P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)


Account No. 092346, Hearing Nos. S0400231AP and S0400232AP

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 decisions of the administrative law judge are affirmed. Accordingly, the appellant is liable for contributions to the Unemployment Reserve Fund, and interest thereon, as set forth in the initial determination and according to the amounts the appellant paid to those individuals that were identified in the department's audit and proposed audit adjustments.

Dated and mailed November 8, 2006
results . ssd : 110 :   EE 407 EE 410  PC 715  PC 729

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner


This case concerns the status of a number of persons who provided services as sales representatives for Results Plus, Inc., a business engaged in sale and leasing of credit card processing and processing equipment, ATM processing and ATM terminals, and related services. Following a department audit, a determination was issued on August 20, 2004, which concluded that 29 persons who had performed services for Results Plus during all four quarters of calendar year 2002 and the first three quarters of calendar year 2003, had done so as statutory employees rather than as independent contractors, and that Results Plus was liable for UI contributions attributable to those services. This determination, upon appeal, became hearing number S0400231AP. A separate determination issued on August 23, 2004, covering 15 persons who provided services to Results Plus during the fourth quarter of calendar year 2003, arrived at the same conclusion on the question of employee status; on appeal this became hearing number S0400232AP. Results Plus filed timely appeals of these determinations. A hearing on these appeals was held before an Appeal Tribunal for the department on June 19, 2006. (1)  On June 26, 2006, the Appeal Tribunal issued decisions affirming the determinations. Results Plus has now petitioned for review by the commission of these decisions.

Burden of proof -- An important threshold consideration relates to the burden of proof and the extent to which the evidence could be considered to meet it. The statute effectively provides that once it is established that individuals were "performing services for" an employing unit, there is a presumption of employee status and the employing unit has the burden of proving the applicability of a sufficient number of the statutory conditions to allow a conclusion that the individuals were, in fact, not employees. Wis. Stat. § 108.02(12). At the hearing in this matter, the ALJ initially attempted to determine the positions of the parties on the question of whether the individuals whose status was at issue were performing services for Results Plus, and based on statements made by Results Plus' representative, he concluded that the individuals were indeed performing services for Results Plus such that Results Plus would bear the burden of proving that the individuals were not employees. Results Plus did not object to this conclusion, and more significantly, in its written argument to the commission in support of its petition for review, it has not argued with or disputed the conclusion that the individuals in question were providing services for it within the meaning of Wis. Stat. § 108.02(12)(a). The commission thus finds this point to be both supported by the record and conceded by the petitioner.

The question then becomes the extent to which the evidence specific to one individual may be taken as relevant or probative as to others. As noted above, this case involves the status of 29 persons who performed services in 2002 and the first three quarters of 2003, and 15 persons who performed services in the fourth quarter of 2003. Apart from testimony from its president (Allen Palubiak) and his wife (Susan Palubiak) who also works there, Results Plus presented testimony from only one of the persons whose status was at issue.

In Clear Choices Inc. (LIRC, October 26, 2005), a case in which only two of the individuals whose status was at issue were present at the hearing, the commission noted that there had been no stipulation that their situations as described in their testimony could be considered representative of the other individuals who did not testify, and that there had been no ruling by the Appeal Tribunal that the testimony of those two individuals could be taken as representative of all of the others. The commission held that in the absence of such a stipulation or ruling, it was necessary that sufficient proof be presented as to each individual whose status is at issue. In this case, there was no stipulation or ruling that the testimony of the one sales representative who was presented as a witness could be taken as representative. Indeed, it does not appear that any such stipulation or ruling was ever sought by Results Plus. (2)   Thus, there is no basis for generalizing from evidence as to the one individual sales representative who testified, to the others. As is reflected in the ALJ's decision and in the discussion below, the lack of evidence as to those other representative played a significant part in the decision that Results Plus failed to carry its burden.

