NATIONS CARELINK LLC, Employer

An administrative law judge (ALT) 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. That part of the FINDINGS OF FACT and CONCLUSIONS OF LAW section in the final paragraph on page 4 of the decision, analyzing condition 4., is deleted and the following substituted:

Both of the tests of condition 4. are satisfied here. Baker performed services for Nations CareLink under multiple contracts, and controlled the means and method of performing such services.

2. That part of the FINDINGS OF FACT and CONCLUSIONS OF LAW section in the first paragraph on page 5 of the decision, analyzing condition 5., is deleted and the following substituted:

Because Baker incurred the costs of travel, it is obvious that she incurred the main expenses related to the services at issue. Condition 5. is satisfied.

3. That part of the FINDINGS OF FACT and CONCLUSIONS OF LAW section in the second paragraph on page 5 of the decision, analyzing condition 6., is deleted and the following substituted:

Baker's agreement with Nations CareLink required her to indemnify Nations CareLink and hold it harmless for any claims arising from her actions and, as a result, condition 6. is satisfied.

4. That part of the FINDINGS OF FACT and CONCLUSIONS OF LAW section in the fourth paragraph on page 5 of the decision, analyzing condition 8., is deleted and the following substituted:

The record does not show that there was a realistic possibility that Baker could incur a loss under her contracts with Nations CareLink, and condition 8. is not satisfied as a result.

5. The second sentence of the DECISION section is modified to delete the words "and anyone else performing similar services to the employer under similar circumstances."

The decision of the administrative law judge, as modified, is affirmed. Accordingly, Nations CareLink is subject to the Wisconsin Unemployment Insurance law retroactive to January 1 , 2006, and is liable for contributions and related interest regarding the services performed by Sharon Baker in the State of Wisconsin for the relevant time period.

Dated and mailed December 17, 2008
nations . smd : 115 : 1  EE 410  EE 410.03  EE 410.04a  EE 410.04b  EE 410.05

/s/ James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner

The putative employer (Nations CareLink) contracts with licensed nurses to provide in-home health assessments for its client insurers.

On March 13, 2005, Registered Nurse (RN) Sharon Baker (Baker) signed an agreement to provide such services for Nations CareLink in Wisconsin.

Wisconsin Statutes § 108.02(12)(a) creates a presumption that an individual who provides services for pay is an employee, and it requires the entity for which the individual is performing those services to bear the burden of proving that the individual is not an employee. 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).

Although the issue noticed for hearing states that the status of Baker "and any other individuals performing similar services" for Nations CareLink LLC is to be determined, there was no evidence adduced in regard to any other individuals, and no stipulation by the parties that evidence offered in regard to Baker would be deemed evidence offered in regard to any other individuals. As a result, the discussion and decision here will relate only to Baker.

It is undisputed that Baker did not hold or apply for a FEIN, and condition 1. is not satisfied as a result.

The record establishes that, since 2005, Baker has filed a business/self-employment tax return, and it appears to be undisputed, as a result, that condition 2. was satisfied at all times relevant to this matter.

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).

Here, the only entity for which Baker performed medical assessments was Nations CareLink. The fact that an individual performs services only for the putative employer is generally inconsistent with the existence of a separate business. Prince Cable, Inc., UI Hearing No. 59900227MW (LIRC Feb. 23, 2001).  Nations CareLink argues that the fact that Baker also performed nursing services as an employee for Parkview Homes, Inc., establishes that she satisfies condition 3. However, performing nursing services as an employee for another entity does not lend support to the existence of a separate business enterprise created and maintained by Baker. See, Lifeplans, Inc., UI Hearing No. S0200012MD (LIRC April 7, 2005).

Moreover, Baker did not have a separate office or even a separate space in her home dedicated to a business purpose. In Quality Communications Specialists, Inc., supra, the commission clarified that all elements of the test articulated in condition 3., i.e., office, equipment, materials, and other facilities, must be satisfied in order for the putative employer to meet its burden. Exceptions have been made, however, when requiring satisfaction of any of the four elements would be incompatible with the nature of the enterprise at issue. See, Groeschl Forestry Consulting, Inc., UI Hearing No. S0000141HA (LIRC March 19, 2002); Diane Egan/Health Exams Plus, Inc., UI Hearing No. SO300071JV (LIRC April 15, 2005) (nurses conducting health examinations of prospective insureds not required to have other facilities in order to satisfy condition 3) . Nations CareLink argues that, since Baker could perform her duties without having a separate office, an office should not be regarded as a required element of condition 3. However, that is not the test. Unlike separate business facilities, a separate business office would not be unexpected, could be useful, and certainly would not be incompatible with the type of enterprise at issue here, i.e., nurses engaged in providing in-home health assessments of potential insureds. See, Diane Egan/Health Exams Plus, Inc., supra.

