TANNETTE ELIE, Claimant/Petitioner
CITY BUSINESS USA LLC, Employing
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:
The claimant worked for the Milwaukee Journal Sentinel newspaper for about 20 years, and took a voluntary buyout in August 2009. In September 2009, she began to provide services for the Business Journal of Milwaukee, also known as City Business USA LLC (hereinafter "City Business"), writing articles for its business diversity section. She signed a letter agreement prepared by City Business's editor, outlining general terms and conditions of their working relationship. One paragraph in the agreement provides as follows:
Freelance fees for material you prepare for or submit to us, subject matters, lengths, and other details of what assignments will be, are agreed upon by you and the appropriate editor at the time of assignment or on a case-by-case basis.
In another provision, she agreed to cooperate with City Business if any claim or issue was raised about her work. The letter agreement also stated that, as a freelancer, she was not an employee, but was an independent contractor.
The claimant writes her stories for City Business from her home, using her own computer, telephone, and other equipment. She may suggest the topic to City Business or City Business may contact her with an idea. She subscribes to a number of business journals and periodicals in order to stay current in her field of expertise, and her husband also reads them. She pays for all expenses, such as food or travel, incurred when producing an article. She is paid by City Business for each article written, subject to terms contained in the agreement and her negotiated agreement with the appropriate editor. City Business can return any article to the claimant that she has submitted, and request revisions. If City Business does not use an article, the claimant would be paid a lower fee for the "killed" story.
The claimant does not write articles for any other businesses, but she does continue to teach at UW-Parkside, presumably as an acknowledged employee, and she consults and gives speeches for nonprofit organizations, writes proposals, and provides training. She attends networking events, for which she pays a fee, and believes that her work for City Business gives her a credential and credibility in other independent endeavors she is trying to do as she builds herself as an independent journalist and communications professional.
The issue to be decided is whether, during her base period consisting of the second, third, and fourth quarters of 2010 and the first quarter of 2011, the claimant was an employee of City Business for purposes of determining unemployment insurance benefit eligibility.
The administrative law judge found that the claimant was not an employee of City Business during the identified calendar quarters in 2010 and in 2011. He amended his decision several weeks later to include an overpayment of $440 that the claimant was required to pay to the department, because her earnings from City Business were no longer included in her base period wages for computation of unemployment benefits. The claimant petitioned for commission review of his amended decision, questioning why there had been an amendment to his decision since nothing had changed since his original decision. During the hearing, the claimant asserted that she was an independent contractor for City Business, not an employee. The parties agreed with the amount of the claimant's base period wages, as had been determined by the department in its determination.
Applicable Law
Substantive changes were made to the statutory definition of "employee" in Wisconsin unemployment insurance law by 2009 Wisconsin Act 287, enacted on May 12, 2010, and applicable to services performed after December 31, 2010. The claimant's base period consists of the last three quarters of 2010 and the first quarter of 2011. Therefore, the analysis of the claimant's employment status while performing services for City Business is bifurcated, first, using the applicable pre-2011 law; and second, using the applicable 2011 law.
The commission notes that, in its interpretation of the new law, it has looked, when appropriate, to the legislative history giving rise to the change in the statute, specifically a report to the Unemployment Insurance Advisory Council(1) dated June 25, 2009, by the committee appointed to study and to suggest changes to the definition of "employee" under 108.02(12).(2) See Milwaukee County v. DILHR, 80 Wis. 2d 445, 259 N.W.2d 118 (1977) (Wisconsin Supreme Court looks to Advisory Council comments made in conjunction with recommended law changes to determine or to clarify legislative intent), citing Western Printing & Lithographing Co. v. Industrial Comm., 260 Wis. 124, 130, 50 N.W.2d 410 (1951).
Certain provisions left unchanged and applicable both before and after December 31, 2010 are as follows:
Wisconsin Stat. § 108.02 states, in relevant provisions, as follows:
108.02 Definitions. As used in this chapter:
(4) BASE PERIOD. "Base period" means the period that is used to compute an employee's benefit rights under s. 108.06 . . .
(4m) BASE PERIOD WAGES. "Base period wages" means:
(a) All earnings for wage-earning service which are paid to an employee during his or her base period as a result of employment for an employer;
Definition of "employee" under law applicable to services performed through December 31, 2010
Wis. Stat. § 108.02(12) provides, in relevant part, as follows:
(a) "Employee" means any individual who is or has been performing services for pay for an employing unit, whether or not the individual is paid directly by the 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 and 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. . . .
