STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

DAVID P PETRAUSKI, Employer
PETRAUSKI ROOFING

UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Account No. 681945, Hearing No. S9800206MW

An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own, except that it makes the following modifications:

1. On page 3 of the Appeal Tribunal Decision, the first, second and third paragraphs are deleted.

2. The deleted portion of the Appeal Tribunal Decision is replaced with  the following:

It was not established at the time of hearing that Mr. Voechting had filed business or self-employment federal income tax returns for the 1995, 1996 or 1997 tax years. Mr. Voechting acknowledged that he did not keep track of his business expenses and did not pay social security taxes on the money paid to him by Petrauski for the three months in 1996 in which he performed services for Petrauski.

While Mr. Voechting had not filed income tax returns for 1997 as of December 18, 1998, the date of hearing, he subsequently filed those returns and Mr. Petrauski supplied copies to the department.

Mr. Petrauski has not established that Mr. Voechting held or applied for an employer identification number with the Federal Internal Revenue Service during the time periods in issue. Therefore, the exception provided at Wis. Stat. § 108.02(12)(b)1.a. is inapplicable and cannot meet the first part of the conjunctive test for overcoming the presumption of employe status.

As to the alternative means for showing an exception to the first part of the conjunctive test, Mr. Voechting's income tax returns for 1997, including the "Schedule C" therein, have been supplied by Mr. Petrauski. They were not available, by the exercise of due diligence, at the time of the hearing. The federal return establishes that Mr. Voechting filed a business or self-employment return for 1997, within the meaning of Wis. Stat. § 108.02(12)(b)1.b. However, under that provision, the effect of such a return is only upon calendar quarters in issue that follow the tax year for which the return was filed.

Accordingly, the 1997 return could affect, at most, the first calendar quarter of 1998, by meeting the first part of the conjunctive statutory test for overcoming the presumption of employe status as applied to that quarter only. Moreover, even as to that quarter, there remains the additional (conjunctive) requirement of satisfying at least six of the eight criteria listed in Wis. Stat. § 108.02(12)(b)2.a.-h.

When the 1997 tax returns supplied after the hearing are considered, the first part of the conjunctive statutory test for an exception to the presumption of employe status has been met as to one of the six calendar quarters in issue (specifically, the first quarter of 1998).

Robert Voechting's services in the fourth quarter of 1996 and in all four quarters of 1997 must be deemed to have been performed as an employe because the first of the conjunctive statutory tests clearly was not met by evidence presented at the hearing.

An analysis as to whether the second statutory test was met by Petrauski for the first quarter of 1998 is necessary. It is appropriate to expand that analysis to cover all quarters in issue (the six quarters from the fourth quarter of 1996 through the first quarter of 1998). It is also appropriate to examine the applicability of each of the statutory criteria in the second conjunctive statutory test, to conserve administrative and (possibly) judicial resources.

The second conjunctive statutory test requires a putative employer to demonstrate that at least six of the eight criteria in Wis. Stat. § 108.02(12)(b)2.a.-h. are satisfied. The criteria were set forth verbatim earlier in this Appeal Tribunal Decision and will not be repeated here. The following analysis addresses the application of those criteria to the facts of this particular case.

a. Petrauski did not show that Mr. Voechting maintained a separate business with his own office, equipment, materials and other facilities. Mr. Voechting testified that in 1997 (in which four of the six quarters in issue fall), he did not have a going business that he could have sold. There was no showing at the hearing that Mr. Voechting had a business with transferable value in the other quarters in issue. Mr. Voechting further testified that he did not have a business office and that he used the address of his apartment for business purposes.

During the quarters in issue, Mr. Voechting performed his services for Petrauski with his own hand tools and equipment. Those items fit in the trunk of his Cavalier automobile. He required only one ladder and transported it on the roof of the Cavalier. He subsequently acquired a pick-up truck during the period in issue; both vehicles were also used as family transportation. The roofing materials he installed were supplied by Petrauski or, occasionally, the customer. On occasion, Mr. Voechting had his own nails and used them while working for Petrauski on a roofing "job" (a specific installation or repair). Petrauski would then pay Mr. Voechting for the nails.

Under these circumstances, Mr. Voechting did not maintain a business separate from that of Petrauski. Criterion a. was not satisfied.

b. On September 27, 1997, Mr. Voechting signed a document supplied by Petrauski's accountant that purported to make Mr. Voechting an independent contractor in his relationship with Petrauski. That purported "contract" does not bear the signature of anyone identified in the document as representing Petrauski; the only signature other than Mr. Voechting's is that of a Notary Public apparently authenticating Mr. Voechting's signature. Even if this document were to be construed as a contract between Mr. Voechting and Petrauski, it would not constitute a contract "to perform specific services for specific amounts of money". No other purportedly qualifying contracts, written or parol, were shown by the testimony. Accordingly, Criterion b. is not satisfied.

c. The main expenses related to the services that Mr. Voechting performed for Petrauski consisted of payment for roofing materials. Those expenses were not incurred by Mr. Voechting; they were usually paid by Petrauski but occasionally were paid by Petrauski's customer; e.g., a homeowner.

