KEVIN N ZIEBELL, Employee
COX AUTO TRADER, 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 claimant by the employer during the time period at issue totaling $739 shall be included in the department's computation of the employee's base period wages.
Dated and mailed January 4, 2008
zebelke . usd : 115 : aty EE 410 PC 749
/s/ James T. Flynn, Chairman
/s/ Robert Glaser, Commissioner
/s/ Ann L. Crump, Commissioner
The commission notes that the appellant here is Cox, the putative employer, even though the issue relates solely to benefit eligibility, not employer liability for contributions.
Even though Ziebell provides driving services for Cox, he does not qualify as a trucker within the meaning of Wis. Stat. § 108.02(25e), for purposes of invoking the exception stated in Wis. Stat. § 108.02(12)(c), because he does not lease his vehicle to Cox. Wis. Adm. Code § DWD 100.02(12). See, McSorley v. Velocity Express, UI Hearing No. 06004688MD (LIRC May 9, 2007).
It appears to be undisputed that, since Ziebell performs services for Cox for pay, he does so in an "employment," within the meaning of Wis. Stat. § § 108.02(12)(a) and (15). As a result, a presumption that he does so as an employee is created which may be rebutted by showing that Ziebell's employment satisfies at least seven of the ten conditions set forth in Wis. Stat. § 108.02(12)(bm). 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).
The record does not show that Ziebell holds or has applied for a federal employer identification number (FEIN) as required by condition 1., or filed a business or self-employment tax return as required by condition 2.
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); Lozon Remodeling, UI Hearing No. S9000079HA (LIRC Sept. 24, 1999). In Quality Communications Specialists, Inc., supra, 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.
Although Ziebell used his own equipment and materials to provide services for Cox, the record does not show that he had a separate office or even a separate space in his home dedicated to a business purpose. Cox argues, citing a 2003 appeal tribunal decision (ATD) involving the same putative employer (1), that, as that ATD concluded, "[t]here is no need for an office or business separate from the claimant's vehicle" in order for condition 3. to be satisfied.
However, as discussed below, the manner in which an issue was resolved in this ATD does not have preclusive effect here, and is not considered binding precedent.
Moreover, the use of one's personal vehicle to carry out delivery duties and to prepare related paperwork does not qualify as maintaining a separate business office, just as using one's dining room table or personal computer to carry out work responsibilities does not.
See, Stehn v. Cybrcollect, Inc., UI Hearing No. 05000775MD (LIRC Sept. 7, 2005).
As a result, condition 3. is not satisfied.
To satisfy condition 4., it must be established that Ziebell 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.
The record shows that Ziebell controls the means and method of performing the delivery services for Cox. Condition 4., however, also requires multiple contracts. These may take the form of multiple contracts with separate entities, or multiple serial contracts with the putative employer if such contracts are shown to have been negotiated "at arm's length," with terms that will vary over time and will vary depending on the specific services covered by the contract. The existence of bona fide multiple contracts tends to show that the individual either has multiple customers, or that he/she has periodic opportunities for "arm's length" negotiation with the putative employer as to the conditions of their relationship, and that he/she is not dependent upon a single, continuing relationship that is subject to conditions dictated by a single employing unit.
See, T-N-T Express LLC, UI Hearing Nos. S9700385, etc. (LIRC Feb. 22, 2000);
Dane Co. Hockey Officials, supra.
The record shows that there was a single contract entered into between Ziebell and Cox. This single, continuing relationship with conditions dictated by Cox does not satisfy the multiple contracts requirement of condition 4.
See, Barnett v. Alternative Entertainment, Inc., UI Hearing No. 02003109WU (LIRC Oct. 29, 2002);
Dane Co. Hockey Officials, supra.; Thomas Gronna, The Floor Guys, UI Hearing No. S9900063WU (LIRC Feb. 22, 2000);
Gary R. Gilbert, UI Hearing No. S0200083DB (LIRC July 21, 2005).
Applying condition 5. requires a determination of what services are performed under the contract, what expenses are related to the performance of these services, which of these expenses are borne by the person whose status is at issue, and whether these expenses constitute the main expense. Lozon Remodeling, supra.; Quality Communications Specialists, Inc., supra. This inquiry requires quantification of these expenses, and, under the circumstances present here, a determination of which entity, Ziebell or Cox, bears the larger total expense.
Given that Ziebell bears the costs of operating and maintaining the vehicle he uses to make deliveries, it is obvious that the expenses Ziebell bears would necessarily exceed those borne by Cox. As a result, the record supports a conclusion that condition 5. is satisfied.
In order to satisfy condition 6., Ziebell is required to be responsible for the satisfactory completion of the services he performs, and liable for any failure to satisfactorily complete them. Ziebell is responsible, if he fails to complete his route, for locating and paying another driver to do so. In addition, the contract provides that Ziebell will indemnify and hold Cox harmless for any damages resulting from his actions or those of his agents. Condition 6. is satisfied.
Ziebell is paid on a per-job basis, which satisfies condition 7.
Condition 8. examines whether, under an individual contract for a worker's services, there can be a profit (if the income received under that contract exceeds the expenses incurred in performing the contract), as well as whether there can be a loss under that contract (if the income received under that contract fails to cover the expenses incurred in performing the contract). It is arguable, as the commission concluded in Quality Communications Specialists, Inc., supra., that the receipt by Ziebell of more in payments than he was required to spend performing services for Cox could constitute "realiz[ing] a profit...under contracts to perform services." However, since Ziebell is essentially guaranteed payment if he performs the delivery services, it is difficult to envision how he could suffer a loss over the term of his contract with Cox. See, Dane County Hockey Officials, supra. Even Cox conceded in its testimony that it was not aware of "any way that the employee could lose money." As a result, condition 8 is not satisfied.
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 putative employer, such as the cost of an office lease, professional fees, or professional liability insurance. The record does not show that Ziebell had any such costs, and condition 9. is not satisfied as a result.
Finally, 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 is put at risk 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, supra. The record does not show that Ziebell put a significant investment at risk, and, as a result, condition 10. is not satisfied.
In summary, conditions 5., 6., and 7. are satisfied. Since Wis. Stat. § 08.02(12)(bm) requires that seven conditions be satisfied in order for a worker to be considered an independent contractor, the satisfaction of only three of the ten conditions compels the conclusion that Ziebell performed services for Cox as an employee, not an independent contractor, during the time period at issue.
Cox argues that, by application of the doctrine of issue preclusion (collateral estoppel), the commission should be bound by an earlier appeal tribunal decision (2) involving the same putative employer. The commission disagrees.
First of all, prior appeal tribunal decisions have no preclusive or binding effect upon the commission. See, Zoromski v. Cox Auto Trader, UI Hearing No. 07000466MD (LIRC Aug. 31, 2007).
Moreover, the persuasiveness of this earlier ATD is diminished by those aspects of its legal analysis which fails to take the relevant statutory language into account and which is inconsistent with commission precedent. For example, the ATD concluded that a delivery driver working out of his personal vehicle would satisfy the condition 3 requirement for a separate business office; a single contract would satisfy condition 4.; the possibility of earning a profit or suffering a loss over the course of one week, rather than over the term of the entire contract, would satisfy condition 8.; costs of operating a vehicle would constitute a recurring business liability or obligation; and condition 10. would be satisfied if a driver could earn a profit or sustain a loss over the course of a week.
cc: Thomas G. Martinchek
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