GARY L FISHER, Employee

WISPOLITICS.COM, 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:

The FINDINGS OF FACT and CONCLUSIONS OF LAW section is deleted and the following substituted:

The sole issue in this case relates to the claimant's eligibility for benefits, not to the putative employer's (WisPolitics) liability for contributions. As a result, the reversal of the appeal tribunal decision requested by WisPolitics would have no effect upon its liability for unemployment contributions but instead, as explained in the department determination, would simply remove the claimant's WisPolitics earnings from the base period wages upon which the amount of his UI benefit is computed. .

The claimant (Fisher), from 2000 through September 9, 2005, earned $600 per month, under an oral contract, to attend legislative hearings and court proceedings as assigned, and to prepare and submit articles/summaries for publication by WisPolitics through one of its online or subscription services.  Fisher used his home computer and Internet connection, and his personal vehicle, to perform these services. WisPolitics provided him a laptop computer and cell phone, access to a computer and work space at its offices on an ad hoc basis, use of word processing assistance if he called in an article, and reimbursement of parking expenses. The hearings and proceedings Fisher attended generally took place in downtown Madison.

One of the noteworthy aspects of this case relates to the manner of Fisher's compensation by WisPolitics. The evidence of record establishes that Fisher was paid $600 per month regardless of the number of hours he worked or the number of his articles/summaries published by WisPolitics.  However, contrary to this evidence, WisPolitics argues to the commission that the claimant was "paid only if his material was published," "wrote his material for WisPolitics without any guarantee of...compensation," and "would only get paid for articles that were published ".  This argument is apparently based on the tortured reasoning that, since Fisher was working as a freelancer, freelancers are typically paid only if their writing is published, Fisher's writings were consistently published each month, and he was consistently paid $600 each month, consequently, he must have been paid because his writings had been published. Building on this reasoning, WisPolitics further argues that, if Fisher's writings had ceased to be published by WisPolitics, he would not have been paid. These arguments are unpersuasive if not specious.

Another noteworthy aspect of this case is WisPolitics' repeated citation to a 1999 department determination, and argument that this determination provides binding precedent here. First, a department determination does not constitute binding precedent.   Second, this determination was decided under a prior statute Finally, the relevant facts are not closely comparable in certain material respects. Among other distinctions, the putative employer in the earlier case, Wisconsin Newspress, paid those individuals performing reporting services by the column inch or the article, whereas WisPolitics paid the claimant $600 per month regardless of the number of articles/summaries published.

Wisconsin Statutes § 108.02, states as follows, as relevant here:

(12) Employee.

(a) 'Employee" means any individual who is or has been performing services for an employing unit, in an employment, whether or not the individual is paid directly by such employing unit, except as provided in par. (b), (bm), (c), (d), (dm) or (dn). . .

(bm) During the period beginning on January 1, 2000, with respect to contribution requirements, and during the period beginning on April 2, 2000, with respect to benefit eligibility, par. (a) does not apply to an individual performing services for an employing unit other than a government unit or nonprofit organization in a capacity other than as a logger or trucker, if the employing unit satisfies the department that the individual meets 7 or more of the following conditions by contract and in fact:

1. The individual holds or has applied for an identification number with the federal internal revenue service.

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.

3. The individual maintains a separate business with his or her own office, equipment, materials arid other facilities.

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.

5. The individual incurs the main expenses related to the services that he or she performs under contract.

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.

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.

8. The individual may realize a profit or suffer a loss under contracts to perform such services.

9. The individual has recurring business liabilities or obligations.

10. The success or failure of the individual's business depends on the relationship of business receipts to expenditures...

(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...

A two-step analysis is used to determine whether an individual is an employee. Goldberg v DILHR, 168 Wis. 2d 621, 625 (Ct App 1992). The first step is to determine whether the individual has been performing services for an employing unit, in an employment. Wis. Stat § 108.02(12)(a).  An "employment" is "any service . . . performed . . . for pay." Wis. Stat. § 108.02(15)(a). There is no dispute that Fisher performed services for WisPolitics for pay.  A presumption therefore arises that such services were performed as an employee.  The burden then shifts to the putative employer to establish that the claimant is excepted from employee status by some statutory provision. See, Dane County Hockey Officials, UI Hearing No. S9800101MD (LIRC Feb. 22, 2000); Quality Communications Specialists, Inc., UI Hearing Nos. 80000094MW, etc. (LIRC July 30, 2001).

