STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)
T-N-T EXPRESS LLC, Employer
STANLEY E TATE,
d/b/a TNT EXPRESS DELIVERY, Employer
UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Account No. 648687-3, Hearing No. S9700385
Account No. 610121-7, Hearing No. S9700386MD
An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued decisions in these matters. Timely petitions for review were filed.
The commission has considered the petitions 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:
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The Tate family operates a courier or delivery service. Prior to April of 1996, the business was operated as a sole proprietorship, owned by Stanley E. Tate, and doing business as TNT EXPRESS DELIVERY. Since then, the business has been a limited liability corporation (T-N-T EXPRESS LLC) and has done business under that name. As indicated in the caption, each of the two different business entities was given its own account number.
Approximately forty-four individuals performed delivery services for the two named employers in 1996 and 1997. Donna R. Perzewski was one such individual. She worked as a driver for T-N-T Express, LLC in 1997. In early 1998, she claimed unemployment insurance based on those services. A commission decision is being issued today in her benefit eligibility case, Hearing Number 98002259MD
Hearing Number S9700386MD addressed Unemployment Insurance contribution liability for the first calendar quarter of 1996, during which time the courier service was known as Stanley E. Tate, d/b/a TNT EXPRESS DELIVERY. The ATD in that case found that the drivers in issue were not employes of that business and reversed the initial determination dated September 25, 1997 that had held that the business was liable for $2,564.76 in contributions, plus continuing interest, for the first quarter of 1996.
Hearing Number S9700385MD addressed liability for the second through fourth quarters of 1996 and the first quarter of 1997. In that period, the courier service operated as TNT EXPRESS, LLC. The ATD in that case also found that the drivers in issue in that period were not employes and reversed the initial determination dated September 29, 1997 that had held that the business was liable for $4,721.42 in contributions, plus continuing interest, for the four quarters in issue.
The above-described two tax cases involved a total of 44 drivers identified by a department audit. At the combined hearing in these matters, testimony was taken from seven drivers, two of whom were subpoenaed as the department's witnesses.
It is undisputed that both the original sole proprietorship and the corporation were
covered by the Wisconsin Unemployment Insurance (UI) Act, based on employment of
individuals whose status as statutory employes is not in issue at this time (e.g.,
dispatchers).
Wis. Stat. § 108.02(12)(a) provides a statutory presumption in favor of employe status
where services are performed for pay. At subparagraphs b., c., and d., of that provision,
there are statutory exceptions to the otherwise conclusive presumption.
The individuals whose employment status is here in issue drive vehicles, including trucks as well as automobiles, in the performance of the services in issue. One of the statutory exceptions to the otherwise applicable presumption of employe status appears in Wis. Stat. § 108. 02(12)(c), which provides,
(c) Paragraph (a) does not apply to an individual performing services for a government unit or nonprofit organization, or for any other employing unit in a capacity as a logger or trucker if the employing unit satisfies the department:
1. That such individual has been and will continue to be free from the employing unit's control or direction over the performance of his or her services both under his or her contract and in fact; and
2. That such services have been performed in an independently established trade, business or profession in which the individual is customarily engaged.
The above-cited conditional exception to the presumption of employe status is not applicable to the cases under review herein. In Kanzelberger, (LIRC January 8, 1998), the commission adopted an analysis for determining the applicability of Wis. Stat. § 108.02(12)(c). Kanzelberger, like the cases here under review, involved individuals who performed courier delivery services. A determination as to whether (c) is applicable to courier drivers must begin with a determination as to whether they are "truckers," within the meaning of Wis. Stat. § 108. 02(12)(c).
"Trucker" is defined, at Wis. Stat. § 108.02(25e), as "a contract operator with a trucking carrier."
The term "contract operator" is defined at Wis. Admin. Code Ch. DWD 100.02(12) as, "an individual who contracts to lease a motor vehicle to a carrier for use in the carrier's business."
While there is no definition of "carrier" in Chapter 108 of the statutes, the applicable definition is provided at Wis. Admin. Code Ch. DWD 100.02(8).
(8) "Carrier" means a person engaged in the hauling of passengers or freight by motor vehicle and includes a person engaged as a "common motor carrier," under s. 194.01 (1), Stats., as a "contract motor carrier," under s. 194.01 (2), Stats., or as a "private motor carrier," under s. 194.01 (11), Stats.
