TRACEY M DEXTER-DAILEY, Employee
INDEPENDENT DISABILITY SERVICES 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 makes the following:
This is a UI benefit claim case which presents the issue of whether certain services provided by the claimant for pay, were provided by her as an "employee" for UI purposes such that her pay for such services had to be reported by her in her weekly UI claims and taken into account in computation of her weekly benefit rate.
The services which the claimant provides involve caring for a disabled adult. A number of different entities are involved in various ways with this person and the care services she is provided.
The Rock County Developmental Disabilities Board provides funds for and oversees the provision of care to developmentally disabled and brain injured persons in Rock County. It does this through contractual arrangements with a number of entities. The Board has contracts with adult foster homes which care for developmentally disabled and brain damaged adults who reside in such homes. The Board also contracts with Catholic Charities to provide case management services for such disabled persons. The Board also contracts with Independent Disability Services to handle payroll for individuals who perform care services for such disabled persons.
"Alissa" is a developmentally disabled adult who lives in Rock County and who is provided various care services under the general supervision of, and pursuant to contracts with, Rock County. Alissa resides in an adult foster home where she is cared for by the operators of that foster home, who do so pursuant to a contract with Rock County. The operator of the adult foster home where Alissa is currently living is Angie Cook. John Weber, a social worker employed by Catholic Charities, is Alissa's case worker. Alissa is subject to legal guardianship; her guardian is Sharon Johnson, who is with the Wisconsin Association of Retarded Citizens.
The contracts between Rock County and adult foster homes such as the one in which Alissa resides, provide that a certain amount of money will be made available for the purchase of "respite care". Respite care is care provided to the disabled person on an occasional basis by another individual, at another location, designed to give the regular care provider a period of time off.
Prior to September, 2006, the claimant's mother, Karen J. Depold, provided respite care services to Alissa for the benefit of the operators of the adult foster homes in which Alissa resided. In September 2006, Depold was no longer able to provide such respite care services, and she suggested to the adult foster home operators and to the claimant that the claimant take over providing that respite care. Alissa's foster home contacted the claimant and an arrangement was reached whereby the claimant began providing respite care services for Alissa, in her (the claimant's) home, every third weekend of the month. The claimant began providing these respite care services in September, 2006, and continued to do so at least through the time of the hearing in this matter in July, 2007. On the weekend each month during which the claimant cared for Alissa, she would pick her up on Friday and drop her off again on Monday. Alissa would stay at the claimant's home during that weekend.
In order to be paid, the claimant was required to submit time sheets, which were a form created by and bearing the name of the Rock County Developmental Disabilities Board, and which the claimant obtained from either the operators of Alissa's foster home or John Weber of Catholic Charities. She was required to use these time sheet forms, and could not submit her own invoices. The completed time sheets had to be submitted to John Weber's office. Weber would review them, sign them to indicate his approval, and forward them to IDS. When IDS received an approved timesheet for the claimant from Weber, it would issue a check to the claimant for the services accounted for on that time sheet. IDS would then send Rock County a form indicating what amount had been paid to the claimant, and the County would then send a payment to IDS reimbursing it for the amount IDS had paid to the claimant.
At and prior to the times material herein, the claimant was also employed by an employer named "Housekeeping Services By Jodi". The claimant's employment with that employer ended in March, 2007, and she filed a claim for unemployment insurance benefits at that time. The department issued a monetary computation finding that the claimant had a potential benefit entitlement, based on a base year consisting of the 4th calendar quarter of 2005 and the 1st through 3rd calendar quarters of 2006. During this base period the claimant had covered employment only with Housekeeping Services By Jodi; thus, its UI account was to be charged for 100% of all benefits paid to the claimant in the claim year she began in March, 2007, and no other employing unit's account (including that of IDS) was subject to being charged or affected by that claim.
It appears that when the claimant began her claim for benefits, she informed the department about the care she provided to Alissa and the payments she received from IDS. The department conducted an investigation into the question of whether the claimant was providing these services as an "employee" within the meaning of the UI Act. The reason that it was necessary for the department to investigate and resolve the question of whether the claimant was providing services as an employee, was that if she was, then the amounts she was being paid for those services would have to be reported by her as "wages" when she made her weekly benefit claims and would have to be taken into account by the department in computing her benefit entitlement for any week in which she worked at such services and earned such wages.
