Wisconsin Labor and Industry Review Commission --
Summary of Wisconsin Court Decision relating to Unemployment Insurance

Subject: Start Renting Inc. v. LIRC and Wisconsin Department of Workforce Development, Case 09-CV-2872 (Wis. Cir. Ct., Dane Co., October 29, 2009)

Digest Codes: EE 407 EE 410.03 EE 410.04a EE 410.06 EE 410.08 EE 410.09

Start Renting Inc. distributes magazines and other publications to locations in Madison, Milwaukee and the Fox River Valley, through delivery drivers who have routes they are responsible for. The drivers use their own vehicles, cover their own expenses, and are paid “per drop”. DWD determined that the drivers were employees under the UI Act, rather than independent contractors, and after hearing an ALJ affirmed. On appeal, LIRC"s decision modified and affirmed the ALJ"s decision. Start Renting appealed.

Held: Relying on Gary Gilbert v. LIRC & DWD, 2008 WI App 173, 315 Wis. 2d 726, 762 N.W.2d 671, the court holds that LIRC"s interpretation and application of Wis. Stat. § 108.02(12) is entitled to great weight deference.

Regarding criterion 3, these drivers" personal vehicles used to deliver magazines are a far cry from the Kenworth semi-tractor found in Floerchinger v. Nestle Transportation, (LIRC Aug. 15, 2001) to have helped satisfy the parallel “separate business w. office, equipment, materials and other facilities” element of the WC employee test. Regarding criterion 4, these drivers had single contracts with the putative employer, and no contracts with any other entity; this is not close to the multiple separate jobs contracted for in other cases in which individuals were found to meet this criterion. Regarding criterion 6, nothing in the drivers" contracts addressed any particular consequence of failure to perform the contract, and while termination would probably be likely in that case, that is true of employees also; something more than that is the earmark of the independent contractor's status. Regarding criterion 7, while the question presents a “close call”, the court cannot say that LIRC was unreasonable in concluding that pay on a “per drop” basis was akin to piecework and thus did not satisfy this criterion. Regarding criterion 8, LIRC was unreasonable in concluding that there was not realistic possibility of profit or loss – they are responsible for all expenses, and volatile gas prices or a cataclysmic vehicle failure could easily put a driver in the red. Regarding criterion 9, LIRC reasonably interpreted this as requiring expenses incurred even in periods when no work is being done.

Start Renting"s “equal protection” argument is rejected; it has failed to develop its argument by failing to identify what it alleges are similarly situated businesses that are receiving different treatment. Start Renting's argument that the decision violates the Contracts Clauses of the U.S. and Wisconsin constitutions is also rejected. Start Renting is free to hire and contract with whomever it wishes; what it can"t do is avoid its unemployment compensation responsibility by hiding behind a false veil of claimed independent contractor status.

Appealed to the Court of Appeals. Affirmed, unpublished per curiam decision, December 30, 2010. Petition for Supreme Court review denied, April 12, 2011.

Please note that this is a summary prepared by staff of the commission, not a verbatim reproduction of the court decision.

[ Search UC Decisions ] - [ UC Digest - Main Index ] - [ UC Legal Resources ] - [ LIRC Home Page ]