Benefits ATD involving one employee -- At hearing, Results Plus brought up an Appeal Tribunal Decision which had been issued in a benefit case involving one of its sales representatives who was at issue here, Todd Klemp. (3)   The point of this was presumably that this should be taken to establish that the department had already concluded that the salespersons involved here were independent contractors rather than employees. However, as the ALJ noted, even where they may both involve interpretation and application of the standards found in Wis. Stat. § 108.02(12), a decision in a case involving an individual's eligibility for benefits is not binding in another case involving their employer's liability for unemployment insurance contributions on such individual's services. See, Wis. Stat. § 108.101(2). While such a decision may be considered, the weight, if any, to be given to it will depend on the extent to which it has some persuasive effect. The Klemp decision has very little. That decision's discussion of the relevant facts was sketchy, and it was not tied particularly closely to the relevant statutory standards. The analysis and conclusion based on these limited findings was perfunctory and entirely conclusory. The commission agrees that the decision lacks sufficient persuasive effect to warrant consideration.

Objection to length of time taken to provide a hearing -- The petitioner objects to the length of time it took the department to provide a hearing. The petitioner argues that because of the delay in scheduling a hearing, the amount at issue has grown because of interest accumulation to the point that the amount owed as interest is almost as much the original amount due. The petitioner also asserts that because of this delay, evidence and witnesses were no longer available to it. Thus, it asserts that all but one of the persons cited in the initial determination as having been found to be employees were no longer associated with Results Plus when the matter finally came to hearing and that efforts to locate and contact them were unsuccessful.

There was indeed a very significant delay by the department in providing the petitioner with a hearing. After the Initial Determinations were issued in August, 2004, Results Plus filed a timely request for hearing in early September, 2004. The department sent out its acknowledgment of the filing of this request for hearing in February, 2005. This acknowledgment stated, "a hearing will be scheduled as soon as possible," but it was not until April, 2006, that a notice of hearing was finally issued, and it set the matter for hearing in June, 2006. Thus there was a delay of 1  years after the appeal was filed until a hearing was held.

With respect to the effect this delay had on the accumulation of interest, the petitioner's argument is unpersuasive. As the petitioner essentially conceded in his argument to the commission, paying the amount determined to be due when it was first assessed would have prevented the accumulation of interest on the amount. With respect to the effect this delay had on the petitioner's ability to present a case at hearing, however, the petitioner's argument has more potential force. It is entirely plausible that the significant delay here prejudiced the petitioner's ability to present his case by making it more difficult for him to present testimony from the individuals whose status was at issue.

This situation is troubling, because the delay was arguably contrary to provisions in both the UC Act and the administrative rules of the department which require promptness in the scheduling of hearings and the resolution of appeals. Wis. Stat. § 108.09(4)(a), which is made applicable to status (tax liability) cases by Wis. Stat. § 108.10(2), provides:

(4) APPEALS (a) Opportunity to be heard. Unless the request for a hearing is withdrawn, each of the parties shall be afforded reasonable opportunity to be heard, and the claim thus disputed shall be promptly decided by such appeal tribunal as the department designates or establishes for this purpose.

(emphasis added). It is questionable whether a party who has been made to wait 1 years for a hearing has been given a "reasonable" opportunity to be heard; it is certain that in such a case their appeal has not been "promptly" decided. In addition, the department's rules provide, at Wis. Admin. Code § DWD 140.06:

(1) The department shall schedule a hearing at the earliest feasible time after the appeal is received.

(emphasis added). There is nothing in the record here indicating why it would not have been "feasible" to have scheduled a hearing in something less than 21 months. Indeed, there is nothing in the record before the commission in this matter which suggests any explanation whatsoever for the 1 year delay.

The delay is particularly problematic because of the fact that in status cases the department, which controls the scheduling of the hearing, is also effectively an interested party. Since the burden of proof rests with the putative employer in this type of case, anything which makes it more difficult for them to present evidence which might meet that burden effectively benefits the department in its capacity as an interested party. When it is the department which has been responsible for a significant delay in providing a hearing, as appears to have been the case here, it is understandable that questions could arise about the fairness of the process.