On May 12, 2007, the department issued an Initial Determination which recited
that "the claimant performed services for her client as an employee." The
determination also stated that "the claimant worked as a respite worker for a
disabled adult client." The determination stated that its effect was that "the
claimant's services constitute employment for unemployment benefit purposes."
(1)
The body of the Initial Determination did not state that any particular employing unit was determined to be the employer of the claimant in the employment which it determined she was engaged in. It also concluded with a paragraph attempting to clarify that the determination was being issued under Wis. Stat. § 108.09 and only resolved the current benefit issue, and that pursuant to Wis. Stat. § 108.101 the determination was not binding for any other purpose and could not be used to determine liability for contributions based on services performed by the claimant. The determination did, though, list IDS by name and address in the caption of the determination, and the department sent a copy of the determination to IDS. Evidently not understanding that the determination had no effect on it, IDS filed an appeal of the determination. It was able to do this despite the fact that the determination did not affect it, because the department had effectively made it a "party" by listing it on the determination and sending it a copy.
Pursuant to IDS' appeal, the matter came on for hearing before an ALJ on June 12, 2007. On June 15, 2007 the ALJ issued an Appeal Tribunal Decision which affirmed the determination.
In her decision, the ALJ stated that it was "clear that the claimant performed services for an employing unit." She noted that IDS had argued that it did not actually employ the claimant but was merely a "fiscal agent" for Rock County, but she declined to address this issue, noting simply that she had found that "the claimant was employed by an employing unit as required by the statute" (emphasis in original). The ALJ ordered that "[t]he issue of which employer is the correct employing unit for the purposes of charging" be remanded for further investigation. The ALJ continued by applying the standards found in Wis. Stat. § 108.02(12)(bm) and concluding that "the employer" failed to meet its burden of proving that the claimant worked as an independent contractor.
IDS has filed a petition for commission review of the Appeal Tribunal Decision.
Discussion -- As noted above, this case presents the issue of whether the claimant provides her services in question as an "employee".
Under the statutes, answering the question of whether an individual provides services as an employee is dependent on first answering the question of who they provide those services "for". This is because of the structure of Wis. Stat. § 108.02(12). In its initial subparagraph (a), this section creates a presumption that an individual providing services for pay for an employing unit is doing so as an "employee" of that employing unit. That employing unit then has the burden of proof to rebut that presumption by making certain showings described in following subparagraphs.
While the statute is fairly detailed in describing what must be shown to rebut a presumption of employee status, it is less detailed in describing what creates that presumption in the first place. It simply provides that an individual is presumed to be an employee of an employing unit if the individual "is or has been performing services for pay for an employing unit, whether or not the individual is paid directly by the employing unit" (emphasis added). Thus virtually everything hinges on what it means to be performing services "for" another.
The question of who an individual is providing services "for" can be difficult to answer when there are, as here, a number of entities connected or involved with the services in question. For example, in this case, while an argument could be made that the claimant provided services "for" IDS because IDS sent her paychecks, arguments could also be made that the claimant provided her services "for" Alissa, who needed and benefited from having the care provided; or "for" the adult foster home operators, who needed the time off from caring for Alissa and benefited from having the claimant make that possible; or "for" Catholic Charities, which had a contractual obligation to Rock County to provide case management for Alissa and monitored the claimant's reports as to the services she was providing; or "for" Rock County, which had an obligation to oversee Alissa's care pursuant to which it not only obtained case management services for her (through contract with Catholic Charities) but also disbursed (through IDS) payments to claimant for the care she provided to Alissa.
In this case, the ALJ chose not to decide who the claimant's employer was, i.e., what employing unit the claimant was providing services "for" within the meaning of Wis. Stat. § 108.02(12)(a). She decided only that the claimant was providing services for some employing unit, and she then turned to the question of whether the applicable exceptions to the presumption of employee status were proved. As noted above, she also decided that the applicable exceptions were those described in Wis. Stat. § 108.02(12)(bm).
There are problems with the ALJ's approach.
For one thing, without a finding that a particular employing unit is the one for which a claimant provided services, there is no basis for saddling that particular employing unit with the burden of proving that the claimant is not an employee. Yet the ALJ appears to have done so, noting that "[t]he employer carries the burden of proof to establish that the claimant is not an employee" and concluding that "[t]he employer did not meet its burden" and that "the employer failed to meet its burden of proving that the claimant worked as an independent contractor and not as an employee." The reference to "the employer" can only be to IDS.
