PATRICIA S ZIBURSKI, Employee
SHOP N CHEK 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:
Facts -- This case arises out of a claim for unemployment insurance (UI) benefits filed by Patricia S. Ziburski. The question for decision in this case is whether Ziburski provided services for the petitioner, Shop 'N Chek, Inc. (1), as its "employee" within the meaning of the UI Act, during her base period.
Shop 'N Chek is a business that gathers customer service information for other businesses by assigning "mystery shoppers" to act as shoppers or by having the mystery shoppers conduct merchandizing surveys by questioning customers and recording their responses.
Ziburski has performed services for over three and one-half years as a mystery shopper for Shop 'N Chek. She remains in this relationship with Shop 'N Chek
Ziburski takes on work assignments with Shop 'N Chek by consulting a list of potential assignments on Shop 'N Chek's website. She is free to accept as many or as few of these assignments as she wishes. She is however limited from taking assignments where she herself might have a conflict of interest. Otherwise, there is no limitation on her taking an assignment.
Once Ziburski accepts an assignment, she is to make a shopping trip to a particular retail establishment that has contracted with Shop 'N Chek as a client. Time limits are placed as to when the shopping trip is to take place and there is designated criteria for the nature of a purchase she is to make and information she is to provide regarding that shopping trip. She is to submit verification of the trip in the form of a sales slip to Shop 'N Chek. For this, she is reimbursed to a designated amount for the purchase she has made and is paid a designated amount for completing the assignment. Shop 'N Chek supplies no work tools or similar items to Ziburski in the performance of these services.
Additional facts relevant to the application of the statutory standards are described in the discussion which follows.
Discussion -- Under Wisconsin law, the question of whether an individual is an "employee" of another for unemployment insurance purposes is governed solely by statute. The UI Act effectively provides that any individual who performs services for pay for an employing unit is presumed to be an "employee" of that employing unit, unless that employing unit establishes that certain stated conditions are met. Wis. Stat. § 108.02(12)(a). In the case of a private business such as Shop 'N Check, the relevant conditions are described under Wis. Stat. § 108.02(12)(bm), and the showing which must be made is that at least seven of those ten conditions are met. The entity for which the individual has performed services bears the burden of proving that a sufficient number of conditions are met.
It is not disputed that Ziburski performed services for Shop 'N Chek for pay within the meaning of § 108.02(12)(a), during her base period (the fourth calendar quarter of 2006 and the first three calendar quarters of 2007). Therefore, she must be found to have been its "employee" within the meaning of that section if Shop 'N Chek fails to carry its burden of establishing that at least seven of the ten conditions stated in § 108.02(12)(bm)1.-10. were satisfied.
The ALJ found that Shop 'N Chek established only that conditions 2., 3., 4., 6., 7., and 9. were met. In its appeal, the petitioner relies on the ALJ's decision as to those six conditions, and it also contends that conditions 5., 8., and 10. were met. The commission's findings and conclusions as to the applicability of the relevant conditions are set out below.
1. The individual holds or has applied for an identification number with the federal internal revenue service - Ziburski has not received or applied for a federal employer identification number. Shop 'N Chek concedes that this condition was not met.
2. The individual has filed business or self-employment income tax returns with the federal internal revenue service based on such services in the previous year or, in the case of a new business, in the year in which such services were first performed
- Ziburski testified that when she files income taxes she files a Schedule C form for self-employment. This condition was met.
3. The individual maintains a separate business with his or her own office, equipment, materials and other facilities -- In its argument, Shop 'N Chek does not address this condition other than to note that the ALJ found that it was met. However, in reviewing decisions involving application of Wis. Stat. § 108.02(12), the commission is not limited to considering the issues raised by the petitioning party. When a petition for review asserts that an ALJ made an incorrect decision on whether an individual was providing services as an employee under § 108.02(12), that petition implicitly raises the applicability of each of the statutory conditions as an issue. Even though the ALJ may have found that certain conditions were satisfied, and the putative employer relies on this and fails to address them in its argument, the commission may still consider those issues and may decide, contrary to the ALJ, that the conditions were not met. See, e.g., Donald Christopherson (LIRC, Sep. 13, 2006), Borgheѕanі v. Vіrtual Heroeѕ Inc. (LIRC, Dec. 27, 2006). Therefore, the commission will consider the applicability of this condition.