(e) This subsection shall be used in determining an employing unit's liability under the contribution provisions of this chapter, and shall likewise be used in determining the status of claimants under the benefit provisions of this chapter.
Wisconsin Stat. § 108.02(12)(a) creates a presumption that a person who provides services for pay is an employee, and it requires the entity for which the person is performing those services to bear the burden of proving that the person is not an employee. See Dane County Hockey Officials Association, Inc., UI Dec. Hearing No. S9800101MD (LIRC Feb. 22, 2000); Quality Communications Specialists Inc., UI Dec. Hearing Nos. S0000094MW, etc. (LIRC July 30, 2001).
Therefore, since the record shows that the claimant performed services for City Business in 2010 for pay, there is a presumption that she did so as a statutory employee. In addition, the commission notes that the claimant's status as an independent contractor or a statutory employee is determined by statute, and not by the terms of a private agreement.
Roberts v. Industrial Comm., 2 Wis. 2d 399, 86 N.W.2d 406 (1957). See also
Knops v. Integrity Project Management, UI Hearing No. 06400323AP (LIRC May 12, 2006). In addition, the applicable statute requires that the statutory conditions must be met "by contract and in fact." Therefore, the specific factual circumstances of each case must be examined to determine whether the conditions are actually and genuinely met.
Of additional significance, the unemployment statute specifically states, at Wis. Stat. § 108.12, that "[n]o agreement by an employee to waive the employee's right to benefits or any other rights under this chapter shall be valid." In sum, the claimant's status as an independent contractor or an employee, for unemployment insurance purposes, is determined by statute, and not by any agreement or understanding between the parties.
Analysis of Conditions
Condition 1 - The claimant does not hold, nor has she applied for, an identification number with the federal internal revenue service. This condition
is not met.
Condition 2 - The claimant did not file federal business or self-employment income tax returns based on the services she performed for City Business in 2009, the first year that she performed such services, or in 2010. This condition
is not met.
Condition 3 - This condition, that the claimant maintains a separate business with her own office, equipment, materials and other facilities,
is not met.(3)
The focus of this condition is to determine whether a separate business, one created and existing separate and apart from the claimant's relationship with City Business, is being maintained with the claimant's own resources.
See, e.g., Princess House, Inc. v. DILHR, 111 Wis. 2d 46, 330 N.W.2d 169 (1983);
Campbell v. Speedmark, UI Dec. Hearing No. 08002536MD (LIRC April 27, 2009) (no evidence of a separate free-standing office of any kind, or a home office primarily for business purposes). In
Quality Communications Specialists, Inc., cited previously, the commission clarified that all elements of this condition must be considered, including an office, equipment, materials and other facilities. A narrow exception has been created subsequently for a situation in which lack of "other facilities" would be consistent with the nature of the services provided.
See, e.g., Acute Care, Inc., UI Dec. Hearing No. S0500090MD (LIRC Feb. 15, 2008) (doctors as independent contractors);
Groeschl Forestry Consulting Inc., UI Dec. Hearing No. S0000141HA (LIRC March 19, 2002) (timber markers as independent contractors).
In this case, there was no evidence presented that the claimant had an office. The claimant performs her services for City Business using her own computer and paper.
In Campbell, cited above, the claimant (a mystery shopper) had a "computer room" in her home, but used that room primarily for personal purposes and for work for another business unrelated to mystery shopping, and would continue to have that room even if she did not perform mystery shopping services. She also had a car to transport herself to mystery shopping locations, but used that car for personal purposes and would still have expenses associated with the car even without the mystery shopping work. The commission noted that the space in her home and her car were not necessarily indicative of a separate business, since most individuals have a space in their homes that they can use to perform "office" functions connected to work they may be doing, and have a car they use to transport themselves. As the commission noted, "[o]wnership 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." The same is true for this case.
Worth particular mention, in Gary Gilbert v. LIRC and DWD, 315 Wis. 2d 726, 748-750, 762 N.W.2d 671 (Ct. App. 2008), the court of appeals included an analysis of this condition in its decision, and noted that the statute requires an individual to own and maintain an office, equipment, materials, and other facilities, these being "typical indicators of an existing business." Id. at 750.