Mr. Voechting testified that he had liability insurance in his name while he performed services for Mr. Petrauski. The department attorney did not dispute that fact. However, criterion c. looks at who pays the main expenses related to the services performed under contract. Leaving aside the fact that Mr. Voechting did not perform the services in issue under contract (as discussed in relation to criterion b., above), he also testified that the liability insurance cost him $211 per year. Given the cost of roofing materials, this was clearly not a main expense related to the services performed by Mr. Voechting. Criterion c. was not satisfied.

d. Petrauski testified that he (Petrauski) would be liable if Mr. Voechting were to fail to satisfactorily complete a roofing job for one of Petrauski's customers. Accordingly, Criterion d. was not satisfied.

e. Mr. Voechting received compensation for services performed for Petrauski on a per-job basis. Accordingly, Criterion e. was satisfied.

f. Mr. Voechting testified that there was no way he could lose money on work he performed for Petrauski. In that arrangement, he was not subject to the entrepreneurial risk of profit or loss. Accordingly, Criterion f. was not satisfied.

g. Mr. Voechting had no recurring business liabilities or obligations. He did pay $211 for liability insurance covering himself during the period in which he performed services for Mr. Petrauski. That payment did not constitute a business liability or obligation; this is so because, for reasons stated herein, Mr. Voechting had no business separate from the business of Mr. Petrauski. The insurance covered Mr. Voechting as an individual. The employe definition statute assigns no specific weight to whose name is on an insurance policy, just as it gives no controlling weight to the existence of a "contract" or "agreement" that purports to make a worker an "independent contractor". One purpose of the statute is to make it clear that it is the department, not individuals with a personal interest, who must determine employment status for U. I. purposes. The department makes such determinations based on the specific criteria published in the statutes. If the law were otherwise, it could be manipulated by individuals seeking to avoid employe or employer status. For example, in order to get work, an individual might be willing to sign a document, or to take some relatively inexpensive action, so that a purchaser of the worker's services could avoid liability for unemployment insurance taxes. As to the intent of Mr. Voechting and Mr. Petrauski in this case, the Commission need not, and does not, make any determination. However, regardless of their intent, Criterion g. was not satisfied.

h. Mr. Voechting had no separate business of his own during the quarters in issue. He was a skilled tradesman practicing his trade in an employment relationship with Petrauski. Accordingly, Criterion h. was not satisfied.

The first conjunctive statutory test was met only as to the first calendar quarter of 1998. Even as to that quarter, only one of the eight statutory criteria in the second conjunctive test was satisfied.

DECISION

The decision of the administrative law judge is modified to conform with the foregoing and, as modified, is affirmed. Accordingly, David P. Petrauski, Petrauski Roofing, is liable for Wisconsin Unemployment Insurance taxes based on services performed by Robert Voechting from the fourth quarter of 1996 through the first quarter of 1998. Thereafter, Mr. Voechting was not an employe of Petrauski.

Dated and mailed May 28, 1999
petrada.smd : 200  EE 410  EE 410.05  EE 410.09

/s/ David B. Falstad, Chairman

/s/ Pamela I. Anderson, Commissioner

/s/ James A. Rutkowski, Commissioner

NOTE: The Appeal Tribunal's ultimate findings, in the paragraph preceding the DECISION paragraph, are not modified by the Commission - they remain the same.

MEMORANDUM OPINION

After filing his petition, Mr. Petrauski sent another letter to the Commission, enclosing several documents that had not been presented at the hearing. One of the documents is a "Certificate of Liability Insurance" indicating that a "commercial general liability insurance" policy naming Robert Voechting as the insured was in effect from March 10, 1997 through March 10, 1998.

At the hearing, Mr. Voechting testified that he had liability insurance in his name. The department's attorney did not dispute that fact, and the Commission has modified the Appeal Tribunal's findings to include that fact. The liability insurance is discussed in the modified findings regarding Criteria c. and g. However, the second statutory test for independent contractor status does not assign weight to the existence of such an insurance policy; indeed, the criteria contain no specific reference to insurance.

Moreover, there is no indication in this case that the insurance certificate could not have been obtained, by the exercise of "due diligence", in time to offer it as an exhibit at the hearing. Due diligence is a court-developed standard for determining whether evidence should be considered when it is offered after a hearing has been completed. Assuming that the certificate had been brought into the hearing record, it would arguably corroborate Mr. Voechting's testimony that he had liability insurance in his own name. However, that fact was undisputed and additional corroboration would not affect the outcome in this case for reasons discussed above in relation to Criteria c. and g.

Other documents sent to the Commission by Mr. Petrauski after the hearing include copies of Mr. Voechting's 1997 Federal and State income tax returns. The federal return includes a "Schedule C" entitled "Profit or Loss from Business (sole proprietorship)."

It is undisputed that the tax returns were not available at the time of the hearing. Accordingly, there has been no apparent lack of "due diligence" by Mr. Petrauski in supplying these documents to the Commission. However, the tax returns submitted by Mr. Petrauski do not change the result in this case for the reasons discussed above in the Appeal Tribunal's findings as modified by the Commission (essentially, because the tax returns could affect, at most, only the first quarter of 1998, and do not affect even that quarter because the second statutory conjunctive test was not met).

Mr. Petrauski also submitted a copy of a "corrected" Federal tax form 1099-MISC, purporting to show that payments to Mr. Voechting in 1996 were "nonemployee compensation." There is no indication that this document was not available, with the exercise of due diligence, for presentation at the hearing. Even if it were considered, the form represents an interested party's labeling of income. Such a form is not given specific weight under the statutes in issue and in this case there are no circumstances, in the view of the Commission, that would justify treating the form as affecting the result.

cc: ATTORNEY PETER W ZEEH
ENFORCEMENTS SECTION

BILL & LINDA DUEHRING
DUEHRING'S TAX SERVICE

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