MISTY D HUCKSTEP, Employee

J & JH CO, 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 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 modifications:

In the second paragraph on page 5 of the administrative law judge's decision delete the first four sentences of that paragraph and insert therefor:

"The services the claimant performed at home did not require the expenditure of a significant amount of money. The appellant established that the claimant did incur the main, although not significant, expenses related to the performance of the services at issue. Condition 5 has been satisfied."

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

Dated and mailed May 28, 2003
hucksmi . usd : 132 : 1  EE 410  EE 408  EE 410.01  EE 410.03   EE 410.07

/s/ David B. Falstad, Chairman

/s/ James T. Flynn, Commissioner

/s/ Robert Glaser, Commissioner

The appellant has petitioned for commission review of the adverse appeal tribunal decision that found the claimant performed services for the appellant as an employee and not as an independent contractor. First, the appellant questions whether a prior decision made by ALJ Paul Gordon is being overturned. A review of the department's computerized records indicate that ALJ Paul Gordon did issue a decision involving the appellant and the claimant in a case arising under Wis. Stat. § 108.10. This case arises under Wis. Stat. § 108.09. The issue in this case is whether the claimant may use the sums paid to her by the appellant for qualifying purposes. Wis. Stat. § 108.101(3) provides that "no finding of fact or law, determination, decision or judgment with respect to rights or liability under s. 108.10 is binding in an action or proceeding under s. 108.09." In addition, a finding that the claimant performed services for the appellant as an independent contractor in 2000, does not automatically lead to the conclusion that services performed in the second quarter of 2001 to the first quarter of 2002 were performed as an independent contractor.

The ALJ is required to make a determination of the claimant's status during the time period at issue based solely on evidence presented at the hearing. Thus, whether the claimant is found to be an employee may change if the appellant does not submit sufficient evidence at the particular hearing to satisfy seven of ten conditions set forth in Wis. Stat. § 108.02(12). Further, whether the claimant's services satisfy conditions for independent contractor status under the Internal Revenue Code is not controlling. As noted by ALJ Crosson, Wisconsin's Unemployment Insurance Law defines who is an employee and who is an independent contractor for purposes of unemployment insurance.

The commission has reviewed the record and agrees with ALJ Crosson's Findings of Fact and Conclusions of Law, except as modified. The appellant states that ALJ Crosson found that the appellant satisfied condition 1. The commission disagrees. ALJ Crosson found that the claimant did not apply for or possess a federal employer identification number. The fact that the claimant operated as a sole proprietor and used her social security number when filing business taxes does not satisfy condition 1.

The appellant further argues that the claimant did maintain a separate business with her own office, equipment, materials and other facilities. After reviewing the record, the commission agrees with ALJ Crosson that the appellant did not establish that the claimant's business was "separate" from the appellant's business. The claimant did not have a business prior to beginning work for the appellant and did not have a business after she ceased working for the appellant.

The appellant argues that the claimant was liable for failure to satisfactorily perform services. However, while the applicant asserts that the claimant would not be paid if the services were not performed satisfactorily, it did not establish that she incurred any "liability" for failing to perform services. As the commission notes in Quality Communications Specialist, Inc., UI Dec. Hearing Nos. S0000094MW and S0000095MW (LIRC July 30, 2001):

"Liab[ility] for 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 cover the cost of the third party's services from the original contractor even if the costs are higher than the original contractor agreed to.

The appellant asserts that, pursuant to its testimony, the claimant was paid per job. However, while the appellant may have been paid per job, the claimant was really paid on an hourly basis. Her pay was calculated by multiplying an hourly rate times the number of hours she performed services in a week. The claimant was paid prior to the appellant being paid. The claimant did not have to wait for the contract to be completed to receive remuneration.

The appellant also asserts that the claimant satisfied condition 8 because if she did not work she would suffer a loss. However, the question is whether, if the claimant performed the services under the contracts at issue, she had a realistic possibility of suffering a loss. There were no expenses associated with performing the services at issue here that would indicate that it was possible that, if she did her work, she could suffer a loss.

The claimant testified that she did not have recurring business liabilities or obligations. The appellant maintains that she did. However, recurring business liabilities are those expenses which continue without regard to whether work for the appellant is being performed and go beyond what is needed for a particular job. The claimant does not have a separate business and her expenses, such as for utilities, are not business expenses for unemployment insurance purposes, but expenses associated with every day living.

Finally, the commission agrees with ALJ Crosson that the appellant has not established that condition 10 was satisfied. The claimant was paid based on an hourly rate, the claimant had a relatively small investment, and little in demonstrated expenditures. Further, any expenditures were discontinued if the claimant was not performing services. The evidence did not establish that claimant faced a realistic prospect of a significant period during which she would have to make expenditures without receipts coming in.

NOTE: The commission notes that a separate determination, which was not appealed by the claimant, found that she quit her employment with the appellant and not for any reason that would permit benefit payment. As a result of that determination, the appellant has not incurred any liability as no benefits have been paid to the claimant. If the claimant requalifies for benefits, those benefits will be charged to the fund's balancing account. Thus, the finding in this case that the claimant was an employee of the appellant, will not result in any charges to the appellant's unemployment reserve account.

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