Condition 4 - This two-part condition, that the claimant operates under contracts to perform specific services for specific amounts of money and under which the claimant controls the means and methods of performing such services, is met.
This condition requires multiple contracts. As noted in
Gronna v. The Floor Guys, UI Dec. Hearing No. S9900063WU (LIRC Feb. 22, 2000), the requirement of multiple contracts is based on sound legislative policy, as it "tends to show that an individual is not dependent upon a single, continuing relationship that is subject to conditions dictated by a single employing unit." The commission has consistently stated that this requirement may be satisfied by multiple contracts with separate entities or by multiple serial contracts with a putative employer if it is established that those contracts 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.
See, e.g., Preferred Financial of Wisconsin, Inc., UI Dec. Hearing No. S0600240MW (LIRC Oct. 23, 2008);
Stark v. 3246 LLC, UI Dec. Hearing No. 07401621SH (LIRC Mar. 12, 2008);
Zoromski v. Cox Auto Trader, UI Dec. Hearing No. 07000466MD (LIRC Aug. 31, 2007) (single, continuing relationship with conditions dictated by putative employer does not satisfy the multiple contracts requirement).
In this case, the claimant entered into one general agreement with City Business. However, that agreement included a paragraph in which it was agreed that fees, subject matter, length and other details of each assignment would be agreed upon by the claimant and the appropriate editor at the time of the assignment or on a case-by-case basis. In fact, the claimant would suggest topics for articles to write or City Business would provide her with ideas for articles. The specific details of the articles to be written would then be worked out between the parties.
The commission, in Start Renting Inc., UI Dec. Hearing No. S0800059MD (LIRC May 15, 2009), rejected the argument that separate contracts were created each time a delivery driver drove a route. However, the commission cited the circuit court decision in
Evolution Technology Systems LLC v. LIRC, Case No. 07-CV-5825 (Wis. Cir. Ct. Milwaukee Co., March 6, 2008), that found multiple contracts in an arrangement in which "each job performed pursuant to the umbrella agreement with the putative employer was separately negotiated and based upon a distinct offer and acceptance." In addition, the commission found multiple contracts in
Quale & Associates, UI Dec. Hearing No. S0200201MW (LIRC Nov. 19, 2004), a case in which craftsworkers, who were performing services for Quale & Associates under one general agreement, negotiated the terms of their services with customers, and signed their contracts with the customers as apparent agents for Quale & Associates.
Similarly, the case at issue involves one general agreement between the parties, but each article written by the claimant and submitted to City Business is separately negotiated and based upon a distinct offer and acceptance. This arrangement satisfies the multiple contracts portion of this condition.
In addition, although the general agreement between the claimant and City Business also states that all material submitted to City Business "must be satisfactory in form and content" to City Business, and that the claimant must comply with copy submission deadlines, the claimant clearly controls the means and methods of performing her services.
Condition 5 - This condition, that the claimant incurs the main expenses related to the services that she performs under contract, is met.
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, e.g., Preferred Financial of Wisconsin, Inc., cited previously;
J Lozon Remodeling, UI Dec. Hearing No. S9000079HA (LIRC, Sept. 24, 1999). In that regard, the commission has consistently held that, without a quantification of these expenses or an obvious conclusion as to the expenses borne by the respective parties, it must be found that condition 5 has not been met.
See, e.g., Gustavson v. Carpenters Inc., UI Dec. Hearing No. 09400168AP (LIRC April 30, 2009);
Preferred Financial of Wisconsin, Inc, cited previously;
Stark v. 3246, cited previously.
Both parties bear expenses related to the preparation of the articles. City Business has certain administrative expenses related to its contacts with the claimant and arrangement for proper compensation of the claimant for the completed articles. However, the claimant is responsible for all other expenses associated with the preparation of her articles and their transmission to City Business, including her travel expenses if she travelled for interviews, and her food expenses if she met a person for breakfast or lunch. She also subscribes to business magazines, at least in part to maintain her understanding of the business climate, and paid the costs associated with networking events. It appears obvious that her expenses related to the articles she was writing would necessarily exceed the expenses incurred by City Business.
Condition 6 - This condition, that the claimant is responsible for the satisfactory completion of her services and is liable for a failure to satisfactorily complete the services,
is not met.
The commission has consistently held that it is not simply the obligation to do re-work without additional pay which is the determining factor in condition 6, because this obligation is typical as well of piecework employees.