The statutory definitions of the three categories of "carriers" incorporated into Wis. Admin. Code Ch. DWD 100.02(8) are sufficiently broad, individually and in the aggregate, that virtually any kind of courier service company would fall within their ambit. Accordingly, the courier service operated by Stanley E. Tate, d/b/a TNT EXPRESS DELIVERY, and subsequently operated by the business known as TNT EXPRESS, LLC, met the definition of "carrier" in Wis. Admin. Code Ch. DWD 100.02(8)
Neither the drivers in Kanzelberger, nor the drivers here in issue, leased their motor vehicles to the putative employers. In the absence of such a relationship, the drivers were not "contract operators." Accordingly, they were not "truckers," as defined by Wis. Stat. § 108.02(25e). Since they were therefore not "truckers" within the meaning of Wis. Stat. § 108.02(12)(c), the "independent contractor exception" there provided is not applicable.
There is yet another "independent contractor exception" at Wis. Stat. § 108.02(12)(d), but it would only be applicable if the drivers themselves were subject employers. There is neither evidence nor any assertion to that effect.
Wis. Stat. § 108.02(12)(b) is therefore the applicable provision under which to determine the employment status of the drivers here in issue. Under that provision, a putative employer has the burden of showing that both of the conjunctive tests for independent contractor status prescribed by Wis. Stat. § 108.02(12)(b)1., and Wis. Stat. § 108.02(12)(b)2., are satisfied with regard to the individuals in issue.
The first test, under Wis. Stat. § 108.02(12)(b)1., requires either: a showing that, in the year[s] in issue, any individual who is otherwise presumed to be an employe did, in fact, hold, or had applied for, a Federal Employer Identification Number (FEIN) while performing the services in issue, or a showing that the individual filed federal income tax returns as a business entity or as a self-employed individual, based on such services, for the year immediately preceding a year that is in issue. The ALJ found that this first test was met by the second alternative means. More specifically, the ALJ found that "virtually all" of the drivers filed business or self-employment income tax returns for the period of their work that was in issue.
The only bases in the hearing record for that finding are the testimony of the seven drivers who appeared, and the testimony of Stanley Tate that the situations of the drivers who testified for the named employers were typical of the situations of all of the drivers in issue.
The first statutory test may be satisfied by supplying one or the other of two kinds of documentary evidence, together with adequate authentication.
The commission considers that the firsthand testimony of the seven drivers who were at the hearing, together with the exhibits related to those individuals' income tax returns, established that the first test was met as to those seven drivers. One of the drivers, Donna R. Perzewski, held a FEIN in the period applicable to her situation.
The evidence provided by, and in relation to, the seven drivers who appeared was not sufficiently probative or representative to establish the highly individual facts as to whether each of the non-appearing drivers met the "FEIN or tax return" test.
The commission therefore finds that the named employers met their burden of showing that the first statutory test under Wis. Stat. § 108.02(12)(b)1. was satisfied as to the seven drivers who appeared, but the employers did not meet their burden under this test as to any of the other thirty-seven drivers in issue.
Since the first test (FEIN or business tax return) was met as to the seven drivers who testified, the second statutory test, provided at Wis. Stat. § 108.02(12)(b)2. (Wisconsin Statutes 1995-96), becomes dispositive as to those seven drivers.
The second, "eight condition" statutory test differs from the first statutory test in significant respects.
Wisconsin Statute § 108.02(12)(b)2. requires a putative employer to show that individuals whose employment status is in issue performed their services under at least six of the eight conditions there listed.
This second test is not susceptible to ready documentary proof. While several of the eight conditions refer expressly to documents (contracts), the language of the eight conditions makes it clear that the decision-maker is to address the actuality of an individual's relationship with a putative employer, in addition to the language of any contract or agreement that is in evidence. If this were not the legislative intent, the list of conditions would be reduced to a template for an "Independent Contractor agreement" that would render the test superfluous.
The actual nature of an employment relationship in fact is susceptible to proof by adequate representative testimony. Indeed, representative testimony may often be the only practicable source of such proof in a statutory administrative process dealing with large numbers of individuals.
Accordingly, the commission considers that the testimony of the seven drivers subpoenaed by the parties was reasonably and sufficiently representative to provide an adequate basis for findings as to whether the second, "eight conditions" test was satisfied as to all of the drivers here in issue.