The record does not show that Fisher held or applied for a federal employer identification number (FEIN) within the meaning of condition 1.

The record does not show that Fisher filed a self-employment income tax return within the meaning of condition 2. Fisher's testimony in this regard was that he was "not sure" if he reported on his 2005 tax return that he was self-employed. The ALJ concluded that this condition had been met because WisPolitics had issued a 1099 form to Fisher for the 2005 tax year.  However, the issuance of this 1099 does not prove that Fisher actually filed a self-employment tax return. See, Gamble v. American Benefits Ltd., UI Hearing No. 04004847MD (LIRC Feb. 15, 2005)(condition 2. is not satisfied simply because the employer considers the claimant to be an independent contractor and issues a 1099 form to him); Spencer Siding, Inc., UI Hearing Nos. 50300142GB, 50300133GB (LIRC June 2, 2006).

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 NW.2d 169 (1983); Larson v. LIRC, 184 Wis.2d 378, 516 N.W.2d 456 (Ct. App. 1994); Diane Egan/Health Exams Plus, Inc., UI Hearing No. SO300071JV (LIRC April 15, 2005); Lozon Remodeling, UI Hearing No. 59000079HA (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 putative employer to satisfy its burden.   Fisher testified that he did work for WisPolitics and other entities at home, where he maintained a computer with an Internet connection, and other unspecified office equipment. WisPolitics argues that the fact that Fisher claimed an office deduction on his 2005 tax return shows that he had a separate office in his home devoted to a business purpose. However, if Fisher was not sure whether he filed a self-employment tax return for 2005, it is obvious that he could not be sure whether he claimed an office deduction on such a return.   In fact, Fisher testified that, although he believed he reported a home office as a business expense on his 2005 taxes, he was not sure.

Although this is a close question, the presence of office equipment in a separate space in Fisher's home which he used to draft and transmit his writings and other communications to WisPolitics, as well as his use of this space/equipment to perform similar services for other entities before and after the time period at issue here, including during times he was also performing these services for WisPolitics, tends to support a conclusion that he was maintaining a separate business with his own resources within the meaning of condition 3.

To satisfy condition 4., it must be established that the claimant operates under contracts to perform specific services for specific amounts of money, and that, under these contracts, he controls the means and methods of performing the services.

The ALJ concluded that, because WisPolitics imposed submission deadlines for the articles/summaries prepared by Fisher, it controlled the means and method by which he performed services. However, the imposition of deadlines for submission of time-sensitive articles/summaries would necessarily be required by WisPolitics of employees or independent contractors given the nature of its business. See, Thomson Newspapers, Inc, UI Hearing No S9200097MW (LIRC May 31, 1994)(no direction and control where employer's establishment of pick-up and delivery times simply insured the result for which bundle haulers' services were retained). Once the claimant received a beat or a particular assignment, he independently determined the content of the article/summary he prepared. This constituted control of the means and method of performing his services for WisPolitics. .

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 has periodic opportunities for "arm's length" negotiation with the putative employer as to the conditions of their relationship, and that he 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. Here, Fisher operated under a single contract with WisPolitics, not multiple contracts, with terms that did not vary over time.

However, Fisher also had contracts with other entities, some during times he was performing similar services for WisPolitics.  Fisher argues that such contracts are not cognizable here because they were not in existence during the time period at issue, i.e., the last three quarters of 2005 and the first quarter of 2006 However, to determine whether a claimant is operating independently, it is often necessary to examine the overall course of an enterprise or contract relationship, and the commission has frequently done so even if it requires an examination of a time period outside that at issue.

Both aspects of condition 4. are 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. Lozon Remodeling, UI Hearing No. S9000079HA (LIRC Sept. 24, 2999); Quality Communications Specialists, Inc., supra. This inquiry requires qualification of these expenses.

Those expenses borne by Fisher include the costs of his personal home computer and Internet connection, and commuting expenses in his personal vehicle, primarily to downtown Madison.

