DIANE M TURNER, Claimant

U W PARKSIDE, 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 performed services for the appellant, an educational institution, beginning in 1997, first as a researcher, then as a program coordinator, and beginning in November of 2000, as a program director. The claimant's responsibilities included interviewing women about the issues of women and poverty. The base period at issue consists of the four quarters of 2001, thus the claimant's status as a program director is at issue.

The claimant testified that she was told at hire that her job would end when the grant money ran out. A contract entered into the record, covering services performed between July 1, 2001, and December 31, 2001, indicates the claimant would receive a maximum of $20,000. Exhibit 1. The appellant testified there was a prior contract covering 2000. Syn. at 6. The claimant testified she was paid a varied amount depending on what she was doing. Syn. at 2. She also testified she was paid a set amount for an understood number of hours per week. Syn. at 3. She also testified that she received a lump sum. (1)  The appellant testified there was an understanding that there was a maximum amount the claimant would be paid and had to submit quarterly invoices. Syn. at 5. The claimant, as program director, used money she received from the appellant to pay others to perform services.

The claimant did maintain an office in her home and had a home computer, but had not prior to 2002 claimed expenses as a deduction for tax purposes. She testified she followed research methodology that was dictated by the appellant. Syn. at 2. The appellant asserted that any methodology was determined by mutual agreement of participants and that the claimant's job was more advocacy than research. Syn. at 5 and 7. She did not risk any liability if she failed to perform her work for the appellant. She did not carry health insurance, worker's compensation insurance, and liability insurance. Her expenses consisted of office supplies that she paid for.

In 1999 and 2000 the claimant also did research for a professor in Pennsylvania off and on for about 18 months earning $6,000.00 total. The claimant testified that she did this as a staff person for Women and Poverty Public Education Initiative (WIPPEI). WIPPEI has been a project of the University of Wisconsin since 1994. The contract entered into between the parties indicates that the claimant's private consulting business is called Women and Poverty Public Education Initiative. Further, the contract contains an explanation of the claimant's unique qualifications (thus exempting her hiring from the competitive bid process) and how her public service consulting business has supported the Women and Poverty Public Education Initiative. Thus, the claimant was alleged to have had the same business name as the project she was working for or on.

The claimant performed services for the appellant and was compensated for doing so. The presumption arises that the services were performed as an employee. In order to rebut such presumption, it is the appellant's burden to establish that the claimant satisfied seven of the ten subdivisions in Wis. Stat. § 108.02(12)(bm).

1. The individual holds or has applied for an identification number with the federal internal revenue service.

The claimant did not have a federal employer identification number. Subdivision 1. was not satisfied.

2. The individual has filed business or self-employment income tax returns with the federal internal revenue service based on such services in the previous year or, in the case of a new business, in the year in which such services were first performed.

The claimant did file self-employment tax returns during her employment. Subdivision 2. was satisfied.

3. The individual maintains a separate business with his or her own office, equipment, materials and other facilities.

The claimant's testimony is sufficient to establish in this case that she had an office, with equipment consisting of her computer, and basic office materials. She had no other separate facilities but none were required to perform her services for the appellant. Subdivision 3. was satisfied.

4. The individual operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means and methods of performing the services.

The testimony and reasonable inferences from that testimony support the finding that the claimant performed services under more than one contract and that each contract was limited in terms of the maximum amount the claimant could be paid. The claimant, as program director, did control the methods and means of performing services. In particular, as director the claimant on her own engaged the services of others to accomplish tasks. Subdivision 4. was satisfied.

5. The individual incurs the main expenses related to the services that he or she performs under contract.

The claimant did incur the main expenses related to the services and those expenses mainly were of the cost of office supplies. There was actually little testimony regarding any other expenses involved in this work including any expenses that might have been borne by the appellant. The claimant used the money she received both to pay individuals to do research and to pay the women who were interviewed. Subdivision 5 was satisfied.

6. The individual is responsible for the satisfactory completion of the services that he or she contracts to perform and is liable for a failure to satisfactorily complete the services.

There was absolutely no evidence that the claimant was liable for failure to satisfactorily complete her services. Satisfaction of this subdivision requires more than establishing that the claimant would not be paid for work not performed. Subdivision 6. was not satisfied.

7. The individual receives compensation for services performed under a contract on a commission or per-job or competitive-bid basis and not on any other basis.

The appellant did not establish that the claimant was performing her work on a commission, per-job, or competitive-bid basis. The testimony was very vague regarding the amount the claimant was paid for any particular period of time, and whether it was based on hours in a week or tasks accomplished during a particular time frame. The written contract in the record only covered half of 2001. Frankly, it is not clear from the record what claimant's responsibilities and activities were as a program director, except that she apparently did some interviewing. Subdivision 7. was not satisfied.