Condition 3. is not satisfied.

To satisfy condition 4., it must be established that Baker operated under contracts to perform specific services for specific amounts of money, and that, under these contracts, she controlled the means and method of performing the services. Baker was an experienced nurse, and exercised enough independence and discretion in conducting the subject evaluations to satisfy the second part of the test. Without any supervision, she took blood pressure readings, observed and assessed physical and mental abilities, and exercised her professional judgment in seeking clarification beyond the questions stated on the interview/report form supplied by Nations CareLink. Unlike the form utilized by the putative employer in Tri-State Home Improvement Co., Inc., v. LIRC, 111 Wis.2d 103, 330 N.W.2d 186 (1983), the interview/report form under consideration here was not utilized by Nations CareLink to monitor the quality of Baker's performance, e.g., the appropriateness of her interactions with those whom she was interviewing or the accuracy of her observations or assessments, but instead was intended as a detailing of the type of information required by its client insurance companies in order to carry out their underwriting functions.

The ALJ held that, because Baker was required to follow "explicit instructions from the employer and/or its clients," she did not control the means and method of performing the health assessment services. However, the record does not show that Nations CareLink imposed these requirements, but instead that they were imposed by the client insurers. Since these requirements are not attributable to Nations CareLink, they should not be considered an indicator of its control over the assessment services provided by Baker for purposes of condition 4.

Condition 4. also requires multiple contracts. These may take the form of 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. See, T-N-T Express LLC, UI Hearing Nos. S9700385, etc. (LIRC Feb. 22, 2000). Here, Baker and Nations CareLink essentially entered into two serial written contracts with terms that varied only as to the assessment fee schedule. This would not satisfy condition 4. See, Barnett v. Alternative Entertainment, Inc., UI Hearing No. 02003 1O9WU (LIRC Oct. 29, 2002)(single contract that essentially renewed unchanged except for unnegotiated updated price structures does not satisfy condition 4.).

However, Baker and Nations CareLink also negotiated numerous, apparently unwritten, contracts for her performance of assessments outside the fee schedule set forth in their written agreements. Baker, based upon considerations of travel time and expense, would apparently determine the minimum fee she would accept for such an assessment, and would decline the work if, after negotiating with Nations CareLink, she was not offered at least this minimum fee. This would satisfy the multiple contracts requirements of condition 4. See, Lifeplans, Inc., supra. (negotiation of agreements for health evaluations outside the terms of the written agreement satisfies multiple contracts requirement of condition 4.).

Condition 4. is satisfied.

Applying condition 5. requires a determination of what services are performed under the contract, what expenses are related to the performance of those services, which of those expenses are borne by the person whose status is at issue, and whether those expenses constitute the main expense. See, Lozon Remodeling, supra.; Quality Communications Specialists, Inc., supra. Here, Baker's expenses would include those for required equipment, e.g., blood pressure cuff, weight scale, tape measure, FAX machine, telephone; and for travel to the homes of those being evaluated. It would have to be presumed that Nations CareLink incurred certain expenses for administering its relationship with Baker, e.g., expenses related to communicating potential assessments to her, providing her with the necessary forms, reviewing her completed assessments for completeness, processing her payment invoices, and negotiating her agreements. Although few of these costs are quantified in the record, it would have to be presumed that Baker's travel expenses would clearly exceed those administrative expenses borne by Nations CareLink attributable to its relationship with her, and condition 5. is satisfied as a result.

The ALJ held that, because, in certain circumstances, Baker went outside her written agreement with Nations CareLink to negotiate a higher fee based upon travel considerations, this constituted the receipt of a travel reimbursement and condition 5. was not satisfied as a result. However, simply building travel costs into a bid for a job does not constitute the receipt of a travel reimbursement.

