SCOTT J BERA, Claimant

BRAN RICH 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 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:

Delete the 19th paragraph under the "FINDINGS OF FACT and CONCLUSIONS OF LAW" and replace with the following:

The commission has expressed that the final test, whether the success or failure of the individual's business depends upon the relationship of business receipts to expenditures, contemplates the existence of a genuine business endeavor; a significant investment is put at risk with the potential for growth in the capital value of the business or significant loss of the investment. Dane County Hockey Officials Association, Inc., UI Hearing No. S9800101MD (LIRC February 22, 2000). The petitioner failed to establish that the claimant placed any significant investment at risk or that there was a potential for real success in the capital growth or value of the investment. The claimant was simply paid for his driving services and while he would have profit from those, there was no evidence of growth potential in an entrepreneurial sense.

The decision of the administrative law judge, as modified, is affirmed. Accordingly, the claimant's services are deemed to constitute employment for unemployment insurance benefit purposes. The claimant must report wages from this employment as they are earned.

Dated and mailed March 30, 2005
berasco . umd : 150 : 1 EE 410

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner

Bran Rich Inc. petitioned the appeal tribunal decision. As noted both in the determination and the appeal tribunal decision, the "employee" finding is issued under Wis. Stat. § 108.09 and only resolves the claimant's current benefit eligibility issue, i.e. whether he must report the wages for these services as they are earned. 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 the claimant. Given this, the commission is at a loss to understand the employer's intent in petitioning this matter; nevertheless, the commission will address the petitioner's arguments.

The petitioner first challenged several of the Administrative Law Judge's findings of fact as incorrect. Yet, following a review of the record in this matter, the record supports and the commission adopts her factual description of the claimant's services and his relationship with the petitioner. The administrative law judge also properly referenced the correct statutory section and the commission addresses the petitioner's further arguments in this framework.

The petitioner does not dispute that the claimant performed services for pay. As such, there is a presumption that the claimant is an "employee" and it is the petitioner's burden to prove that the necessary criteria under Wis. Stat. § 108.02(12)(bm) are met for exclusion from such treatment.

Petitioner first argued that because the petitioner's general manager was aware that the claimant previously worked as an independent contractor for another business, it met its burden to establish that the claimant "holds or has applied for an identification number with the federal internal revenue service." The commission disagrees. The mere fact that the claimant allegedly performed services as an independent contractor does not mean that he actually holds or applied for a Federal Employer Identification Number.

The petitioner conceded that it was unable to establish that the second condition, that of filing "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" was met. While the petitioner could have subpoenaed the claimant to testify on this point, it did not do so. "Condition 2. is not satisfied simply because the employer considers the claimant to be an independent contractor and issues a 1099 Form to the claimant." Gamble v. American Benefit Ltd., UI Dec. Hearing No. 04004847MD (LIRC February 15, 2005).

Next, the petitioner contended that the claimant's possession of a fax machine satisfied the third condition, that the "individual maintains a separate business with his or her own office, equipment, materials and other facilities." The commission disagrees. The commission considers that all parts of the test must be considered in determining whether it is met; while the claimant may own a fax machine, there is no other evidence of a separate business with his or her own office, equipment, materials, and other facilities. Quality Communication Specialists, Inc., UI Dec. Hearing No. S0000094MW and S0000095MW (LIRC July 30, 2001).

For the fourth test to be satisfied, the petitioner must establish "both that the individual operates under contracts to perform specific services for specific amounts of money, and that the individual operates under contracts under which they control the means and method of performing the services." Quality Communication Specialists, Inc., UI Dec. Hearing No. S0000094MW and S0000095MW (LIRC July 30, 2001).

The threshold requirement of multiple contracts can be satisfied, in the view of the commission, either by multiple serial contracts or multiple contemporaneous contracts. Multiple contracts that an individual enters into with multiple business entities are most indicative of that individual's economic independence from a particular putative employer. However, multiple serial or contemporaneous contracts with a particular putative employer may satisfy the criterion if the contracts are shown to have been negotiated "at arm's length." T & D Coils, Inc., UI Dec. Hearing No. S9800147MW (LIRC December 15, 1999).