8. The individual may realize a profit or suffer a loss under contracts to perform services.

The evidence does not indicate that there was a realistic possibility that the claimant could have suffered a loss here. The claimant as director was paying researchers and interviewees out of her own money. However, she received the money first. There is no indication how much money she paid out to researchers or interviewees, or spent on office supplies. The claimant earned over $30,000.00 in four quarters. The appellant did not establish and the evidence does not demonstrate that the claimant had a realistic possibility of suffering a loss. Subdivision 8. was not satisfied.

9. The individual has recurring business liabilities or obligations.

The claimant did not testify that she had any liabilities or obligations that were ongoing. Subdivision 9. was not satisfied.

10. The success or failure of the individual's business depends on the relationship of business receipts to expenditures.

Finally, there was no indication that the claimant faced a realistic possibility of a significant period during which she would have to make expenditures without any receipts. Subdivision 10. was not satisfied.

The commission therefore finds that the claimant performed services for the appellant as an employee in an employment and, in the applicable base period, the claimant was paid wages for those services totaling $30,500.00, within the meaning of Wis. Stat. § § 108.02(12) and 108.02(26).

The decision of the administrative law judge is modified to conform to the foregoing findings and, as modified, is affirmed. Accordingly, the wages paid to the claimant by the appellant totaling $30,500.00, shall be included in the department's computation of the claimant's base period wages for computing potential benefit eligibility.

Dated and mailed February 19, 2003
turnedi . urr : 132 : 1  EE 410  EE 410.01  EE 410.06

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

The appellant argues in its petition that because the services at issue can be performed without obtaining an FEIN, the fact that the claimant did not have an FEIN is immaterial. However, Wis. Stat. § 108.02(12)(bm) does not indicate any exception to the consideration of whether the claimant has an FEIN. Further, declaring the factor immaterial does not constitute satisfaction of subdivision 1. or any other subdivision under paragraph (bm).

Appellant indicates its disagreement with the ALJ's finding regarding subdivision 4. The ALJ actually found in the appellant's favor on that factor, as does the commission. The relevant findings of the ALJ are those related to services performed by the claimant in her base period and thus claimant's services as a program director.

The appellant maintains that the ALJ missed the point regarding the purpose of invoicing and payment process. The appellant states that the claimant would not be paid if she submitted invoices for work not performed or not performed satisfactorily. However, subdivision 6. requires more than that the individual not be paid for failing to satisfactorily complete services, the individual must incur some liability for such failure. The commission noted in Quality Communications Specialists Inc., UI Dec. Hearing Nos. S0000094MW and S0000095MW (LIRC Jul. 30, 2001):

"Liab[ility] for a failure to satisfactorily complete the services" can be understood as meaning that the consequences provided by the contract for the failure to do such re-work to "put things right" are greater than merely not being paid for the work not put right. This might be evidenced by such things as a liquidated damages clause, or a contract provision allowing the other party to contract with someone else to do (or re-do) work not satisfactorily completed and to recover the costs of the third party's services from the original contractor even if the costs are higher than the original contractor agreed to.

The appellant notes that the reason the claimant's position did not go through the competitive bid process was because of her unique qualifications. However, as previously noted, that there exists an explanation for why the services do not satisfy a subdivision does not exempt the services from application of the subdivision.

The commission notes that it conducts a de novo review of the evidence presented at the hearing and makes its own findings and conclusions based on that evidence. The commission is not bound by the rationale of the ALJ or conclusions reached by the ALJ. The commission, unlike the ALJ, finds that the appellant did not satisfy subdivision 8.

The evidence did not establish that the claimant actually had a business that would continue once the relationship with the appellant ceased. The claimant's testimony regarding services performed for another professor indicated that the services were in some way connected to her services for the appellant. In any event, there was simply no testimony that the claimant had recurring obligations which would continue without regard to whether services were being performed for the appellant, e.g. dues, licenses, or insurance.

The commission can appreciate the appellant's position that when, at the time services are engaged, a party agrees to work as an independent contractor, such intent should be honored. However, Wis. Stat. § 108.02(12)(bm) contains specific factors that the commission must apply when determining whether services are performed as an independent contractor. While certainly the intent of the parties cannot be ignored when applying paragraph (bm), such intent is not a specifically delineated factor to be considered.

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(1)( Back ) The commission did review the hearing tape in this matter and notes that page 4 of the synopsis should reflect that the claimant testified that she "received paychecks in a lump sum." 

uploaded 2003/03/03