Wis. Stat. § 108.02(12)(c), as of that week.

The commission further finds that the employee voluntarily terminated his employment in week 1 of 2001, within the meaning of Wis. Stat. § 108.04(7)(a), and that his quitting was not for any reason constituting an exception to that section.

The decision of the administrative law judge is modified to conform to the foregoing findings and, as modified, is affirmed. Accordingly, the employee is ineligible for benefits beginning in week 1 of 2001, and until four weeks have elapsed since the end of the week of quitting and the employee has earned wages in covered employment performed after the week of quitting equaling at least four times the employee's weekly benefit rate which would have been paid had the quitting not occurred.

Dated and mailed March 28, 2002
winegst . usd : 132 : 3 : VL 1007 : EE 421 VL 1007.01 

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

/s/ Laurie R. McCallum, Commissioner

The employee has petitioned for commission review of the adverse appeal tribunal decision that found he voluntarily terminated his employment but not for any reason that permits immediate benefit payment. The employee indicates in his petition that he is seeking to draw benefits for the time that he was an employee. The employee's base period does consist of wages earned as an employee. However, he is not eligible to receive benefits based on those wages because he quit his employment with the employer and not for any reason permitting immediate benefit payment. The employee must requalify for benefits by earning four times his weekly benefit rate in employment covered by the unemployment insurance law of any state or the federal government. The commission understands that the employee was dissatisfied with the manner in which the employer terminated the lease agreement. However, the employer's conduct does not change the fact that the employee voluntarily terminated his work as an employee in order to perform services for the employer as an independent contractor.

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uploaded 2002/04/01