WILLIAM R COURCHAINE, Employee

PANTHER II 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.

The decision of the administrative law judge is affirmed. Accordingly, the wages paid to the employee by the employer shall be reported to the department as they are earned.

Dated and mailed October 19, 2007
courcwi . usd : 115 : 1  EE 421

/s/ James T. Flynn, Chairman

/s/ Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner

The commission first notes that, even though Panther is the petitioner here, the resolution of this matter has no effect upon Panther's liability for unemployment contributions but instead, as explained in the department determination and in the ATD, determines only the amount of benefits to which Courchaine is entitled.

A two-step analysis is used to determine whether an individual is an employee. Goldberg v. DILHR, 168 Wis. 2d 621, 625 (Ct. App. 1992). The first step is to determine whether the individual has been performing services for an employing unit, in an employment. Wis. Stat. § 108.02(12)(a). An "employment" is "any service . . . performed . . . for pay." Wis. Stat. § 108.02(15)(a). There is no dispute that the claimant performed services for Panther for pay. A presumption therefore arises that such services were performed as an employee. The burden then shifts to the employer to establish that the claimant is excepted from employee status by some statutory provision. See, Dane County Hockey Officials, UI Hearing No. S9800101MD (LIRC Feb. 22, 2000); Quality Communications Specialists, Inc., UI Hearing Nos. S0000094MW, etc. (LIRC July 30, 2001).

One of the statutory exceptions to the otherwise applicable presumption of employee status appears in Wis. Stat. § 108. 02(12)(c), which provides,

(c) Paragraph (a) does not apply to an individual performing services for a government unit or nonprofit organization, or for any other employing unit in a capacity as a logger or trucker if the employing unit satisfies the department:

1. That such individual has been and will continue to be free from the employing unit's control or direction over the performance of his or her services both under his or her contract and in fact; and

2. That such services have been performed in an independently established trade, business or profession in which the individual is customarily engaged.

The first step in this analysis is to determine whether Courchaine is a "trucker," within the meaning of Wis. Stat. § 108.02(12)(c).

"Trucker" is defined by Wis. Stat. § 108.02(25e) as "a contract operator with a trucking carrier."

The term "contract operator" is defined in Wis. Admin. Code § DWD 100.02(12) as "an individual who contracts to lease a motor vehicle to a carrier for use in the carrier's business."

"Carrier" is defined in Wis. Admin. Code § DWD 100.02(8) as:

(8) "Carrier" means a person engaged in the hauling of passengers or freight by motor vehicle and includes a person engaged as a "common motor carrier," under s. 194.01 (1), Stats., as a "contract motor carrier," under s. 194.01 (2), Stats., or as a "private motor carrier," under s. 194.01 (11), Stats.

It is clear from the record, and undisputed by Panther, that Courchaine qualifies as a trucker within the meaning of Wis. Stat. § 108.02(25e), and, as a result, that Wis. Stat. § 108.02(12)(c) is applicable here.

The next step then is to determine whether, within the meaning of Wis. Stat. § 108.02(12)(c), Courchaine performed his delivery services free from Panther's direction and control, and performed these services in an independently established trade, business or profession in which he was customarily engaged.
This determination is governed by Wis. Adm. Code § § DWD 105.03 [direction and control], and DWD 105.04 [independently established business].   
  

Direction and control

Wisconsin Administrative Code § DWD 105.03 provides as follows:

DWD 105.03DWD 105.03 Contract operators; direction and control.

(1) The department shall examine the factors enumerated in this section to determine, both under contract and in fact, whether the contract operator is free from a carrier's direction or control, while the contract operator performs services for the carrier. The department shall determine whether:

(a) The contract operator owns the motor vehicle or holds the vehicle under a bona fide lease arrangement with any person other than the carrier;

(b) The contract operator is responsible for the maintenance of the motor vehicle;

(c) The contract operator bears the principal burden of the motor vehicle operating costs including such items as fuel, repairs, supplies, insurance and personal expenses while on the road;

(d) The contract operator supplies, or is responsible for supplying, the necessary personal services to operate the motor vehicle;

(e) The contract operator determines the details and means of performance, namely, the type of equipment, assignment of driver, loading, routes and number of stops to be made during the haul, as well as starting, completion and elapsed times;

(f) The contract operator may refuse to make a haul when requested by the carrier;

(g) The contract operator may terminate the lease at any time after reasonable notice; and

(h) The contract operator is compensated on a division of the gross revenue or by a fee based upon the distance of the haul, the weight of the goods, the number of deliveries, or any combination of these factors.

(2) If the department determines that all of the factors under sub. (1) (a) to (h) are present in the relationship between the contract operator and the carrier, the contract operator shall be deemed to be free from the carrier's direction and control in the performance of services under s. 108.02 (12) (b) 1., Stats....

Again, it is clear from the record, and undisputed by Panther, that each of the requirements of Wis. Adm. Code § DWD 105.03(1) is satisfied here, and, as a result, Courchaine is free from Panther's direction and control.  
  

Independently established business

The next question then is whether Courchaine was engaged in an independently established business, trade, or profession in which he was customarily engaged, within the meaning of Wis. Adm. Code § DWD 105.04.