See T & D Coils, Inc., UI Dec. Hearing No. S9800147MW (LIRC Dec. 15, 1999). There must be an additional factor, such as payment for the repair/replacement materials, as noted in
Thomas J. Harris, UI Dec. Hearing Nos. S0400220HA, etc. (LIRC June 15, 2006), or a loss of corporate profits by having the costs of the redone work deducted from the worker's share of corporate profits, as occurred in
Marv Mews & Sons, Inc., UI Dec. Hearing No. S0800184MW (LIRC March 24, 2009), or liability for faulty work as may be found in a hold harmless/indemnification provision in the parties' agreement, as noted in
Harris and Zoromski, cited previously.
In this case, if the claimant submitted an article that City Business wanted revised or supplemented, they would discuss the issue and she might revise her article, without additional compensation. In addition, the parties' written contract requires that she "cooperate" with City Business if any claim or issue is raised about her work. However, this does not impose any liability on her part, or any requirement to indemnify City Business.
Condition 7 - This condition, that the claimant is paid on a commission or per-job or competitive-bid basis,
is met. The claimant was paid a negotiated amount for each article she wrote, i.e., she was paid on a per-job basis.
Condition 8 - This condition, that the claimant may realize a profit (income received under the contract exceeds expenses incurred in performing the contract) or suffer a loss (income received under the contract fails to exceed expenses incurred in performing the contract),
is not met.
The test is whether, over the term of the contract between the claimant and City Business, there was a realistic possibility that the claimant could realize a profit or suffer a loss.
See, e.g., Zabel v. Snyder's of Hanover, UI Dec. Hearing No. 10000988MD (LIRC Sept. 2, 2010) (even though claimant suffered losses during certain weeks, there was no realistic possibility of loss over term of agreement);
Alsheski v. Codeworks, Inc., UI Dec. Hearing No. 09403672AP (LIRC Feb. 26, 2010) (proper test is whether there is a realistic possibility of loss if individual successfully completes services);
Gustavson, cited previously.
In this case, the claimant indicated that if she were required to do a personal interview, with travel expenses, that could cut into her profit a bit. However, although she might not make the profit she hoped, that does not equate to a loss. In addition, as noted in
Zabel, this condition looks at the entire term of the agreement, and not certain weeks or certain assignments. Given the minimal expenses that the claimant bore in writing her articles, it is likely that she would realize a profit, but unlikely that she would suffer a loss over the term of the underlying agreement, given her negotiated fees.
Condition 9 - This condition, that the individual has recurring business liabilities and obligations,
is not met. This condition requires proof of a cost of doing business that the claimant would incur even during a period of time that she was not performing work for City Business.
See, e.g., Campbell, cited previously;
MSI Services Inc., UI Dec. Hearing No. S0600129AP (LIRC Sept. 5, 2008). Such expenses might include office rent, membership dues or a licensing fee. In this case, the claimant has no recurring business obligations.
Condition 10 - This condition, that the success or failure of the individual's business depends on the relationship of business receipts to expenditures,
is not met. The commission has interpreted this condition to require a significant investment that is put at risk.
See, e.g., Gustavson, cited previously (carpentry tools and fax machine not the types of business investments with attendant entrepreneurial risk contemplated by condition 10);
Quality Communications Specialists, Inc., cited previously (relatively small recurring expenditures could be readily discontinued if the flow of work ceased). The claimant had no investment that was at risk while performing services for City Business.
Therefore, under the law applicable to the claimant's services through December 31, 2010, only three of the ten conditions have been met. Since the law applicable at that time requires that seven conditions be satisfied for an individual to be considered an independent contractor, the claimant must be considered an employee and not an independent contractor for these services, and wages she earned from City Business during that period of time shall be included in the department's computation of her base period wages.
Definition of "employee" under law applicable to services performed after December 31, 2010
Wis. Stat. § 108.02(12) provides, in relevant part, as follows:
(a) "Employee" means any individual who is or has been performing services for pay for an employing unit, whether or not the individual is paid directly by the employing unit, except as provided in par. (bm), (c), (d), (dm) or (dn).