The eight statutory conditions provided in Wis. Stat. § § 108.02(12)(b)2. a.-h., and the commission's related findings, are set forth below, seriatim.
"a. The individual maintains a separate business with his or her own office, equipment, materials and other facilities.
The focus of condition a. is upon determining whether a separate business is being maintained with the individual's own resources.
Condition a. does not expressly assign weight to the monetary value of specific resources; e.g., equipment, or an office in the individual's home. The commission has held, however that the size of an alleged independent contractor's overall investment, and the extent of his or her activities, are potentially significant facts for the purpose of determining whether the individual maintained a business separate from the business of a putative employer during the time in issue.
For example, in T & D Coils, Inc., (LIRC, December 15, 1999), the commission considered that an alleged independent contractor's personal investment in specialized equipment costing several thousand dollars was significant and that this investment, together with other considerations, showed that condition a. was met as to that individual. By contrast, each of the other alleged independent contractors in T & D Coils, Inc. owned $50-$200 worth of common hand-tools, and leased all other necessary equipment from an entity that was created by the putative employer for the purpose. A somewhat similar arrangement appears in the case under review. Exhibit 11 is the written agreement between Ms. Perzewski and TNT. Under Paragraph 7. of that form agreement, a driver agrees to supply a pager, a radio and a telephone. However, s/he can "lease" those items from TNT.
Here, none of the drivers had any significant investment in equipment or materials, and they did little, if any, record-keeping in their homes (none had business offices apart from their homes). Each individual owned the vehicle(s) s/he used to perform delivery services for TNT, but each individual used his/her vehicle(s) for all personal purposes as well.
The commission therefore finds that the named employers did not meet their burden of showing that condition a. was met as to any of the individuals in issue.
"b. The individual operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means and method of performing the services.
Condition b. requires that the individual operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means and method of performing the services.
Condition b. uses the plural form of the term "contract." The commission has construed this as an indication of legislative intent that evidence of multiple contracts is a necessary element for satisfying condition b. T & D Coils, Inc. A single, continuing contract with unchanging terms is indicative of a continuing employment relationship (an employe-employer relationship), while multiple contracts are indicative of a separate, independent business operation by the individual. Multiple serial contracts or multiple contemporaneous contracts in existence during the time in issue may satisfy the condition whether they are all contracts entered into by the individual and the putative employer, or some are between the individual and some business or individual other than the putative employer.
It is the plurality of the individual's contracts to perform services that provides a strong indication that the individual is operating a trade, business or profession that is independent of (separate from) the particular putative employer in a case under examination. The existence of bona fide multiple contracts tends to show that the individual either has multiple customers, or that s/he has periodic opportunities for "arms-length" negotiation with the putative employer as to the conditions of their relationship.
The named employers did not show that any of the drivers in issue had multiple contracts to perform specific services for specific amounts of money. Moreover, the single written agreement that is in evidence (Exhibit 11) does not provide the specificity that condition b. requires. The agreement does not address specific deliveries or the specifics of payment.
The other requirement of Condition b. is, essentially, that the alleged independent contractor must be free from the putative employer's control over the means and method by which the services are performed. There was testimony that Tate/TNT required the use of caps or jackets with the company logo, and the use of magnetic signs on delivery vehicles. While it was not shown that any significant degree of direct control over the drivers' performance of their services was actually exercised, that would not be necessary or feasible, given the type of services being performed.
The single, continuing and non-specific contract between each driver and the named employers did not satisfy the requirements of condition b.
The commission therefore finds that the named employers did not meet their burden of showing that condition b. was satisfied as to any of the drivers.
"c. The individual incurs the main expenses related to the services that he or she performs under contract.
The commission held in T & D Coils, Inc., that an appropriate application of this condition requires, first, a determination as to the specific services actually performed. Next, the expenses that were related to the performance of those services must be identified. A determination may then be made as to which of the related expenses were borne by the alleged independent contractor. Finally, based on those determinations, a determination can be made as to whether the main part of those related expenses was incurred by the alleged independent contractor.
This case involves couriers; i.e., individuals whose services consist of making light deliveries by means of motor vehicles. The couriers or drivers who testified all said they bore the expenses related to their vehicles. Those expenses were clearly the "main" or primary expense related to their work for the named employers. The drivers also used pagers, telephones and radios that they either purchased, or "leased" from Tate/TNT. Either way, the drivers also bore the expense of these items.