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 (LIRC Sept. 24, 1999). In Quality Communications Specialists (LIRC, July 30, 2001), the commission clarified that all parts of the test articulated in condition 3 must be met in order for the putative employer to satisfy its burden.
In explaining his decision that Ziburski maintained a separate business, the ALJ stated that "her income taxes are reported as though she does". The commission disagrees with this element of the ALJ's rationale. The manner in which a claimant files income taxes is, of course, the express and sole subject matter of condition 2. Using it as a determining factor in deciding whether condition 3 is met is inconsistent with the statutory scheme in which the ultimate decision is made by separately considering the ten factors and tallying the number that are met. While it may be relevant to look at what deductions (i.e., home office, office equipment expense) are claimed on an individual's business tax return in order to decide whether the individual has a business office or equipment, there is no decisional authority for looking at the question of whether a claimant files business tax returns at all, as a consideration in deciding whether condition 3 has been met.
Ziburski acknowledged that she did not have an office. She did assert, that she had a computer (which she keeps at the snack bar in her kitchen), a printer, a fax machine capable of sending but not receiving, and a telephone, and that she used her personal car for transportation to mystery shopper assignments. However, these things are not necessarily indicative of a separate business of the type contemplated by this condition. Most individuals have a home of some kind which contains at least some space -- be it a separate room, a desk in a bedroom, or just a kitchen counter -- that they can use to perform "office" functions connected to work they may be doing. Many individuals have telephones, and computers with internet connections and printers, in their homes. Many individuals have a car which they can use to transport themselves. Individuals with these resources routinely use them for personal purposes, and they would have them and use them in this fashion whether or not they were also engaging in any kind of independent business. Ownership and use of such things for personal purposes is now so common, that in and of itself it simply cannot be taken as an indication that the individual is operating a separate business.
Ziburski did not establish that either the space in her home which she used for an office, or the equipment she mentioned, or her internet connection, or her car, were acquired by her for the purpose of using them in doing her mystery shopper work. In addition, Ziburski did not establish that she used these resources primarily for the purpose of doing that work. In these circumstances, ownership of these resources does not establish that this condition is met. Condition 3 is not met.
4. The individual operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means and methods of performing such services -- Condition 4. 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 she has periodic opportunities for "arm's length" negotiation with the putative employer as to the conditions of their relationship, and that 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 (LIRC Feb. 22, 2000); Dane County Hockey Officials (LIRC, February 22, 2000).
Ziburski acknowledged that while she had done mystery shopping for one or two other companies in the past, she did not currently perform such services for any other entities besides the petitioner. In addition, as the ALJ recognized, Ziburski performed her services pursuant to a single "overarching" contract with the petitioner which governed the terms and conditions of the relationship.
However, Ziburski testified that the rates offered for assignments would vary, that sometimes the petitioner would offer a bonus on the rate for an assignment offered at the last minute, that sometimes she would negotiate over the rate and make a counter-offer, and that sometimes the petitioner would accept such counters while sometimes they would reject them. The petitioner's witness confirmed that counter-offers on the rate quoted for an assignment were entertained.
Considering the foregoing, the commission agrees that this condition was met. It comes to this conclusion specifically because, and only because, there was specific evidence as to multiple serial "arm's length" negotiations resulting in variations over time in the financial terms attached to individual assignments.
5. The individual incurs the main expenses related to the services that he or she performs under contract - 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 generally requires quantification of these expenses.
Ziburski bore the cost of transporting herself to and from locations where she performed her services. Apart from this, though, nothing else which may be considered an expense "related to the services" was borne by Ziburski. Absent evidence that Ziburski acquired her computer, printer and other equipment for use in her mystery shopping activities and used them primarily for those activities, there is no basis for considering the expenses connected to these resources as related to the performance of the services.
Another expense related to the services performed by Ziburski was the cost of the merchandise she would need to purchase when making mystery shops. This expense, however, was not borne by Ziburski, because she was reimbursed for any such purchases.