(b) (bm) Paragraph (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 the conditions specified in subds. 1. and 2., by contract and in fact:
1. The services of the individual are performed free from control or direction by the employing unit over the performance of his or her services. In determining whether services of an individual are performed free from control or direction, the department may consider the following nonexclusive factors:
a. Whether the individual is required to comply with instructions concerning how to perform the services.
b. Whether the individual receives training from the employing unit with respect to the services performed.
c. Whether the individual is required to personally perform the services.
d. Whether the services of the individual are required to be performed at times or in a particular order or sequence established by the employing unit.
e. Whether the individual is required to make oral or written reports to the employing unit on a regular basis.
2. The individual meets 6 or more of the following conditions:
a. The individual advertises or otherwise affirmatively holds himself or herself out as being in business.
b. The individual maintains his or her own office or performs most of the services in a facility or location chosen by the individual and uses his or her own equipment or materials in performing the services.
c. The individual operates under multiple contracts with one or more employing units to perform specific services.
d. The individual incurs the main expenses related to the services that he or she performs under contract.
e. The individual is obligated to redo unsatisfactory work for no additional compensation or is subject to a monetary penalty for unsatisfactory work.
f. The services performed by the individual do not directly relate to the employing unit retaining the services.
g. The individual may realize a profit or suffer a loss under contracts to perform such services.
h. The individual has recurring business liabilities or obligations.
i. The individual is not economically dependent upon a particular employing unit with respect to the services being performed.
(e) This subsection shall be used in determining an employing unit's liability under the contribution provisions of this chapter, and shall likewise be used in determining the status of claimants under the benefit provisions of this chapter.
This new test involves first, an analysis of whether the claimant's services are performed free from control or direction by the employing unit, and second, whether the claimant meets six or more of nine specific conditions relating to economic independence and
entrepreneurial risk.
Wisconsin Stat. 108.02(12)(a) was not substantively changed by the new law(4). It still creates a presumption that a person who provides services for pay is an employee, and it still requires the entity for which the person is performing those services to bear the burden of proving that the person is not an employee.
See Dane County Hockey Officials Association, Inc., cited previously;
Quality Communications Specialists Inc., cited previously.
Since the record shows that the claimant performed services for City Business in 2011 for pay, City Business has the burden to rebut the presumption that she did so as a statutory employee. It must establish that the claimant operated free of its direction or control and that the claimant met at least six of the nine conditions set forth in the statute.
Analysis of Conditions
The first part of the test provides five important statutory factors to consider, although these factors are not the only factors that may be considered in
determining whether the claimant performs her services free from the control or direction of the employing unit. Each factor is a separate indicator of an employing unit's exercise of direction or control over the claimant, none of them are essential in any case, and each factor may be weighted differently depending upon the facts of each case.
Wis. Stat. § 108.02(12)(bm)1. - Freedom from control or direction by the employing unit
a. Instructions - This factor looks at whether the individual is free from the employing unit's direction to comply with instructions concerning how to perform the services. This factor
is met. City Business did not instruct the claimant as to how to write her business articles. It relied on her experience and skill in performing those services.
b. Training - This factor looks at whether the individual is free from training by the employing unit with respect to the services performed. This factor
is met. The claimant received no training from City Business on how to write business articles.
c. Personal performance - This factor looks at whether the individual is free from the requirement of personal performance of the services. This factor is not met. The claimant was required to write her own articles, and could not hire anyone else to write them.
d. Services at times or in a particular order or sequence - This factor looks at whether the individual is free from the requirement of performing services at times or in a particular order or sequence established by the employing unit. This factor is met. Although City Business and the claimant agreed on topics for articles she would write and there were deadlines, the claimant could work on the articles using her own timeframe.
e. Oral or written reports - This factor looks at whether the individual is free from the requirement of making oral or written reports to the employing unit on a regular basis. This factor is met. The claimant was not required to make oral or written reports to City Business.
No other factors were raised by either party on the issue of whether the claimant was free from control or direction by City Business, and the commission does not note any other relevant factors. Therefore, given that four of the five factors are met, it has been established that the claimant performs her services free from control or direction by City Business. The first part of this two-part test has been met.
Wis. Stat. § 108.02(12)(bm)2. - Economic independence and entrepeneurial risk
Several of these conditions, in whole or in part, are the same as conditions contained in the previous law. As noted previously, the committee recommending the changes in the law chose not to change these particular provisions due to their continuing relevance and usefulness. Accordingly, the commission decisions and case law relating to these conditions under the previous law would retain their applicability. In addition, two of the conditions (conditions e. and i.) are the same or substantively similar to the current conditions in the "employee" test applicable to non-profit and governmental organizations, and commission decisions and case law relating to those two conditions would be equally applicable in this context.
a. The individual advertises or otherwise affirmatively holds himself or herself out as being in business.
