KATHRYN F STEHN, Claimant

CYBRCOLLECT INC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 05000775MD

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:

Replace the second and third sentences in the fourth paragraph under the FINDINGS OF FACT and CONCLUSIONS OF LAW with the following:

The claimant's first day of work was December 17, 2004 when she executed an "Independent Sales Agent Agreement" with the employer. In 2004, the claimant did not earn any income from the employer and did not file self-employment tax returns for 2004. While she currently has not earned the necessary wages requiring the filing of self-employment tax returns in 2005, she plans to file self-employment tax returns for 2005.

Replace the fourth sentence in the fifth paragraph under the FINDINGS OF FACT and CONCLUSIONS OF LAW with the following:

While the employer did not control when or to what businesses the claimant solicited agreements from, it required her to complete
web-based training and pass a test. It also provided the claimant with brochures to hand out to potential clients.

Insert the following sentence after the third sentence in the eleventh paragraph under the FINDINGS OF FACT and CONCLUSIONS OF LAW:

The employer failed to establish that the claimant has "filed" self-employment tax returns based upon such services. It appears that she began performing services in 2004 but has not yet filed any self-employment tax returns (criteria #2).

Replace the last sentence in the eleventh paragraph under the FINDINGS OF FACT and CONCLUSIONS OF LAW with the following:

The employer established only three of the ten criteria; criteria #5, #7 and #8.

The decision of the administrative law judge, as modified, is affirmed. Accordingly, the claimant is required to report wages from this employment as they are earned.

Dated and mailed September 7, 2005
stehnka . msd : 150 : 2   EE 410

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

Robert Glaser, Commissioner

The administrative law judge found that four criteria were met, namely the second, fifth, seventh and eighth. The commission agrees with the administrative law judge's findings as it relates to the fifth, seventh and eighth criteria and will not go into further detail with respect to them. The commission has modified the appeal tribunal decision to reflect its findings that the second criterion was not met.

The employer contended the claimant met the third criterion with her work area in her dining room, her computer, printer, a file cabinet, office supplies and the use of her vehicle. Yet, overriding the indicia of a business, namely an office, equipment and supplies, is whether a business separate and apart from the relationship with the employer is being maintained with the individual's own resources. See Schmidt v. The Combination Door Co., UI Dec. Hearing No. 99401431AP (LIRC March 31, 2000) and Egan/Health Exams Plus, Inc., UI Contribution Liability Decision Hearing No. S0300071JV (LIRC April 15, 2005). The claimant used her computer, her dining room and her vehicle for personal use as well as $50.00 of her $70.00 telephone/Internet bill. She is not maintaining a separate business without the relationship with the employer; thus, the commission finds that the third criterion is not met.

While the petitioner argued that criterion four was met by the contract between the claimant and the employer, the criterion requires multiple contracts under which the claimant controls the means and the methods. Not only is this a singular contract but the employer set the terms of it. Therefore, this criterion was also not met.

With respect to criterion six, whether the claimant is responsible for satisfactory completion of services, the evidence must indicate that the employee was legally obligated to perform services and would be liable for failing to satisfactorily complete the services. Gamble v. American Benefit Ltd., UI Dec. Hearing No. 04004847MD (LIRC February 15, 2005). While the petitioner argued that this criterion was satisfied because a customer might contact the claimant after she signed it up for the employer's services, the employer's accountant clearly testified that sales agents, such as the claimant, were not responsible for the satisfactory completion of services by the employer. Without evidence of such liability, this criterion is not satisfied.

The ninth test, that of recurring business expenses or liability, requires proof of a cost that would be incurred even during a period when the claimant was not performing services for the employer. Dibbles & Dibbles, Inc., UI Contribution Liability Decision Hearing No. S0300140RH (LIRC January 12, 2005). There is no evidence of any recurring costs or liabilities to the claimant should her services for the employer cease. In particular, once she stops performing services for the employer, her business expenses cease and the additional telephone/Internet services may be cancelled.

Finally, the commission has expressed that the final test,

contemplates the existence of a genuine business or endeavor. In an entrepreneurial enterprise, a significant investment is put at risk and there is thus the potential for real "success", in the sense of the growth of the value of the investment, or "failure", in the sense of the actual loss of the investment. Dane County Hockey Officials, Inc., UI Hearing No. S9800101MD (LIRC February 22, 2000).

The claimant had a relatively small investment and her recurring business expenditures could be discontinued if the work flow from the employer ceased. As such, she faced no real prospect of a significant period of time in which she would have business expenditures without receipts, no significant investment was put at risk, and there is no real potential for success through the growth of the value of the investment or real failure in the sense of the actual loss of the investment.

Under the circumstances, the commission affirms the appeal tribunal decision as modified; the employer failed to establish that seven of the ten conditions were met and for benefit purposes, the claimant must report the wages as earned from the employer.

NOTE: This decision is not binding on any future determination of contribution requirement.

cc: Attorney Peter H. Ames

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