In order to satisfy condition 6., Baker is required to have been responsible for the satisfactory completion of the services she performed, and liable for any failure to satisfactorily complete them. In regard to condition 6., it is not simply the obligation to do re-work without additional pay which is the determining factor, because this obligation is typical as well of piece-work employees. See, T & D Coils, UI Hearing No. S9800147MW (LIRC Dec. 15, 1999); Quality Communications Specialist, Inc., UI Hearing Nos. S0000094MW, etc. (LIRC July 3O 2001). Evidence establishing, for example, not only an obligation to do such re-work but an expectation that it will be done, as well as a penalty for not doing so, would satisfy this condition. Here, the record shows there was an expectation that Baker remedy, without additional pay, any deficiencies in an assessment she had conducted, but the record does not show that she would have suffered a penalty for not doing so. However, the record also shows that Baker's agreement with Nations CareLink includes an indemnification provision (exhibit # 1 ¶ 19) requiring Baker to indemnify and hold Nations CareLink harmless for any claims "arising from actions or omissions" of Baker. This would satisfy condition 6. See, MSI Services, Inc., UI Hearing No. S0600129AP (LIRC Sept. 5, 2008).

Condition 7. is satisfied since it is undisputed that Baker was compensated on a per-job basis.

Condition 8. examines whether, under an individual contract for Baker's services, there could be a profit (if the income received under that contract exceeds the expenses incurred in performing the contract), as well as whether there could be a loss under that contract (if the income received under that contract fails to cover the expenses incurred in performing the contract) . Even assuming, as the commission did in Quality Communications Specialists, Inc., supra., that it is at least arguable that the receipt by Baker of more in pay for her services under the subject contracts than she was required to spend on the various expenses she incurred in performing such services would constitute "realiz[ing] a profit. . .under contracts to perform services," the record does not support a conclusion that she could suffer a loss within the meaning of condition 8. There is no business risk to Baker under the subject contracts, i.e., no realistic possibility that, in performing assessments under the subject contracts, she would earn less than she expended. See, Lozon, supra. It is argued here that, if the cost of gas exceeded the fee she was paid, Baker could sustain a loss. However, Baker only accepted jobs in more remote locations if she was satisfied that the amount she would be paid would cover her reasonable travel expenses. Consequently, there was no realistic possibility that she would sustain a loss under those circumstances. See, also, Dane County Hockey Officials Association, Inc., supra. (no realistic possibility of realizing a loss since, when the officials accept an assignment, the income they will receive is already determined, the fact that they will receive it if they go to the match is determined, and the expenses they will incur are determined) . Condition 8. is not satisfied.

Condition 9. requires proof of a cost of doing business which Baker would incur even during a period of time she was not performing work through Nations CareLink. The record establishes that Baker paid her own nursing licensing costs, and certain of her own continuing education costs, although it is not clear from the record either the extent to which Baker paid for her continuing education or whether the continuing education costs she did incur were necessary for licensing purposes or not. Although licensing and required continuing education costs could be considered continuing business liabilities or obligations under certain circumstances, they do not qualify as such here. As the commission held in Care and Comfort Associates, Inc., UI Hearing No. S9700120MW (LIRC April 30, 1999) in regard to individuals providing nursing services, "the expense of license renewals and/or the cost of required continuing education are incurred by many professional workers who are acknowledged employees."

The commission has interpreted condition 10. as intending to examine the overall course of a person's business. See, Quality Communications Specialists, Inc., supra. Here, Baker had only a small investment in equipment and her nursing license, and used both for her employment by Grandview Homes, and her recurring expenditures for continuing education could be readily discontinued, so that she faced no realistic prospect of any significant period of time in which she would have to make expenditures without any revenue. See, Thomas Gronna, supra. The commission has held that condition 10. requires that a significant investment have been 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. Harlan Mrochinski, UI Hearing No. SO100001WR (LIRC July 15, 2004); Dane County Hockey Officials, Inc., supra. The record does not show that Baker had made such a significant investment. Condition 10. is not satisfied.

To summarize, only five conditions, i.e., 2., 4., 5., 6., and 7. 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 five of the ten conditions compels the conclusion that Baker performed services for Nations CareLink as an employee, not an independent contractor, during the time period at issue.

Since it did not raise the issue in its petition, Nations CareLink appears to be conceding that it became an employer, within the meaning of Wis. Stat. § 108.02(13)(e), as of January 1, 2006.

cc:
Attorney Matthew E. Damon
Attorney Peter W. Zeeh

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