The commission therefore finds that the named employers met their burden of showing that condition c. was satisfied as to all of the drivers in issue.
"d. 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.
As in T & D Coils, Inc., the individuals in issue in the instant case were not held liable for a failure to satisfactorily complete a particular assignment. More specifically, it is clear that a driver who didn't satisfactorily complete a particular delivery assignment did not get paid for that delivery. However, there is no evidence that the driver was required to pay the employer's cost of completing the delivery (typically, payment to another driver), nor is there any indication that the driver would incur any other kind of penalty. As is true of most acknowledged employes who are paid for work actually performed, the driver would simply receive less pay.
The commission therefore finds that the named employers did not meet their burden of showing that condition d. was satisfied as to any of the drivers in issue.
"e. 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.
Here, the drivers received, for each delivery satisfactorily completed, a set percentage of the fee that Tate/TNT received from its customer; e.g., an air freight company. This constituted commission-basis remuneration within the meaning of condition e.
The commission therefore finds that the named employers met their burden of showing that condition e. was satisfied as to all of the drivers in issue.
"f. The individual may realize a profit or suffer a loss under contracts to perform services.
The drivers' vehicles represented a substantial investment in equipment that was essential to the performance of the services for which they were paid by the named employers.
The commission has found, above, that the main expense related to performance of the delivery services was vehicle expense, and that this expense was borne by the drivers. Condition f. requires a showing that the individual "may" suffer a loss (or realize a profit). There is no stated prerequisite that the individual must be maintaining a separate business within the meaning of condition a. in order for the individual's situation to meet condition f.
The commission concludes that an individual's economic endeavor may, depending upon the facts, present the possibility of profit or loss, within the meaning of condition f., whether or not that endeavor is deemed to meet the test for a separately maintained business under criterion a. If the statute did not contemplate such a result in appropriate cases, condition a. would emasculate conditions f., g., and h. (Conditions g. and h. specifically incorporate the term "business" and will be addressed below).
The commission considers that, on the facts in this record, certain reasonable inferences may be made as to likely scenarios in which an individual driver could suffer a loss within the meaning of condition f.
Assuming that a driver financed the purchase of his personally-owned vehicle and used it 80% of the time for deliveries, and 20% of the time for personal use, it seems likely that there could be periods in which his/her remuneration from Tate/TNT might be insufficient to meet even 80% of the vehicle payments and other, related expenses. There is no indication in the "independent contractor agreement," or elsewhere in the record, of any guaranteed minimum number of delivery assignments or guaranteed total amount of remuneration within any particular time period.
Condition f. requires only a showing that the individual "may" suffer a loss (or realize a profit).
The commission therefore finds that the named employers met their burden of showing that condition f. was satisfied as to all of the drivers in issue.
Conditions g. and h. both include the term "business." They will be discussed together.
"g. The individual has recurring business liabilities or obligations.
"h. The success or failure of the individual's business depends on the relationship of business receipts to expenditures."
For the same reasons discussed in connection with condition f., the commission considers that conditions g. and h. may be met, notwithstanding the finding that the condition a. test for a separately maintained business is not met in this case. The commission considers, again, that it cannot have been the intent of the legislature that conditions f., g. and h. may be satisfied only where condition a. has been satisfied. That would make condition a. a mandatory condition, on a par with the first statutory test under Wis. Stat. § 108.02(12)(b)1. If condition a. were intended to be mandatory, the structure of the statute would not be as it is. The existing structure is clearly intended to make the eight conditions in Wis. Stat. §§ 108.02(12)(b)2. a.-h. co-equal in the sense that the "independent contractor exception" is to apply wherever a putative employer meets any six of the eight conditions.
As to the application of condition g. in this case, the ALJ held that condition g. was met because the cost of vehicle insurance, borne by the drivers, would be affected by their business use of their vehicles. The commission considers that, on this record, the increased cost of insurance covering a vehicle that is used for commercial purposes is reasonably viewed as a business liability or obligation, within the meaning of condition g. The commission further agrees with the ALJ that payments under a vehicle purchase loan would also meet condition g. in this case, where use of the vehicle is the primary or "main" expense related to the individual's performance of services. The commission further considers that this situation is clearly distinguishable from, e.g., a situation in which a worker's primary work-related use of a personally owned vehicle is for transportation to and from a work-site, i.e., a use to which many acknowledged employes put their personally owned vehicles.