Notwithstanding all of these considerations, the commission concludes that it can do no more than to note the facts concerning this very unfortunate delay. The petitioner, although it has expressly raised an objection to the delay, has not requested further hearing or any other specific remedy for the problems caused by the delay. Instead, it is simply asking for a decision based finding that the individuals whose status is at issue were performing services as independent contractors. However, the commission has no authority to impose an adverse outcome on the department as a sanction for the delay in this case; it must base its decision on the evidence in the record and the applicable law. It cannot find the individuals at issue to have been independent contractors, when given the evidence in the record and applying the statutory standards it is clear that they were not. 

Merits -- The issue on the merits is whether Results Plus established that at least 7 of the 10 factors described in Wis. Stat. § 108.02(12)(bm) were satisfied. Not all of those conditions are in dispute. The department conceded, and the ALJ found, that conditions 5, 6, 7 and 8 were satisfied with respect to all of the individuals at issue. In addition, the president of Results Plus essentially conceded in his testimony at hearing that he did not know if any of the individuals at issue had or had applied for FEINs (Federal Employer Identification Numbers) in or for the years in question, and he expressly conceded in his brief that this condition was not met. Thus, it is not in dispute that condition 1 was not satisfied.

With respect to condition 2 (filing of business or self-employment tax returns with IRS) the president of Results Plus testified that he did not know if any of the individuals whose status was at issue had filed business tax returns for those years. The only salesperson who testified, Sliwa, said he relied entirely on his accountant and actually didn't know what kind of returns were filed on his behalf. Thus it is clear that the applicability of this condition was not established as to any of the individuals at issue.

Results Plus argued to the commission, however, that the investigator found in the initial determination that condition 2 was met and that for this reason Results Plus did not address this at hearing. It also argued that the administrative law judge then "reversed this part of the initial determination," and did so "without explanation." This argument is unpersuasive. It does appear that, prior to the issuance of the determinations, the department provided Results Plus with a copy of materials generated in the course of the audit which included a July 27, 2004 memo from the investigator explaining his audit conclusions, in which he stated that he found the condition of filing business/self-employment tax returns to have been "met for the most part although the tax return check for some individuals failed to show a return." However, the determinations themselves did not specifically address this (or any other) individual test, but merely stated the ultimate conclusion reached. Furthermore, the notice of hearing issued in this matter identified the issue for hearing as being whether, for the time period stated in the initial determination, the individuals described as employees in the initial determination or summary of proposed audit adjustments were employees of the appellant within the meaning of § 108.02(12). Such a notice, following such a determination, has to be treated as putting in issue the applicability of all of the relevant conditions, notwithstanding what the precise rationale of the department investigator may have been. A hearing on an appeal from an initial determination is a de novo proceeding, in which a party may not simply rely on the findings of the investigator, but must present evidence to establish the facts on which the party's position depends. Results Plus must therefore bear the consequences of its failure to address this issue at hearing, those consequences being that there was inadequate evidence to support a finding in its favor. Finally, it should be noted that the ALJ did not arrive at his decision on this issue "without explanation," as Results Plus argued; the ALJ provided an explanation for his decision as to condition 2, that being that there was no evidence supporting a finding in Results Plus's favor.

Results Plus also argues that condition 2 is "beyond the employer's control" in that it cannot provide individual tax return information because access to individual tax return records is prevented by privacy laws, and that it has no means available to compel an individual to file business or self-employment income tax returns or to hold an individual accountable for refusing to do so. The commission finds this argument unpersuasive. For one thing, the test is expressly provided for in the statute and the commission simply has no authority to ignore it. For another, the petitioner did not establish that this was actually the cause of its inability to offer proof on this condition. There was no indication that Results Plus attempted to obtain evidence on this but was frustrated by assertions of confidentiality. The only individual witness produced by Results Plus (Paul Sliwa) did not refuse to answer questions about whether he had filed such returns; he responded willingly, but said he relied entirely on his accountant and simply didn't know what kind of returns were filed on his behalf.