Those expenses borne by WisPolitics include parking; a laptop computer and cell phone; office space, a desktop computer and Internet connection, and word processing staff at the WisPolitics offices; and recordkeeping and payroll costs.

There is no quantification of these expenses other than a reference to parking costs of approximately $20 per month, and to the fact that the laptop computer provided by WisPolitics was not an expensive one.

WisPolitics argues that Fisher's labor costs should be included as part of the expenses which he bore. However, the cost of labor provided under a contract for services has not been interpreted by the commission as a qualifying expense within the meaning of condition 5.   See, e.g. , Quality Communications Specialists, Inc., supra.; Quale & Associates, Inc., UI Hearing No 50200201MW (LIRC Nov 19, 2004)(cost of labor not cognizable as expense borne by claimant because he is not paying for his labor but instead, depending on whether he qualifies as an employee or an independent contractor, his employer or his customer is).

It is not possible from the evidence of record to determine with any degree of certainty whether the claimant bore the main expense here. As a result, condition 5. is not satisfied.

Condition 6. requires liability by the claimant for a failure to perform satisfactorily.  There is no such liability on the part of the claimant here, i.e. , he was paid $600 per month whether WisPolitics decided to print his articles/ summaries or not.   Again, WisPolitics asserts that the claimant was paid only if his material was published.   However, as discussed above, this assertion is contrary to the evidence of record.   Moreover, even if it were true that the claimant was paid only for that material which WisPolitics deemed satisfactory, this would not satisfy condition 6. because such an arrangement is typical as well of piecework employees. See, T & D Coils, UI Hearing No. S9800147MW (LIRC Dec. 15, 1999); Spencer Siding, Inc., UI Hearing Nos. S0300142GB, etc. (LIRC June 2, 2006).

Condition 7. requires that workers receive compensation for the services they perform on a commission, per-job, or competitive-bid basis and not on any other basis. Although WisPolitics argues that the claimant was paid on a per-job basis, the record shows instead that the claimant was paid a monthly salary of $600, which does not qualify as payment on a commission, per-job, or competitive-bid basis.

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 the claimant of more in pay for his services under the WisPolitics contract than he was required to spend on the various costs he incurred in performing such services would constitute "realiz[ing] a profit. . .under contracts to perform services." However, given that the claimant was guaranteed payment every month and incurred only nominal expenses, the record does not support a conclusion that, over the term of his contract with WisPolitics, he could suffer a loss within the meaning of condition 8. See, Lozon Remodeling, supra. (with an assured amount of remuneration per unit of work, claimant could not suffer a loss for purposes of condition 8.); Dane Co. Hockey Officials, supra. 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 tithe 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 the claimant did not have such continuing costs.  He apparently used his home computer and Internet connection to draft and transmit articles/summaries to WisPolitics, and his personal vehicle to travel to downtown Madison to attend hearings and court proceedings. Obviously, he acquired and used these items principally for non-business purposes, and any costs associated with his use of them to perform work for WisPolitics would immediately cease when he was no longer performing such work. Condition 9. is not satisfied.

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 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. See, Thomas Gronna, The Floor Guys, UI Hearing No. S9900063W1J (LIRC Feb. 22, 2000). The record does not establish that the claimant had put a significant investment at risk.

In summary, only conditions 3. and 4. 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 two of the ten conditions compels the conclusion that the claimant performed services for WisPolitics as an employee, not an independent contractor, during the time period at issue.

The commission therefore finds that Fisher performed services for WisPolitics as an employee, within the meaning of Wis. Stat. § 108.02(12), and that WisPolitics paid him wages of $3,770.20 for such services during the applicable base period.

The decision of the administrative law judge, as modified, is affirmed. Accordingly, the claimant performed services for WisPolitics (UI Account 179807) as an employee during the time period at issue. Amounts earned by the claimant for his performance of these services may be used in calculating the claimant's benefit entitlement.

Dated and mailed April 24, 2007
fishega . umd : 115 : 1   EE 408  EE 410  EE 410.04a  EE 410.04b  EE 410.05

/s/ James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

cc:
Attorney Jennifer L. Peterson
Anthony S. Gibart

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