Where they exist, substantial installment payments, significant maintenance costs, and other similar obligations or liabilities are all recurring in nature and they are all relatively unavoidable--whether or not the endeavor or "business" is currently producing revenue--if the endeavor is to continue. The common denominators are substantiality, regular recurrence and unavoidability. As discussed above, an individual may be engaged in an endeavor that entails significant recurring obligations or liabilities even though that endeavor might not meet the test under condition a. for a separate business.
The commission therefore finds that the named employers met their burden of showing that condition g. was satisfied as to all of the drivers in issue.
As to condition h., the individuals in this case had receipts in the form of piece- work remuneration, fixed amounts set by the named employers for various kinds of deliveries and distances involved. Their receipts were therefore assured for such work as they performed. In this respect, they were, again, in the position of acknowledged employes who are paid on a piece-work basis.
If the individuals in issue chose not to accept a delivery assignment from one of the named employers, or if no such work was available at any given time, they would be unemployed insofar as the relationship here under consideration. However, these individuals had substantial necessary expenditures related to the ownership and maintenance of their delivery vehicles, as well as the cost of insuring the commercial use of the vehicles, as required by the named employers. Accordingly, the success or failure of each individual's endeavor was dependent upon the relationship between that individual's receipts in the form of delivery fees and his or her expenditures for a vehicle, as well as other equipment such as leased cellular telephones, radios or "beepers."
The commission therefore finds that the named employers met their burden of showing that condition h. was satisfied as to all of the drivers in issue.
The commission therefore finds that the named employers met their burden as to five of the eight conditions provided at Wis. Stat. § § 108.02(12)(b)2. a. through h. Specifically, they met their burden as to conditions c., e., f., g. and h. They did not meet their burden of proof as to conditions a., b. and d.
Accordingly, the commission finds that the named employers did not meet their burden of
showing that the seven individuals who met the first statutory test under Wis. Stat. §
108.02(12)(b)1. performed their services in relationships that met at least six of the
eight statutory conditions, as required by Wis. Stat. § 108.02(12)(b)2. a.-h.
The commission further finds that even if the first, "FEIN or tax return,"
statutory test had been met as to the other 37 drivers, the named employers also would not
have met their burden of proof under the second, "eight conditions" test as to
those 37 drivers.
All forty-four individuals in issue performed their services for the named employers in 1996 and 1997 as employes of the named employers, within the meaning of Wis. Stat. § 108.02(12).
Stanley E. Tate, d/b/a TNT EXPRESS DELIVERY, is liable for the payment of $2,564.76 in additional unemployment insurance contributions, together with continuing interest, for the first quarter of 1996.
TNT EXPRESS, LLC is liable for $4,721.42 in additional unemployment insurance contributions, together with continuing interest, for the second through fourth quarters of 1996 and the first quarter of 1997.
DECISION
The appeal tribunal decisions are reversed. Accordingly, all of the forty-four individuals in issue performed their services for the named employers in 1996 and 1997 as employes of the named employers, within the meaning of Wis. Stat. § 108.02(12).
Stanley E. Tate, d/b/a TNT EXPRESS DELIVERY, is liable for the payment of $2,564.76 in additional unemployment insurance contributions, together with continuing interest, for the first quarter of 1996.
TNT EXPRESS, LLC is liable for $4,721.42 in additional unemployment insurance contributions, together with continuing interest, for the second through fourth quarters of 1996 and the first quarter of 1997.
Dated and mailed February 22, 2000
t-n-t.srr : 200 : 5 EE 407 EE 410 EE 410.08 EE 410.09
EE 410.10 EE 421 PC 714.12 PC 717
/s/ David B. Falstad, Chairman
/s/ Pamela I. Anderson, Commissioner
/s/ James A. Rutkowski, Commissioner
MEMORANDUM OPINION
The named employers, the benefit claimant Donna R. Perzewski, and the department have each been represented by counsel in these combined proceedings. The commission carefully considers arguments presented to the commission but does not usually discuss arguments of parties in the commission's findings. The commission's following notes or comments as to specific arguments should not be construed as intended to address every argument advanced in these matters.