This test is not met in cases where the individual provides the same services for one entity without negotiation or renegotiation of rates and, instead, accepts what is given as the continuing rate for the services. Quality Communication Specialists, Inc., UI Dec. Hearing No. S0000094MW and S0000095MW (LIRC July 30, 2001) citing Dane Co. Hockey Officials Association Inc., UI Dec. Hearing No. S9800101 (LIRC, February 22, 2000). As it did at the appeal hearing, the petitioner argued that this condition was met because the claimant could choose the route to the customer's location. While the claimant may have been able to choose the route he drove, he did not negotiate regarding the payment method or amount; he simply accepted the terms as set forth by the petitioner. Therefore, this test was not met.

The petitioner raised no specific objections to the administrative law judge's finding that the fifth criterion was not met. Whether the claimant incurred the main expenses related to the services that he performed under contract requires a determination of what services are performed under the contract, what expenses are related to the performance of those services and which of those expenses are borne by the claimant. Lozon Remodeling, UI Dec. Hearing No. S9000079HA (LIRC, September 24, 1999). If equipment is involved, equipment depreciation is factored to reduce the actual business costs. Quality Communication Specialists, Inc., UI Dec. Hearing No. S0000094MW and S0000095MW (LIRC July 30, 2001). Although the claimant did have expenses related to DOT testing, his logbook, meals and any driving citations he might incur, the main expenses, those of liability insurance and gasoline were borne by the petitioner. While the petitioner argued that ultimately its customers paid for the gasoline through negotiated rates with the petitioner, the fact that the claimant did not bear that expense is the only analysis needed. The fifth criterion was not met.

The commission agrees with the administrative law judge that the sixth criterion was met. Specifically, "liab[ility] for failure to satisfactorily complete the services" may be evidenced by "a contract provision allowing the other party to contract with someone else to do (or re-do) work not satisfactorily completed and to recover costs of the third party's services." Quality Communication Specialists, Inc., UI Dec. Hearing No. S0000094MW and S0000095MW (LIRC July 30, 2001).

The claimant's per-job payment satisfied the seventh criterion.

While the petitioner claimed that the administrative law judge found that it established that the claimant "may realize a profit or suffer a loss under contracts to perform such services," and consequently met the eighth condition, she did not so find. Given the inability of the claimant to control the work offered or to negotiate rates, the commission agrees that this condition was not met.

The petitioner twice argued that the claimant met the ninth criterion, that of "recurring business liabilities or obligations." Petitioner also claimed that the administrative law judge's rationale that the claimant did not maintain professional liability insurance, rental or any other long term expenses were not requirements as evidenced by "Condition, § 108.02." Yet, examples of such "recurring business liabilities or obligations" may include monthly rent for a place of business or ownership of expensive equipment. Gronna (Floor Guys), UI Dec. Hearing No. S9900063WU (LIRC February 22, 2000). Also, liability insurance is a continuing business liability or obligation. Dibbles & Dibbles Inc., UI Dec. Hearing No. S0300140RH (LIRC January 12, 2005). Thus, the administrative law judge's reference to these as examples was proper. Additionally, this criterion "requires proof of a cost of business which the claimant would incur even during a period of time he was not performing work." Cole v. Handyman Connection, UI Dec. Hearing No. 04002664MD (LIRC February 11, 2005). Since the expenses cited by petitioner and which were not reimbursed by it were not in the nature of those cited by the administrative law judge and did not continue after the claimant's actual performance of services was complete, the commission finds that the ninth criterion was not met.

As the modification reflects, the commission does not find that the tenth criterion was met.

In conclusion for those reasons cited by the administrative law judge and the commission above, the appeal tribunal decision is modified and, as modified, is affirmed.

cc: Attorney John W. Greene

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