Another problem with the ALJ's approach arises from the fact that § 108.02(12)
establishes different tests for determining if an individual is an "employee" of
a particular employing unit depending on whether that employing unit is a
government unit or a nonprofit organization. (2) Without a finding that a particular employing unit is the one for which a claimant provided services, there is no basis for determining which one of the potentially applicable subparagraphs under § 108.02(12) actually should be applied. Yet the ALJ did so, deciding that subparagraph (bm) applied. Furthermore, the ALJ's decision in this respect appears to have been incorrect, even if based on a choice of IDS as the employer, since several pieces of evidence in the record suggest that IDS is in fact a nonprofit
organization. (3) If that is indeed the case, then any decision on whether the claimant was an "employee" of IDS would instead have to be resolved by reference to § 108.02(12)(c).
In another case, these problems might require that the decision be set aside and remanded for further proceedings. However, the commission does not do so here because it concludes, based narrowly on the specific factual situation presented, that it is unnecessary because the result would be the same whether a burden of proof was deemed to be on IDS, and whether the tests of subparagraph (bm) or (c) were applied.
This said, the commission would emphasize that as a general matter, an issue of whether a claimant provides certain services as an "employee" should not be resolved -- indeed, often can not be resolved -- without first deciding, expressly, what employing unit the claimant provides those services "for" within the meaning of Wis. Stat. § 108.02(12)(a). For the reasons discussed above, this is just as true in a § 108.09 claimant benefit entitlement case as it is in a § 108.10 employer tax liability case.
Application of § 108.02(12)(bm) "employee/independent contractor" tests -- If the standards applicable to this situation are those provided in Wis. Stat. § 108.12(bm), the evidence in the record establishes that the claimant should be considered an employee, for the following reasons.
The claimant did not apply for nor did she have a federal employer identification number. She has not filed self-employment or business income taxes for any past tax year, and is not sure whether she will do so in the future. Conditions one and two were not met.
The claimant does not have any kind of legally formed business and does not consider herself a sole proprietorship. She performs her services of caring for Alissa in her own home and transports Alissa to and from her home in her personal car. She has no office, equipment or materials used in connection with taking care of Alissa. She did not perform these kinds of care services for anyone before she began providing care for Alissa, does not currently perform these kinds of care services for anyone other than Alissa, does not advertise herself as a respite care provider, and does not have business cards. For these reasons, the requirements of condition three were not met.
The claimant had no written contract with either IDS, the operator of the adult foster home where Alissa lived, or any other party mentioned above. Her verbal agreement to provide care for Alissa was made with the operator of the adult foster home where Alissa lived. While the claimant controlled the means and methods of performing her services, the agreement under which she performed those services was a single, continuing, unchanging contract of indefinite duration. As such, the requirements of condition four were not met.
There was no evidence offered that there would be any consequences of the claimant failing to satisfactorily complete the agreed services (i.e., caring for Alissa in her home for the third weekend of each month) apart from a possible termination of the agreement under which she provides such services. The requirements of condition six were not met.
Under the agreement pursuant to which the claimant performed her services, she cares for Alissa on the third weekend of each month. On those weekends, Alissa stays at the claimant's home for two nights. Under the agreement, the claimant is paid $25 per day for each day on which she cared for Alissa. She receives a check for $50 for each weekend she cares for Alissa. This is payment on a per-unit-of-time basis, rather than on a "per-job" (or competitive bid) basis, and therefore the requirements of condition seven were not met.
The requirements of conditions eight, nine and ten were also not met. All of those conditions envision an individual who performs services as part of her own business. Here, the claimant had none of the usual trappings and attributes of a business. She made no financial investment. While she provided the services in her own home, she did not maintain a separate area of her home devoted solely to caring for the disabled woman. She had no business name, no recurring expenses, no business insurance, and no advertising costs. She performed her services only for one entity at rates it dictated.
The foregoing conclusions that nine of the ten conditions stated in Wis. Stat. § 108.02(12)(bm) were not met in the claimant's case, leads to the conclusion that, if the claimant performed her services for an employing unit that was not a government unit or a nonprofit agency, she performed those services as an employee within the meaning of Wis. Stat. § 108.02(12).
Application of § 108.02(12)(c) "employee/independent contractor" tests -- If the standards applicable to this situation are instead those provided in Wis. Stat. § 108.12(c), the evidence in the record also establishes that the claimant should be considered an employee, for the following reasons.