The department's attorney objected to Mr. Tate's testimony as whether individuals in issue but not at the hearing met the first statutory test under Wis. Stat. § 108.02(12)(b)1. The objection was based on the lack of any non-hearsay corroboration or foundation in the record. The ALJ overruled the objection and relied on the testimony in her ATD. In his argument to the commission, the department's attorney has pointed out that the commission held, in Cosgrove Construction, Inc. (LIRC June 30, 1999),
"On the issue of whether Ms. Dresen and Ms. Riesen had filed tax returns indicative of self-employment, the employer's witness, Mr. Cosgrove, provided only his own testimony that they had told him that. He did not bring to the hearing any corroborative documentary evidence regarding the individuals' tax returns, and did not obtain the appearance of the alleged employes. There is no contention that the employer even attempted, prior to the hearing, to obtain corroborating documentary evidence or to arrange for the individuals to appear and corroborate his hearsay testimony." (LIRC decision, p. 6)
The department's attorney has also pointed out in his brief to the commission that the statutes address the employment status of an individual.
It should also be noted that Wisconsin Admin. Rule Chapter 140.16 provides that, subject to some exceptions not applicable to this case, uncorroborated hearsay is not a sufficient basis upon which to decide an issue.
The employers' arguments on the hearsay issue. The brief filed with the commission on behalf of Tate/TNT initially cites the ALJ's ruling that the testimony was admissible, and her subsequent reliance on the testimony in her ATD. However, the commission is an original fact-finder under Chapters 108 and 102 of the statutes. The commission therefore acts de novo both as to findings and as to rulings on evidence.
The employers' attorney presents three other arguments that require attention.
The first of these arguments is based on an offer made by the employers' attorney at the end of the hearing. The offer was stated as follows,
"...if either the Appeal Tribunal or the Department might want any further evidence from them on any issue, including the threshold issue, the Tates would make every effort to accommodate any such request or demand. The same verbatim record will show that neither the Appeal Tribunal nor the department asked for or demanded any further proof from the Tates in the face of that offer."
This was not a specific offer of proof, and there was no request by the attorney to hold the hearing record open so that specific additional evidence could be supplied.
Without a specific offer of proof, the ALJ was not in a position to determine whether holding the hearing open would garner additional evidence that would be relevant, reasonably probative, and non-cumulative. Under these circumstances, and with no actual request to hold the record open, the commission sees no error or abuse of discretion in the ALJ's actions.
There are, in the commission's experience, cases in which a party is not represented by an attorney, but has apparently made a diligent or good-faith effort to bring necessary proof to the hearing, and is then surprised by the need for additional or different forms of proof. Examples would be copies of FEINs or tax returns for individuals in issue who were not at the hearing to testify.
Given the perennial complexity of independent contractor cases, if such a party asserts that s/he can promptly provide, after the hearing, some specifically identified evidence that would apparently be probative, relevant and non-cumulative, an ALJ who holds the hearing record open on his/her own motion to receive such evidence is acting reasonably, and well within her/his discretion.
This is not such a case. There was no sufficiently specific offer of proof on the part of the named employers, and no indication as to why all necessary proof was not available for the hearing.
In administrative law, and in civil litigation in general, it is not an unusual or obscure requirement that the situation of each individual involved in a case must be proven. However, the sponsor of the potential testimony of a large group of witnesses usually seeks leave to present representative testimony. Such rulings are usually obtained on the basis of a stipulation between parties, subject to approval by the judicial or quasi-judicial hearing officer. However, a hearing officer necessarily has inherent discretion to control the progress of a hearing and can, therefore, limit the number of witnesses by requiring representative testimony, whether or not s/he is asked to do so.
As the commission's decision indicates, the testimony of Mr. Stanley Tate and the seven driver-witnesses, as to the mandatory first statutory test (FEIN or business tax return), cannot be considered as sufficiently representative of the situations of all forty-four drivers in issue, absent any relevant documentation or other corroborating, non-hearsay evidence.
The second argument by the employers' attorney is that Wis. Stat. § 904.06(2) (part of the statutory rules of evidence), and a decision of the Wisconsin Court of Appeals require that the testimony of the seven driver-witnesses be treated as representative.
The case cited is Chomicki v. Wittekind, 128 Wis. 3d 188, 196 (Ct. App. 1985). In Chomicki, a woman sued her former landlord under the Wisconsin Fair Housing Act for allegedly sexually harassing her; specifically, she sued under the following provision,
106.04(2) Discrimination prohibited. It is unlawful for any person to discriminate:
(f) By refusing to renew a lease, causing the eviction of a tenant from rental housing or engaging in the harassment of a tenant.