The focus of condition 3 is upon determining whether a separate business, i.e., an enterprise created and existing separate and apart from the relationship with the putative employer, is being maintained with the individual's own resources. See, Princess House, Inc. v. DILHR, 111 Wis.2d 46, 330 N.W.2d 169 (1983); Larson v. LIRC, 184 Wis.2d 378, 516 N.W.2d 456 (Ct. App. 1994); Diane Egan/Health Exams Plus, Inc., (LIRC April 15, 2005); Lozon Remodeling, (LIRC Sept. 24, 1999). In Quality Communications Specialists, Inc., (LIRC, July 30, 2001), the commission clarified that all parts of the test articulated in condition 3 must be met in order for the employer to satisfy its burden. The ALJ reasoned here that the evidence as to Sliwa was inadequate to establish that he satisfied this condition, primarily because his "business," such as it was, was in no real sense separate from that of Results Plus. Sliwa, the ALJ noted, had performed no sales work for anyone for half a year before he began working for Results Plus, and after he began doing so he never performed any sales work for anyone else. He printed and distributed business cards that expressly represented his sales work as part of Results Plus' business, with its business name above and in larger type than Sliwa's own. The commission agrees with the ALJ that, in view of this, it is difficult if not impossible to view Sliwa's activities as having been conducted in a "separate business." The petitioner's argument in respect to condition 3 rests largely on the terms of the written agreements entered into between it and the salespersons, but the terms of such agreements are not determinative. Results Plus also argues in effect that in order to perform the services agreed upon the salespersons "must have" made an investment in certain kinds of business equipment -- but this is not competent evidence that they in fact did so. Whether or to what extent any of the particular individuals performing services for Results Plus had the indicia and attributes of having a separate business under condition 3, simply could not be determined without some evidence particular to that person. This was lacking here, and as a result the conclusion that condition 3 was not met is appropriate.

To satisfy condition 4, it must be established that the individual whose status is in question operates under contracts to perform specific services for specific amounts of money and that, under these contracts, he controls the means and method of performing the services.

Results Plus argues first that the department's attorney conceded that this condition was met and this was recorded on the hearing record. The commission acknowledges that this argument appears, at first glance, to be supported by the Commission Review Notes (or "synopsis"). This synopsis is prepared by department staff who listen to the digital recording of the hearing and prepare a written summary of it. However, the commission has the authority under its rules to consider the actual audio recording in addition to the synopsis, Wis. Admin. Code § LIRC 1.04(7), and has done so in this case. The commission's own review of the actual digital recording of this part of the hearing (which can be found at 3:57:14 of the digital record) satisfies it that the synopsis was simply in error. It is clear from the recording that what the department's counsel in fact said was this:

I believe that the testimony with respect to a separate business is problematical at best, but in any event, that the fourth criteria wasn't satisfied, we didn't have multiple contracts here, we just had one open ended contract which the Labor and Industry Review Commission has said is not satisfactory for the purposes of the fourth condition.

Thus, the department's counsel in fact did not concede that condition 4 was met, but instead affirmatively argued that it was not met.

The ALJ found that this condition was not satisfied, because it required either multiple contracts with multiple businesses or multiple contracts entered into sequentially with a single business as a result of arm's-length negotiation. He found that there was no competent evidence of either, but only that the individuals in question performed their services on a continuing basis over a lengthy period of time pursuant to a single contract that was open-ended and indefinite as to any limits on the total amount of work that might be performed under the contract or when it might terminate. Responding to this, Results Plus argued that the salespersons had the ability to individually negotiate and renegotiate their contracts with varying commission structures. Even in so arguing, however, it conceded that a majority of the salespersons in fact did not do so, but rather operated under the standard agreement initially offered to all salespersons. While Results Plus argued that "some" salespersons negotiated variance, its argument does not identify who these "some" are and does not point to any specific evidence in the record on this point, and the commission finds no such evidence in the record. The one individual salesperson who testified, Sliwa, described only working under the same basic agreement and gave no indication that he had negotiated sequential, differing contractual arrangements with Results Plus. The commission concludes that the ALJ's decision that condition 4 was not met because the services were performed pursuant to a single, open-ended continuing contract, is reasonable and appropriate.