The amounts of all of these various expenses are not quantified in the record, and thus they cannot be compared. It cannot be considered obvious that the transportation expenses borne by Bauknecht necessarily exceeded the expenses for product purchases borne by Shop 'N Chek. Because the petitioner had the burden of proof, the consequences of the lack of evidence allowing a quantitative comparison of the expenses necessarily falls on it. For these reasons, the commission concludes that condition 5 is not met.
See, MSI Services, Inc., supra.
6. The individual is responsible for the satisfactory completion of the services that he or she contracts to perform and is liable for a failure to satisfactorily complete the services -- The ALJ explained his conclusion that this condition was met by stating that unless Ziburski satisfactorily and correctly completed the services she was to perform, she would receive no pay. The commission does not agree with this part of the ALJ's rationale. The fact that an individual may not get paid for services she has performed, and may not be offered further jobs if her performance is not satisfactory, does not distinguish such an individual's circumstance from those of a piecework employee, and is not a determining factor. See, Spencer Siding, Inc. (LIRC June 2, 2006); Vanpelt v. Quality Controlled Services (LIRC Aug. 31, 2007).
However, the record here shows that agreements which governed Shop 'N Chek's relationship with its mystery shoppers included an indemnity provision requiring the mystery shoppers to hold harmless and indemnify Shop 'N Chek from any and all claims of third parties from acts committed by the mystery shopper. The presence of such a provision in the agreement between an individual and a putative employer satisfies condition 6,
see, MSI Services, Inc., supra, and therefore this condition is met here.
7. The individual receives compensation for services performed under a contract on a commission or per-job or competitive-bid basis and not on any other basis -- Ziburski was paid on a per-job basis. This satisfies this condition.
8. The individual may realize a profit or suffer a loss under contracts to perform such services -- This condition 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).
Consistent with the commission's analysis in Quality Communications Specialists, Inc.,
supra., the receipt by Ziburski of more in payments than she was required to spend performing services for Shop 'N Chek could be considered to constitute "realiz[ing] a profit...under contracts to perform services." However, the commission agrees with the ALJ that given the limited nature of the expenses or overhead that Ziburski has, it is difficult to envision how she could suffer a loss.
See, Dane County Hockey Officials, supra.; Van Pelt v. Quality Controlled Services,
supra.; MSI Services, Inc., supra. The commission concludes that this condition was not met.
9. The individual has recurring business liabilities or obligations -- The ALJ concluded that this condition was met because Ziburski had regular transportation expenses. This conclusion is based on an erroneous understanding of what this condition involves. The commission has consistently interpreted this condition to refer to liabilities and obligations that an individual continues to incur on a regular basis even when they are not getting any income-producing work. See, e.g., Clear Choices Inc., (LIRC October 26, 2005), Gamble v. American Benefit LTD (LIRC, Feb. 15, 2005), Dane Co. Hockey Officials (LIRC, Feb. 22, 2000). It has specifically rejected the theory that expenses of transportation to get to and from work assignments can be considered to satisfy this condition. Matthew G. Frazer (LIRC, June 14, 2007). The transportation expenses on which the ALJ relied here are only incurred if there is an assignment of income-producing work.
It was not established that Ziburski had any liabilities and obligations attributable to her mystery shopping activity that she would continues to incur on a regular basis even when she was not getting assignments from the petitioner. For this reason, this condition was not met.
10. The success or failure of the individual's business depends on the relationship of business receipts to expenditures -- The commission has interpreted condition 10. as intending to examine the overall course of a worker's business. See, Quality Communications Specialists, Inc., supra. This condition requires that a significant investment is put at risk and that 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 (LIRC, February 22, 2000).
The record does not show that Ziburski put any significant investment at risk in connection with her mystery shopping activities. It was not established that she acquired any assets for use in connection with those activities which could decline in value, nor did she invest any capital which she was at risk of losing. There was no entrepreneurial risk of the type contemplated by condition 10. The commission therefore agrees with the ALJ that condition 10. is not satisfied.
Conclusion - Only four statutory conditions -- 2, 4, 6 and 7 -- were shown to have been met with regard to Ziburski's services for petitioner. The petitioner has thus failed to establish that at least seven of the ten conditions in Wis. Stat. § 108.02(12)(bm) were met, and the presumption of employee status existing by virtue of Wis. Stat. § 108.02(12)(a) thus stands unrebutted.