The evidentiary statute cited by the employers' attorney provides,
904.06 Habit; routine practice. (1) Admissibility. Except as provided in s. 972.11 (2), evidence of the habit of a person or of the routine practice of an organization, whether corroborated or not and regardless of the presence of eyewitnesses, is relevant to prove that the conduct of the person or organization on a particular occasion was in conformity with the habit or routine practice.
The holding in Chomicki upon which the employers' attorney relies is to the effect that it was permissible to receive and rely upon the testimony of several other tenants to prove that the landlord had a "habit or routine practice of sexually harassing his tenants. The argument demonstrates resourcefulness but is not persuasive for the following reasons.
First, Wis. Stat. § 108.09(5)(a) provides, in pertinent part, that the conduct of hearings shall be governed by general department rules, whether or not they conform to common law or statutory rules of evidence and other technical rules of procedure.
Wis. Admin. Code Ch. DWD 140.16, entitled Admissibility of evidence, similarly provides,
(1) Statutory and common law rules of evidence and rules of procedure applicable to courts of record are not controlling with respect to hearings.
Moreover, the first, or threshold statutory test under Wis. Stat. § 108.02(12)(b)1. doesn't give any indication that the "habit or routine" of the seven drivers who testified (presumably, the habit or routine of getting FEINs and/or filing business tax returns) would even satisfy the requirement that the seven individuals in fact had FEINs during the specific times in issue, or that they filed business tax returns in the year specified by the statute (the year immediately prior to the year in issue). The test was met, as to those seven drivers, because they gave testimony specific to their situation in the specific year(s) in issue, and because the employers' exhibits corroborated their testimony. That is precisely what is missing, with regard to the situations of the other thirty-seven drivers, and it cannot be supplied, in the view of the commission, by saying that all forty-four drivers must have had the habit or routine of getting FEINs and/or filing business tax returns. Such matters are entirely too individualistic to be established by "representative" or hearsay testimony that is uncorroborated admissible probative evidence such as reliable documents.
The third argument of the employers' attorney is essentially a reasonableness argument. He asserts that the department's position (that the threshold requirement must be met as to each of the 44 individuals in issue in this case) "knows no limits," and could not be accommodated by the resources of the department and the commission.
It is undeniable that a standard operating procedure of obtaining testimony from; e.g., a hundred individuals in one case, fifty in another, etc., would not be feasible in a high-volume administrative process like unemployment compensation hearings. However, the argument ignores the fact that ALJs have discretion to utilize practical means of avoiding such a dramatic waste of resources, while preserving thoroughness and fairness. As already discussed, the employers' attorney could have sought a stipulation with the other parties, and/or a ruling regarding representative testimony from the ALJ, prior to the hearing. He could also have attempted either of those approaches during the preliminary discussion before the hearing was opened. He could have requested, during the hearing, or at its conclusion, that the hearing be held open, basing such request on a specific offer of proof. He may or may not have succeeded with one or more of those approaches, depending upon, e.g., his pre-hearing diligence. The point, however, is that apparently none of the listed possible actions was attempted (there is no claim to the contrary in the brief filed in behalf of the employers).
The commission does not agree with the department attorney's characterization of the commission's holdings in Care and Comfort Associates, Inc., (LIRC April 30, 1999) regarding the first of the eight conditions in Wis. Stat. § 108.02(12)(b)2.a. ("...maintains a separate business...").
The department's attorney characterizes the commission's view as being that condition a. is a "two-part" test, requiring both that a separate business is being maintained, and that the business has an office, equipment, materials, etc. (Department's Reply Brief, p. 6.) The commission has not made a finding to that effect. Instead, the commission's approach to applying condition a. has been that a separately maintained business is the requirement, and that the language regarding "an office, equipment, materials and other facilities" is a non-exclusive listing of factors that, where present, tend to show the maintenance of a separate business.
The commission's above notes or comments are not intended as criticism of those who have, in this case or in other recent cases, advanced the arguments discussed. Instead, the commission's observations are intended to provide some guidance as to the statutory interpretations and application likely to be applied by the commission in comparable future cases.
cc: ATTORNEY JORGE L FUENTES
DWD ENFORCEMENTS SECTION
ATTORNEY TERRY F PEPPARD
ATTORNEY JOHN C TALIS
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