ROBERT S SEFTAR, Claimant

WAUKESHA SYMPHONY INC, Appellant

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 claimant has performed services as a bassoonist for about three years for the appellant, a non-profit organization which operates a symphony orchestra. The claimant initiated a claim for unemployment benefits after being discharged from his job as a pastry chef for a bakery.

The claimant performs musical services for the appellant and for eight other orchestras. He auditioned for a position with the appellant's orchestra. He is paid on a per performance basis at an amount set forth in the appellant's pay scale. He is given a schedule of the appellant's performances prior to the season and indicates which ones he is available for. He provides the instrument to perform his services and the sheet music is provided by the appellant. The claimant's investments include $33,000.00 for his bassoon and $18,000.00 for his contra bassoon.

The issue to be resolved is whether the claimant performed services for the appellant as an "employee."

A two-step analysis is used to determine whether an individual is an employee. Goldberg v. DILHR, 168 Wis. 2d 621, 625 (Ct. App. 1992). The first step is to determine whether the individual has been performing services for an employing unit, in an employment. Wis. Stat. § 108.02 (12)(a). An "employment" is "any service . . . performed . . . for pay." Wis. Stat. § 108.02 (15)(a). There is no dispute that the claimant performed services for the appellant for pay. A presumption therefore arises that such services were performed as an employee. Wis. Stat. § 108.02(12)(a). The burden then shifts to the appellant to establish that the claimant is excepted from employee status by some statutory provision. The appellant is a nonprofit organization. Accordingly, the applicable statutory provision is Wis. Stat. § 108.02(12)(c) which provides:

Paragraph (a) does not apply to an individual performing services for a government unit or nonprofit organization, or for any other employing unit in a capacity 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.

The first issue is whether the claimant performed services free from the appellant's direction and control.

The appellant did not directly control the claimant's performance of his services. The appellant did engage the services of a conductor who in turn directed the claimant and other orchestra members on how to play the music provided. However, the appellant did not exercise any direct control over the claimant. The claimant signed up for individual performances rather than a fixed period of employment. The claimant was free to and did turn down work. The claimant was free to and did work for other orchestras. The conductor, by definition, would direct the claimant in how to play a particular piece, but the claimant's performance depended on his own previously existing skill and knowledge as a musician. The commission finds that the claimant performed his services free from the appellant's direction and control.

The second issue is whether the claimant's services were performed in an independently established trade, business or profession in which the claimant was customarily engaged. This condition is analyzed in light of five interrelated factors set forth in Keeler v. LIRC, 154 Wis. 2d 626 (Ct. of App. 1990):

1. Integration -- whether the services performed directly relate to the activities conducted by the company retaining those services.

2. Advertising or holding out -- whether the alleged employee advertises or holds out to the public or a certain class of customers the existence of its independent business.

3. Entrepreneurial risk -- whether the alleged employee has assumed the financial risk of the business undertaking.

4. Economic dependence -- whether the alleged employee is independent of the alleged employer, performs services and then moves on to perform similar services for another.

5. Proprietary interest -- whether the alleged employee owns various tools, equipment, or machinery necessary in performing the services involved, but also including whether the alleged employee has proprietary control, such as the ability to sell or give away some part of the business enterprise.

The Keeler factors are not to be mechanically applied. Rather, the weight and importance of each factor varies according to the specific facts of each case. The five factors should be applied in a manner consistent with the purpose of the statute -- "to effect unemployment compensation coverage for workers who are economically dependent on others in respect to their wage-earning status." Larson v. LIRC, 184 Wis.2d 378, 391 (Ct. App. 1994).

Clearly the claimant's services are integrated into the appellant's business. The services of a bassoonist are directly related to the operation of an orchestra. However, while lack of integration points to an independent contractor status, the fact that there is integration does not necessary establish employee status.

The evidence did not establish that the claimant advertised. There was no testimony that he had business cards or placed advertisements for his services. The claimant did hold himself out to the "orchestral community" as a professional bassoonist.

The claimant's entrepeneurial risk consisted of his substantial investment in his instruments which totalled over $50,000.00.

As noted by the court in Larson, economic dependence is not a matter of how much money an individual makes from one source or another, but refers to the survival of the individual's independently established business if the relationship with the putative employer ceased to exist. Larson at 392. Here, if the claimant's relationship with the appellant ceased to exist his business would continue. Likewise, the ability of the claimant to work for others, the fact that he did work for others, and his ability to turn down work further establishes the separateness of his business from the appellant's business.

Finally, as to proprietary interest, the claimant does not in fact have anything he alone could sell or transfer as an ongoing concern, such as goodwill. However, as was noted by the court in Larson, the proprietary interest factor is not the sole test of whether an individual is engaged in an independently established business. The court stated, "we do not read the supreme court to 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. Business based on the provision of creative services are common in the film industry. [Cite omitted]. Thus, even though the facts do not show that the crew members could sell their businesses, we consider that factor in light of film industry practices." Larson at 395. The claimant's business depended on his particular talents as a basoonist rather than a personnel pool or equipment inventory.

Considering the Keeler factors set forth above, the commisson finds that the claimant's services were performed in an independently established business in which the claimant was customarily engaged. The claimant was not economically dependent on the appellant for his livelihood. His unemployment and need for unemployment insurance benefits were unrelated to his services for the appellant.

The commission therefore finds that the claimant did not perform services for the appellant as an employee within the meaning of Wis. Stat. § 108.02(12).

The commission further finds that the claimant was paid benefits in the amount of $925.00 for which the claimant was not eligible and to which the claimant was not entitled, within the meaning of Wis. Stat. § 108.03(1).

The final issue to be decided is whether recovery of overpaid benefits must be waived.

Wisconsin Statute § 108.22(8)(c), provides that the department shall waive the recovery of overpaid benefits if the overpayment was the result of departmental error, and the overpayment did not result from the fault of the claimant. Under Wis. Stat. § 108.02(10e)(a) and (b), department error is defined as an error made by the department in computing or paying benefits which results from a mathematical mistake, miscalculation, misapplication or misinterpretation of the law or mistake of evidentiary fact, or from misinformation provided to a claimant by the department, on which the claimant relied.

The overpayment in this case results from the commission's reversal of the appeal tribunal decision. Such reversal was not due to department error as defined in Wis. Stat. § 108.02(10e)(a) and (b).

The commission further finds that waiver of benefit recovery is not required under Wis. Stat. § 108.22(8)(c), because although the overpayment did not result from the fault of the claimant as provided in Wis. Stat. § 108.04(13)(f), the overpayment was not the result of a department error. See Wis. Stat. § 108.22(8)(c)2.

The decision of the administrative law judge is reversed. Accordingly, payments made to the claimant by the appellant totaling $1,540.00 shall not be included in the department's computation of the claimant's base period wages for computing potential benefit eligibility. The claimant is required to repay the sum of $925.00, of which $21.00 was found overpaid in a separate decision, to the Unemployment Reserve Fund.

Dated and mailed April 25, 2002
seftaro . urr : 132 : 1 : EE 411  EE 412 EE 413

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

/s/ Laurie R. McCallum, Commissioner

Note: The commission did not consult with the ALJ regarding witness credibility or demeanor. The commission's reversal is not based on a different credibility or demeanor assessment.

cc: George W. Love

[ Search UC Decisions ] - [ UC Digest - Main Index ] - [ UC Legal Resources ] - [ LIRC Home Page ]

uploaded 2002/04/26