This code provision states as follows:

DWD 105.04 Contract operators; independently established business; customarily engaged.

(1) If the department determines that a contract operator is free from a carrier's direction or control in the performance of services under s. DWD 105.03, the department shall examine the following factors to determine whether a contract operator who performs services for a carrier is performing these services in an independently established business in which the contract operator is customarily engaged. The department shall determine whether:

(a) The contract operator owns the motor vehicle or holds the vehicle under a bona fide lease arrangement with any person other than the carrier;

(b) The contract operator is free to hire another person as a driver in the performance of services for the carrier; and

(c) The contract operator is free to reject hauling a load offered by the carrier.

(2) If the department determines that all of the factors under sub. (1) (a) to (c) are present in the relationship between the contract operator and the carrier, the contract operator shall be deemed to be performing services in an independently established business in which the contract operator is customarily engaged under s. 108.02 (12) (b) 2., Stats. If one or more of the factors under sub. (1) (a) to (c) are not present in the relationship between the contract operator and the carrier, the department shall consider additional factors including whether:

(a) The contract operator's business may provide a means of livelihood that is separate and apart from the livelihood gained from services performed for a particular carrier;

(b) The business would continue if the relationship with the carrier were terminated; and

(c) The contract operator has an ownership interest in a business that the contract operator alone may sell or give away without restriction from the carrier.

(3) If the contract operator is found to be free from the carrier's direction or control but not engaged in an independently established business under subs. (1) and (2), the contract operator shall be deemed to be an employe of the carrier under s. 108.02 (12) (b) 1. and 2., Stats. If the contract operator is found to be free from the carrier's direction or control and engaged in an independently established business, the contract operator shall be deemed to be an independent contractor and not an employe of the carrier under s. 108.02 (12) (b) 1. and 2., Stats.

The relationship at issue here does not meet all of the requirements set forth in Wis. Adm. Code § 105.04(1). In particular, although Courchaine owned the vehicle he used to perform delivery services for Panther, and he was free to reject deliveries offered to him by Panther, the evidence of record does not show he was free to hire another driver to perform the subject delivery services.

In particular, the written agreement between Courchaine and Panther states as follows in this regard:

2.03 Drivers and Other Personnel. Contractor [Courchaine] will furnish drivers and other individuals as required from time to time to operate the Equipment and to load and unload the freight transported by the Equipment. Each driver furnished by the Contractor (Courchaine] will at all times meet and satisfy the minimum driver qualification and compliance standards established by: (1) the U.S. Department of Transportation (DOT); (2) other regulatory bodies having jurisdiction over Carrier's [Panther's] operation; and (3) by the Carrier [Panther] itself (such drivers referred to herein as "Qualified Drivers"). Upon request of Carrier [Panther], Contractor [Courchaine] will immediately substitute a Qualified Driver for any person who fails to meet or satisfy such minimum qualification and compliance standards or who fails to comply with Carrier's [Panther's] operation policies and procedures.

According to these terms, Courchaine was restricted to hiring drivers who not only met all applicable legal/regulatory requirements, but who also met other standards imposed by Panther, including compliance with its operating policies and procedures.

Consistent with the commission's recent decision in Parker v. DeBoer Transportation, Inc., UI Hearing No. 06201248EC (LIRC Feb. 1, 2007), the fact that Courchaine was restricted to hiring drivers who met all applicable legal/regulatory requirements would not constitute a cognizable restriction upon his freedom to hire.

However, the further restrictions imposed by the agreement between Courchaine and Panther, i.e., that there were requirements in addition to legal/regulatory requirements which these drivers must meet, and that any drivers hired by Courchaine must comply with Panther's operating policies and procedures, establish that Courchaine was not free to hire drivers within the meaning of Wis. Adm. Code § DWD 105.04(1)(b).

Panther argues that the minimum compliance standards it imposes upon drivers hired by Courchaine and other contract operators "ensure that [Panther] satisfies its DOT obligations." However, if such minimum compliance standards were comprised solely of legal/regulatory requirements imposed by DOT or other authorities, it would have been unnecessary for Panther to reference in provision 2.03 of its agreement with Courchaine not only such requirements but also, in (3), standards it itself imposed. Moreover, Panther failed to show that its operating policies and procedures, to which it would hold drivers hired by Courchaine, were comprised solely of legal/regulatory requirements imposed by DOT or other authorities, and, in fact, it would have been unnecessary for Panther to develop such policies and procedures if that had been the case.

Since the relationship at issue here did not meet all of the requirements set forth in Wis. Adm. Code § 105.04(1), it is necessary to review the factors set forth in Wis. Adm. Code § 108.04(2), to determine whether Courchaine was engaged in an independently established business.

Application of these factors to the relationship at issue here does not show that Courchaine was engaged in an independently established business. Specifically, Courchaine's transportation enterprise could not provide a means of livelihood separate and apart from his relationship with Panther given, as Courchaine testified, he is required to display the Panther logo on each side of his vehicle and "cannot use my van for driving for anyone else." Courchaine purchased his delivery vehicle for the express and sole purpose of driving for Panther; has not had other clients for his delivery services; and has no delivery enterprise separate and apart from his relationship with Panther.

cc: Attorney Douglas M. Feldman

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