MICHAEL J ASENCIO, Claimant

NETWORK COMMUNICATIONS 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 agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own.

The decision of the administrative law judge is affirmed. Accordingly, the wages paid to the claimant by the appellant totaling $23,017.04 shall be included in the department's computation of the claimant's base period wages for computing potential benefit eligibility.

Dated and mailed February 25, 2005
asencmi . usd : 132 : 1   EE 410 EE 445

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner

The appellant has petitioned for commission review of the appeal tribunal decision that found the claimant performed services for the appellant as an employee. The appellant does not dispute that the claimant performed services for it for pay. A presumption therefore arises that such services were performed as an employee. Wis. Stat. § 108.02(12)(a). The appellant has two bases for asserting that the claimant was not its employee.

First, the appellant argues that the claimant fit within the exception contained in Wis. Stat. § 108.02(12)(d), which provides:

Paragraph (a) does not apply to a contractor who, in fulfillment of a contract with an employing unit, employs any individual in employment for which the contractor is subject to the contribution or reimbursement provisions of this chapter.

Whether a contractor is subject to ch. 108 is determined by application of Wis. Stat. § 108.02(13)(e), which provides:

(e) Any other employing unit, except a government unit, shall become an employer as of the beginning of any calendar year if the employing unit:

(f) 1. Paid or incurred liability to pay wages for employment which totaled $1,500 or more during any quarter in either that year or the preceding calendar year; or

    2. Employed at least one individual in some employment in each of 20 or more calendar weeks in either that year or the preceding calendar year, whether or not the same individual was in employment in each such week and whether or not such weeks were consecutive. . . .

In Hansen Trucking, Inc. v. LIRC, 126 Wis. 2d 323, (1985), the Wisconsin Supreme Court stated:

The legislature created paragraph (e) to provide expressly that contractors who are covered employers are not to be considered employees of the principal. In excepting contractors who are covered employers from being considered employees, paragraph (e) contemplates that these contractors will be liable for the unemployment compensation of the individuals they hire.

In this case, the question is whether the claimant was a contractor, who in fulfillment of his contract with the appellant, employed an individual in employment for which he was subject to the contribution requirements of ch. 108.

The claimant testified that during the time he performed services for the appellant he at one time paid the son of his supervisor, an individual named Relahan, half the money he received from the appellant. At some point, due to nepotism concerns the account was in the supervisor's son's girlfriend's name. When the account was in the claimant's name he would split the money he received from the appellant with the supervisor's son. The claimant testified that he paid the supervisor's son approximately $8,000.00.

The facts and circumstances of the relationship between the appellant and the claimant support a finding that there was at least an implied contract between the two whereby the appellant agreed to pay the claimant for performing services, making the claimant a "contractor" of the principal, the appellant. The testimony supports a finding that the claimant employed the supervisor's son to fulfill his contract with the principal. However, what cannot be determined from the record is when the claimant began making these payments to the supervisor's son, how much was paid in any given quarter and how many weeks the supervisor's son performed such services for pay in any calendar year. That is, the record does not establish that the claimant paid the supervisor's son $1,500.00 during any quarter or paid for services performed in 20 or more calendar weeks in a year.

Based on the claimant's testimony he began working for the appellant in 1999. Based on the appellant's testimony the claimant began work for it sometime in 2000. The payments were potentially made by the claimant to the supervisor's son from 1999 to the fourth quarter of 2001. The employer's witness testified that the claimant began performing services for the employer sometime in 2000. The commission cannot determine that the payments to the supervisor's son and the weeks services were performed by the supervisor's son satisfy one of the requirements of Wis. Stat. § 108.02(13)(e)1. or 2.

The appellant also asserts that the claimant's wife and church members who helped him do deliveries on occasion were also employees of the claimant, even though they were not paid for services performed because "Chapter 108's definition of employee specifically states that an employee is someone who performs services for an employer 'whether or not the individual is paid by the employer.'" The attorney misquotes the statute. Wis. Stat. § 108.02(12)(a) provides that that an employee is an individual performing services for an employing unit "whether or not the individual is paid directly by such employing unit."

The appellant's second argument is that the claimant performed services as an independent contractor under Wis. Stat. § 108.02(12)(bm). The commission agrees with the ALJ's analysis in her decision as to why that provision has not been met. Specially, there was no evidence that the claimant had an FEIN or that he filed self-employment tax returns. The claimant did not have a separate business with his own office, equipment and materials. The claimant had a few minor items such as pencils and maps that he purchased to perform services for the appellant. The commission notes that while one could argue that the claimant's expenses could be significant, the evidence does not actually indicate what the claimant's expenses were. There was no evidence that the claimant could incur any penalty or liability for failing to satisfactorily complete his services. There was no evidence of multiple contracts negotiated at arm's length with terms and conditions that varied over time. Finally, there was no evidence of overhead expenses and no specific testimony regarding any recurring liabilities or obligations that would establish that he could suffer a loss performing the services at issue. The success of the claimant's "business" depended on his relationship with the appellant and there was no evidence that while performing services for the appellant he was performing similar services elsewhere. The claimant also testified that he was not permitted to perform similar services, that is, delivering real estate publications, while working for the employer. The ALJ credited such testimony. The record did not establish that the claimant had any significant investment that was put at risk resulting in the potential for success by growth in the value of the investment or failure by the loss of the investment.

Finally, the commission declines to order further testimony. The burden was on the appellant to establish that the claimant's services were not performed as an employee. Two hearings were held giving the appellant ample opportunity to present sufficient evidence to meet its burden. The appellant had the ability to subpoena any necessary witnesses and documentation. The appellant's reliance on the claimant, whose position regarding the nature of his services was contrary to its own, to provide evidence favorable to the appellant's position, was not reasonable.

For the above reasons, and for the reasons set forth in the appeal tribunal decision, the commission affirms that decision.

NOTE: This determination is issued under Wis. Stat. § 108.09 and only resolves the current benefit eligibility issue. Under Wis. Stat. § 108.101, this decision is not binding for any other purpose and cannot be used to determine whether the employer is liable for contributions based on the services performed by this claimant.

cc: Attorney Drew J. Cochrane

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