LORNE B BRUSLETTEN, Employee
PRIMERICA LIFE INSURANCE CO, 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, except that it makes the following modifications:
1. The final two sentences of the paragraph beginning on page 3 of the decision and continuing on page 4, are deleted.
2. The first sentence in the first full paragraph on page 4 of the decision is modified to indicate that the claimant meets "only four out of the ten conditions,..."
The decision of the administrative law judge, as modified, is affirmed. Accordingly, as of week 39 of 2008, the claimant is required to report wages earned from services performed for the putative employer as they are earned.
Dated and mailed February 26, 2009
brusllo . umd : 115 : 1 ET 483.07 UW 900
EE 410 EE 410.03
/s/ James T. Flynn, Chairperson
/s/ Robert Glaser, Commissioner
/s/ Ann L. Crump, Commissioner
Brusletten filed a claim for benefits on October 1, 2008 (week 40).
The issue is whether Brusletten is required, when he files his weekly claims, to report as wages his earnings from Primerica.
Even though Primerica is the appellant, the outcome will not directly affect Primerica's liability for contributions, but instead the amount of benefits to which Brusletten is entitled.
Wisconsin Statutes § 108.02 states as follows, as relevant here:
108.02 Definitions. As used in this chapter:
...(11) Eligibility. An employee shall be deemed "eligible" for benefits for any given week of the employee's unemployment unless the employee is disqualified by a specific provision of this chapter from receiving benefits for such week of unemployment, and shall be deemed "ineligible" for any week to which such a disqualification applies....
(14m) Employing unit. "Employing unit" means any person who employs one or more individuals.(15) Employment.
(a) "Employment", subject to the other provisions of this subsection means any service, including service in interstate commerce, performed by an individual for pay....(k) "Employment" as applied to work for a given employer other than a government unit or nonprofit organization, except as the employer elects otherwise with the department's approval, does not include service:...
6. By an individual for a person as an insurance agent or an insurance solicitor, if all of the service performed as an insurance agent or solicitor by the individual for the person is performed by remuneration solely by way of commissions;...
(26) Wages. Unless the department otherwise specifies by rule:
(a) "Wages" means every form of remuneration payable, directly or indirectly, for a given period, or payable within a given period if this basis is permitted or prescribed by the department, by an employing unit to an individual for personal services....
In order to be considered wages required to be reported when filing a weekly claim, payments for services, pursuant to Wis. Stat. § 108.05(3), are those made to an "eligible employee." The definition of employee in Wis. Stat. § 108.02(12), as relevant here, includes "any individual who is or has been performing services for pay for an employing unit(1)...except as provided in par....(bm).
This statutory definition of employee, as modified by 2005 Wisconsin Act 86, no longer requires that services be performed "in an employment." As a result, the exclusions to the definition of employment, including the exclusion stated in Wis. Stat. § 108.02(15)(k) for services performed as an insurance agent, do not operate to exempt payment for such services from the wage reporting requirement. See, Kunst v. Energy Marketing Services, UI Hearing No. 08400750AP (LIRC July 31, 2008).
As a result, Brusletten is required to report payments he receives for services performed for Primerica unless he satisfies the exception to the definition of employee stated in Wis. Stat. § 108.02(12)(bm), i.e., unless he satisfies at least seven of the ten statutory conditions.
The record does not show that Brusletten possesses, or has applied for, a FEIN, as required by condition 1.; or has filed business or self-employment tax returns for 2008, his first year in business, as required by condition 2. Although Primerica argues that Brusletten would not have filed a business tax return for 2008 because he did not earn any sales commissions that year, this circumstance would not be controlling.
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). See, also, Lozon Remodeling, UI Hearing No. S9000079HA (LIRC Sept. 24, 1999). In Quality Communications Specialists, Inc., UI Hearing Nos. S0000094MW, etc. (LIRC July 30, 2001), the commission clarified that all parts of the test articulated in condition 3. must be met. Although the record shows that Brusletten used certain of his own equipment, e.g., his personal vehicle and computer, it does not show that he maintained a separate office or even a separate space in his home devoted to a business purpose. The use of one's personal computer to carry out work responsibilities does not qualify as maintaining a separate business office. See, Stehn v. Cybrcollect, Inc., UI Hearing No. 05000775MD (LIRC Sept. 7, 2005); Kunst, supra. Moreover, the fact that Brusletten did not perform similar services for any other entity militates against the existence of a business enterprise separate and apart from his relationship with Primerica. See, Prince Cable, Inc., UI Hearing No. S9900227MW (LIRC Feb. 23, 2001) (fact that worker performs services only for putative employer generally inconsistent with existence of separate business). Condition 3. is not satisfied.
To satisfy condition 4., it must be established that Brusletten operated under contracts to perform specific services for specific amounts of money, and that, under these contracts, he controlled the means and method of performing the services.
Although the record shows that Brusletten controlled the means and method of performing the subject sales services, condition 4. 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).
The contract under which Brusletten performed services for Primerica was a single contract with terms that did not vary over time or by event, and which were dictated, apparently without negotiation, by Primerica. This single contract does not satisfy the multiple contracts requirement of condition 4. See, Barnett v. Alternative Entertainment, Inc., UI Hearing No. 02003109WU (LIRC Oct. 29, 2002); Thomas Gronna, The Floor Guys, UI Hearing No. S9900063WU (LIRC Feb. 22, 2000); Gary R. Gilbert, UI Hearing No. S0200083DB (LIRC July 21, 2005). Condition 4. is not satisfied.
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. See, Quality Communications Specialists, Inc., supra. In the absence of quantification of the expenses borne by Brusletten, and given that it is not obvious that his expenses would necessarily exceed the related administrative expenses borne by Primerica, the record does not show that condition 5. is satisfied.
In order to show that the requirements of condition 6. are satisfied, the record would have to show that Brusletten was responsible for the satisfactory completion of the services he performed, and liable for any failure to satisfactorily complete them. Since Brusletten's agreement with Primerica requires him to indemnify Primerica for any harm he may cause, condition 6. is satisfied. See, MSI Services, Inc., UI Hearing No. S0600129AP (LIRC Sept. 5, 2008).
Brusletten was compensated on a commission basis only and, therefore, condition 7. is satisfied.
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 Brusletten of more in commissions than he was required to spend performing sales services for Primerica would constitute "realiz[ing] a profit...under contracts to perform services." In addition, since Brusletten was paid only if he completed a sale, it is possible that his expenditures on travel and other costs could exceed his commissions and he could realize a loss. See, Kunst, supra. Condition 8. is 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 liability insurance. The record shows that Brunsletten had recurring costs for required continuing education and licensing. As a result, condition 9. is satisfied.
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 Brusletten put a significant investment at risk. As a result, condition 10. is not satisfied.
In summary, only conditions 6., 7., 8., and 9. are satisfied. Since Wis. Stat. § 108.02(12)(bm) requires that seven conditions be satisfied in order for a worker to be considered an independent contractor, the satisfaction of only four of the ten conditions compels the conclusion that Brusletten performed services for Primerica as an employee, not an independent contractor.
Primerica argues that Brusletten should be regarded as an independent contractor, not an employee, because that is what his contract with Primerica specified. However, Brusletten's status is determined by statute, not by the terms of a private agreement.
Roberts v. Industrial Comm., 2 Wis. 2d 399 (1957). See, also,
Knops v. Integrity Project Management, UI Hearing No. 06400323AP (LIRC May 12, 2006).
cc: Primerica Financial Services (Hudson, Wisconsin)
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