This condition is met. The claimant holds herself out as being in business, going to networking meetings to establish new business connections, and performing related services for multiple entities on a short-term basis.
b. The individual maintains his or her own office or performs most of the services in a facility or location chosen by the individual and uses his or her own equipment or materials in performing the services.
This condition is met. The new law changed the requirements in the old condition 3 to reflect the changing times in which "consultants, writers, programmers and others" are very mobile, do not maintain their own office, and sometimes do not perform their services in an office. As noted in the committee report, under the new law "those who do not maintain their own office but perform most of their services at locations that they select would satisfy [this] factor".
The claimant does her writing wherever she wants, using her own equipment and materials, including a computer and paper.
c. The individual operates under multiple contracts with one or more employing units to perform specific services.
This condition is met. This condition is similar to condition 4 under the old test, retaining the first part of that condition relating to multiple contracts, but not the second part, and warrants the same finding.
d. The individual incurs the main expenses related to the services that he or she performs under contract.
This condition is met. This condition is identical to condition 5 under the old test, and warrants the same finding.
e. The individual is obligated to redo unsatisfactory work for no additional compensation or is subject to a monetary penalty for unsatisfactory work.
This condition is met. This condition replaces condition 6 of the old law that read - "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 claimant may be required to revise or supplement her articles, in consultation with a City Business editor. If so, she would not receive additional compensation, but would receive the same amount that had been previously negotiated unless there was a mutual agreement to extend the article, justifying a higher fee than originally negotiated.
f. The services performed by the individual do not directly relate to the employing unit retaining the services.
This condition is not met. This condition is a factor relating to "integration" of the individual's services into the kind of work done by the employing unit. The committee of the Unemployment Insurance Advisory Council notes in its report that it is one of the factors currently used by the courts and the commission for government and nonprofit employers, citing the case of Keeler v. LIRC, 154 Wis. 2d 626, 631 (Ct. App. 1990). In Keeler, the Court of Appeals gave an example of the integration concept - a tinsmith was called upon to repair the gutter of a company engaged in a business unrelated to the repair or manufacture of gutters. Since the tinsmith's activities were totally unrelated to the business of the company retaining his services, his services were not "integrated" into the alleged employer's business, and were considered to be a factor evidencing an independent business. In this case, the claimant, as a business writer, performs services that are integrated into the business of City Business, a business publication.
g. The individual may realize a profit or suffer a loss under contracts to perform such services.
This condition is not met. This condition is identical to condition 8 under the old test, and warrants the same finding.
h. The individual has recurring business liabilities or obligations.
This condition is not met. This condition is identical to condition 9 under the old test, and warrants the same finding.
i. The individual is not economically dependent upon a particular employing unit with respect to the services being performed.
This condition is met. This condition replaces condition 10 under the old test - "The success or failure of the individual's business depends on the relationship of business receipts to expenditures". The Unemployment Insurance Advisory Council committee report states that "[f]or many years, economic independence has been acknowledged by the Commission and the courts as an important factor in the test applicable to government and nonprofit employers."
The economic dependence factor was addressed and interpreted in a published Court of Appeals decision,
Larson v. LIRC, 184 Wis. 2d 378, 392, 516 N.W.2d 456 (Ct. App. 1994), as follows:
[E]conomic dependence is not a matter of how much money an individual makes from one source or another. Instead, it refers to the survival of the individual's independently established business if the relationship with the putative employer ceases to exist.
The commission has relied on that reasoning in numerous subsequent cases. See, e.g., Williams v. MTEC, UI Dec. Hearing No. 07604021MW (LIRC Nov. 21, 2007) (instructor); Eichman v. Wisconsin Technical College System Foundation, UI Dec. Hearing No. 06003528JV (LIRC Jan. 18, 2007) (emergency preparedness workshop presenter); Ristau v. Fox Valley Symphony Orchestra Association Inc., UI Dec. Hearing No. 06401057AP (LIRC Aug. 23, 2006) (percussionist); Seftar v. Waukesha Symphony Inc., UI Dec. Hearing No. 01609181WK (LIRC April 25, 2002) (bassoonist). In each of these cases, if the individual's relationship with the employing unit at issue ceased to exist, the individual's business would continue. The commission looked at the specialized skills and/or investment in equipment that the individual had, supporting an ability to perform specific services for others, as well as the fact that the individual did such work for others, demonstrating the independence of the individual's work from that of the employing unit at issue.