The commission therefore finds that in her applicable base period, Ziburski performed services for the petitioner as an employee in an employment, and was paid wages for those services totaling $45, all within the meaning of Wis. Stat. § 108.02(12) and 108.02(26).
The decision of the administrative law judge is modified to conform with the foregoing and, as modified, is affirmed. Accordingly, the wages paid to the employee by the petitioner shall be included in the department's computation of the employee's base period wages for purposes of determining her total potential benefit eligibility.
Dated and mailed April 27, 2009
mfizibu . urr : 110 : EE 410 EE 410.03 EE 410.04a EE
410.05 EE 410.09 PC 749 PC
751
/s/ James T. Flynn, Chairperson
/s/ Robert Glaser, Commissioner
/s/ Ann L. Crump, Commissioner
NOTE: The determination in this case involved the question of whether the services performed by Ziburski for Shop 'N Chek were performed by her as an employee. However, that question was presented only for a limited purpose: it had to be answered in order to decide whether amounts paid to Ziburski for those services would be included in her base period wages. The determination made it clear that its actual effect was similarly limited: it determined simply that the amounts paid could be included in computing the employee's total base period wages, which would form the basis for computing the amount of her total UI benefit entitlement.The determination also stated,
NOTE TO THE EMPLOYER: This determination is issued under section 108.09 of the Statutes and only resolves the current benefit eligibility issue. Under section 108.101 of the statutes, this decision is not binding for any other purpose and cannot be used to determine whether the employer is liable for contributions based on services performed by this claimant.
The statutory section referred to, Wis. Stat. § 108.101(2), provides:
108.101 Effect of finding, determination, decision or judgment.
. . .
(2) No finding of fact or law, determination, decision or judgment made with respect to rights or liabilities under s. 108.09 is binding in an action or proceeding under s. 108.10.As the NOTE explained, the determination was one issued under Wis. Stat. § 108.09 involving the particular benefit claim and rights of a claimant. It was not a determination issued under § 108.10 holding that Shop 'N Chek had to pay UI taxes on amounts it paid to Ziburski (or anyone else). By virtue of § 108.101(2), in any separate proceeding which did involve Shop 'N Chek's tax liability - which would be a proceeding under § 108.10 - this determination would not be binding. Thus, this determination had no binding effect, actual or potential, on the current or future tax liability of Shop 'N Chek.
The determination also had no other effect, actual or potential, even on the balance of Shop 'N Chek's UI account. Base period employers who have contributed less than 5% of a claimant's base period wages do not have any charge made against their UI account when benefits are paid to that claimant. Wis. Stat. § 108.07(3m). The total amount of the payments Shop 'N Chek made to Ziburski during her base period came to only $45, which amounted to only 0.154% of Ziburski's total base period wages. For this reason, Shop 'N Chek faced no potential for liability as a base period employer in connection with benefits being paid to this claimant.
Notwithstanding that the determination in this case had no material effect on any material interests of Shop 'N Chek, the commission was required to review and decide Shop 'N Chek's appeal. It was required to do so because Wis. Stat. § § 108.09(2r) and 108.09(6)(a), which grant all parties a right to appeal, do so without any reference to whether the decisions being appealed from affect or are adverse to any material interests of that party.
Shop 'N Chek should note, however, that this is not the case with respect to the right to appeal this decision of the commission to circuit court.
Pursuant to Wis. Stat. § 108.09(7), a party may commence an action for judicial review of a commission decision if the party does so "in accordance with s. 102.23." Section 102.23 in turn provides that "any party aggrieved [by]" a commission decision may commence an action for judicial review thereunder. It has been expressly held that an employer whose UI account is not affected by the commission's decision, is not "aggrieved" within the meaning of this provision, and has no standing to commence an action for judicial review of that decision. Cornwell Personnel Associates v. ILHR Dept., 92 Wis. 2d 53, 63, 284 N.W.2d 706 (Ct. App. 1979).
cc:
Market Force Information
Karen Frame
Attorney Stephen A. Ditullio
Dewitt, Ross & Stevens
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