Wis. Stat. § 108.02(12), provides:
(c) Paragraph (a) shall 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 satisfied 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 "independently established" condition is to be analyzed in light of five interrelated factors set forth in Keeler v. LIRC, 154 Wis. 2d 626 (Ct. of App. 1990):
1. Integration -- whether the services performed directly relate to the activities conducted by the company retaining those services.
2. Advertising or holding out -- whether the alleged employee advertises or holds out to the public or a certain class of customers the existence of its independent business.
3. Entrepreneurial risk -- whether the alleged employee has assumed the financial risk of the business undertaking.
4. Economic dependence -- whether the alleged employee is independent of the alleged employer, performs services and then moves on to perform similar services for another.
5. Proprietary interest -- whether the alleged employee owns various tools, equipment, or machinery necessary in performing the services involved, but also including whether the alleged employee has proprietary control, such as the ability to sell or give away some part of the business enterprise.
The Keeler factors are not to be mechanically applied. Rather, the weight and importance of each factor varies according to the specific facts of each case. The five factors should be applied in a manner consistent with the purpose of the statute -- "to effect unemployment compensation coverage for workers who are economically dependent on others in respect to their wage-earning status." Larson v. LIRC, 184 Wis.2d 378, 391 (Ct. App. 1994).
The claimant did not advertise or hold herself out to the public or any class of customers as being involved in a business of, or available for, providing care of the kind she provided Alissa. She assumed no financial risk in connection with her activities as a caretaker for Alissa. She did not meet the standards described in the Keeler "economic dependence" test in that she performed services only to Alissa pursuant to this one agreement, having never done so before, and there was no evidence she sought to expand her activities to providing such service for anyone else. Finally, there was no Keeler "proprietary interest" in that the claimant did not need and did not use any special equipment or assets in connection with caring for Alissa apart from her own personal assets (house and car) which she would have had anyway, and the claimant had no interest in her care-giving activity which she could sell or transfer to anyone else.
On balance, considering all of the Keeler factors, the commission concludes that it was clear that the services performed by claimant were not performed in an independently established trade, business or profession in which the claimant was customarily engaged within the meaning of Wis. Stat. § 108.02(12)(c)2. Because the conditions in § 108.02(12)(c) must both be met, this makes it unnecessary to consider whether the claimant was free from the employing unit's control or direction over the performance of her services both under her contract and in fact. Thus, even if the claimant performed her services for an employing unit that was a government unit or a nonprofit agency, it must be concluded that she performed those services as an employee within the meaning of Wis. Stat. § 108.02(12).
Conclusion -- In each of the alternative cases discussed above, the evidence affirmatively establishes that the necessary conditions were not met. It is therefore not necessary to engage in a burden analysis by looking to whether IDS met a burden to demonstrate that a sufficient number of the necessary conditions were met. The allocation of the burden to prove that makes no difference because a preponderance of the evidence proves the contrary.
The commission therefore finds that, as of week 11 of 2007, the claimant's services of providing care to Alissa as described above were performed by her as an employee, in an employment, within the meaning of Wis. Stat. § § 108.02(12) and 108.02(15).
The Findings of Fact and Conclusions of Law of the administrative law judge are modified to conform with the foregoing and, as modified, the decision of the administrative law judge is affirmed. Accordingly, the amounts paid to the claimant by Independent Disability Services Inc. shall be reported to the department by the claimant as wages as they are earned.
Dated and mailed November 2, 2007
dexterd . urr : 110 : 1 EE 410 EE 413 ER 460
/s/ James T. Flynn, Chairman
/s/ Robert Glaser, Commissioner
/s/ Ann L. Crump, Commissioner
NOTE: The commission has issued its own decision in place of that issued by the ALJ in order to set forth more fully the reasoning which led it to arrive at the same result on the question of whether the amounts paid to the claimant by IDS were required to be reported by the claimant as wages.
The commission has omitted the remand order which was included in the ALJ's decision, because it believes it is premature and unnecessary. If and when the department determines that it is necessary to resolve the issue of whether IDS, or any other entity, is the employer of the claimant herein, it will presumably do so. There is no reason to order it to do so at this point because it does not affect the claimant's claim and the department is not currently contending that IDS is liable to file reports identifying the claimant as an employee or to pay UI tax contributions on amounts paid to her.
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