Condition 9 requires proof of a cost of doing business which the worker would incur even during a period of time he was not performing work through the employer. The ALJ found that this condition was satisfied as to Sliwa, based on his testimony that he had continuing and on-going expense to maintain liability insurance on a second automobile he owned which he used exclusively in performing services for Results Plus as well as ongoing expenses for telephone utility services dedicated exclusively to his work for it. As to the others, though, there was again simply no competent, specific evidence sufficient to establish that this condition was met.

The commission has interpreted condition 10 as intending to examine the overall course of a worker's business. See, Quality Communications Specialists, Inc., supra. Condition 10 requires that a significant investment have been put at risk in the business enterprise and there is the potential for real success through the growth in the value of the investment and for real failure in the sense of actual loss of the investment. See, Thomas Gronna, The Floor Guys, (LIRC Feb. 22, 2000). The ALJ noted the evidence offered by Sliwa, that he had spent about $1,000 to set up a home office, but he ultimately found that condition 10 was not met as to Sliwa or any of the others, because there was no evidence that any of them had made any significant capital investment for the start-up or development of a business that was separate from their sales work performed for Results Plus. The commission agrees. Even assuming that the salespersons invested a certain amount of money in buying equipment to be used in their sales activities for Results Plus, where this was the only sales work they engaged in, they cannot be said to have made an investment in a business. They would be equivalent to a worker who spent money to buy personal tools which were then used in performing work for an employer on a job; while there is in such a case an "investment" of sorts, it is not an investment in a business because there is no "business," but only employment.

The petitioner's arguments with respect to both condition 9 and condition 10 refer back to its argument regarding condition 3. This argument was basically in the nature of an assertion that the condition must have been met because the individuals would have needed certain equipment and resources in order to provide the services in question. Even disregarding the essentially speculative nature of this argument, it fails to take into account the very real possibility that the salesmen could have performed the services using equipment and resources, and involving expenses, which they had as an ongoing matter in connection with their personal lives, entirely apart from the business. Costs associated with these things -- for example, ongoing automobile insurance premiums for a personal car, regular phone bills for a home phone line, etc. -- would in such a case not be identifiable as business expenses. Also, of course, with the exception of Sliwa, the record here is essentially devoid of any specific evidence about any actual investment any of the salespeople may have made in connection with their sales "businesses" or activities.

The lack of specific competent evidence as to the particular situation of any of the salespersons other than Sliwa really determines the outcome on conditions 9 and 10. There simply is no adequate evidence that the conditions were met.

For all the foregoing reasons, the commission agreed with the findings and conclusions of the ALJ and adopts them as its own.

cc: Attorney Michael J. Mathis


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(1)( Back ) The appeal tribunal decisions inaccurately indicate, on their face sheets, that the employer did not appear at the hearing. There is no dispute that Results Plus did indeed appear at the hearing and present evidence. The erroneous indication on the face sheets of the appeal tribunal decisions was not substantive and had no effect on the decisions or the commission's review.

(2)( Back ) In Spencer Siding Inc. (LIRC, June 2, 2006), the commission acknowledged the potential burdensomeness of requiring putative employers to prove each of their workers met statutory standards, but it noted that there were mechanisms which had been successfully employed to minimize this burden, e.g., prehearing stipulations based upon audit or other documents, or agreements that hearing testimony elicited from one or more workers could represent the testimony of all similarly situated workers. It noted that in that case, the putative employer had failed to pursue such options.

(3)( Back ) This decision marked as Ex. 10, was not received as an exhibit but was retained in the file.


uploaded 2006/11/13