In addition, in other cases in which an individual has performed services for multiple entities, the commission has considered whether the individual performed such services as part of an independently established business rather than as an employee, recognizing that individuals may work as acknowledged employees, holding several part-time jobs, or a part-time job and a full-time job.
See, e.g., Lopez v. County of Richland, UI Dec. Hearing No. 09003995MD (LIRC Jan. 15, 2010) (Spanish interpreter);
Dexter-Dailey v. Independent Disability Services, UI Dec. Hearing No. 07002206JV (LIRC Nov. 2, 2007) (caregiver);
County of Door, UI Dec. Hearing No. S0500025AP (LIRC March 28, 2007) (caregiver);
Barman v. Madison Metropolitan School District, UI Dec. Hearing No.
01005639MD (LIRC Oct. 1, 2002) (sports referee).(5)
Accordingly, in interpreting the new law, the commission has taken an approach that recognizes these various rationales. For example, in Bentheimer v. Bankers Life & Casualty, UI Dec. Hearing No. 10006546JV (LIRC Aug. 16, 2011), the claimant worked full-time for Bankers Life, an insurance company, and was clearly economically dependent on that business, as the commission found. Although she might move on to perform services for another insurance company if her relationship with Bankers Life ceased to exist, taking her skills and experience with her, she would not be doing so as an independently established business, but as an individual employee.
The commission notes that analysis of this condition must be made on a case-by-case basis, taking into consideration each claimant's circumstances and whether there are the characteristic signs of a viable independently established business. In this case, the claimant is attempting to establish herself as an independent journalist and communications professional. She has a skill set consisting of expertise in business-related matters and years of experience as a journalist, and she uses her skills and expertise in various ways. She teaches, apparently as an acknowledged employee, and she also enters into agreements with various business entities to write articles and proposals, to speak to groups, to consult, and to train. She attends networking meetings to expand her independent business opportunities. These various assignments and activities are consistent with a viable independently established business, whether she is considered a journalist, a communications professional, or something else. She holds herself out, under the rubric of a journalist or a writer, as able to perform each of these services, and she does so for numerous different entities. Most important, were her services for City Business to end, she would be able to continue performing these related kinds of services for various entities. The commission concludes that the claimant is not economically dependent upon City Business.
In sum, six of the nine conditions in the second part of the new test are met. Therefore, since the new Wis. Stat. § 108.02(12)(bm) requires that, first, the claimant be free from the control and direction of Spar, and second, that at least six of the nine conditions in the second part of the test be met for the claimant to be considered an independent contractor, the claimant must be considered an independent contractor, and her 2011 earnings from City Business will not be included in the department's computation of her base period wages.
The commission therefore finds that the claimant performed her services for City Business as an employee during the applicable base period quarters in 2010, and as an independent contractor during the applicable base period quarter in 2011.
The commission further finds that the claimant was erroneously paid benefits in
the amount of $27 per week for weeks 33, 34, 36 through 39, 41, and 42 of 2011,
amounting to a total of $216(6) for which she was not eligible and to which she was not entitled, within the meaning of Wis. Stat. § 108.03 (1), and pursuant to Wis. Stat. § 108.22 (8)(a), she is required to repay such sum to the Unemployment Reserve Fund.
The decision of the administrative law judge is amended as to the overpayment amount, is modified to conform to the above findings of fact and conclusions of law and, as modified, is affirmed in part and reversed in part. Accordingly, the wages paid to the claimant by City Business USA LLC in the second through fourth quarters of 2010, but not in the first quarter of 2011, shall be included in the department's computation of the claimant's base period wages for computing potential benefit eligibility. The claimant is required to pay the sum of $216 to the Unemployment Reserve Fund.
Dated and mailed March 28, 2012
elietan : 120 : 2
BY THE COMMISSION:
/s/ Robert Glaser, Chairperson
/s/ Ann L. Crump, Commissioner
/s/ Laurie R. McCallum, Commissioner
NOTE: The commission did not confer with the ALJ before reversing his decision relating to the claimant's 2010 base period wages, because its reversal is not based upon a differing view as to the credibility of witnesses, but instead upon a differing interpretation of the applicable law.
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