BROYHILL FURNITURE INDUSTRIES, Employer
An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.
The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own, except that it makes the following modifications:
The final sentence of the fifth paragraph of the Findings of Fact and Conclusions of Law section (beginning with the words "The sales work he performed. . .") is deleted.
The sixth paragraph of the Findings of Fact and Conclusions of Law section is modified to read as follows:
Under the circumstances, the services performed by Jim Haugen met the requirements of Wis. Stat. § 108.02(15).
The seventh paragraph of the Findings of Fact and Conclusions of Law section is modified to read as follows:
The services performed for the appellant by Jim Haugen constituted employment in Wisconsin within the meaning of Wis. Stat. § 108.02(15), and the employer was liable for contributions and interest for the third calendar quarter of 2000 and the first calendar quarter of 2001 totaling $306.18.
The decision of the administrative law judge, as modified, is affirmed. Accordingly, the employer is liable for contributions and interest for the third calendar quarter of 2000 and the first calendar quarter of 2001 totaling $306.18.
Dated and mailed October 24, 2003
broyhfu . smd : 115 : 1 ET 495
/s/ David B. Falstad, Chairman
/s/ James T. Flynn, Commissioner
/s/ Robert Glaser, Commissioner
(a) "Employment", subject to the other provisions of this subsection, means any service, including service in interstate commerce, performed by an individual for pay.
(b) The term "employment" shall include an individual's entire service performed within, or partly within and partly outside, Wisconsin, if such service is "localized" in Wisconsin; and shall also include such service, if it is not "localized" in any state but is performed partly within Wisconsin, and if:
1. The base of operations, or, if there is no base of operations, then the place from which such service is directed or controlled, is in Wisconsin; or
2. The base of operations or place from which such service is directed or controlled is not in any state in which some part of such service is performed, but the individual's residence is in Wisconsin.
(c) An individual's entire service for an employer, whether performed partly within or entirely outside Wisconsin, shall be deemed "employment" subject to this chapter, provided both the following conditions exist:
1. Such service is deemed "employment" covered by this chapter pursuant to a reciprocal arrangement between the department and each agency administering the unemployment insurance law of a jurisdiction in which part of such service is performed; or no contributions are required with respect to any of such service under any other unemployment insurance law; and
2. The employer so elects with the department's approval and with written notice to the individual.
(d) An individual's entire service shall be deemed "localized" within a state, if such service is performed entirely within such state, or if such service is performed partly within and partly outside such state but the service performed outside such state is incidental to the individual's service within such state (for example, is temporary or transitory in nature or consists of isolated transactions).
The issue presented by this case is whether Jim Haugen's work for the employer constituted "employment" in Wisconsin within the meaning of Wis. Stat. § 108.02(15). If it did, the employer would be liable to Wisconsin for unemployment insurance contributions and interest for the 3d calendar quarter of 2000 and the first calendar quarter of 2001.
The statutory provisions cited above are derived from a uniform law, the provisions of which have been adopted in most states. The historical background and purpose of this uniform law were described in Claim of Mallia, 299 N.Y. 232, 86 N.E.2d 577 (N.Y. Ct. App. 1949) as follows:
The unemployment insurance laws of the various states, most of which were enacted during the decade of the depression, originally contained varying definitions of "employment" by which the scope of the several laws was to be determined. This led to uncertainty of application of those laws as to the payment of benefits and assessment of taxes upon employers, where a worker had performed services for a single employer in a number of states.
In 1937, after conferences among representatives of the various states and representatives of the national Social Security Board, a proposed uniform definition of "employment" was drafted for submission to the State Legislatures in order to eliminate such uncertainty. The purpose of that definition was stated by the Social Security Board as follows: "This definition is based on two principles: (1) All the employment of an individual should be allocated to one state and not divided among the several states in which he might perform services, and such state should, of course, be solely responsible for benefits payable to him; (2) the state to which his employment is allocated should be the one in which it is most likely that the individual will become unemployed and seek work."
That provision was adopted by New York and a large number of other states. . . The purpose of the Legislature is manifest upon the face of the statute and in the history of its adoption. It is to bring within the scope of the New York act those employees who work both in New York and one or more other states when the most substantial contacts of the employment are in New York. . . (citations omitted)
To that end, the uniform law, including the version adopted in Wisconsin, specified the following tests, to be applied consecutively, in the indicated order of preference, (1) to determine the state with which the employment had the most substantial contacts:
(1) the place where the work is "localized;"
(2) the site of the "base of operations;"
(3) the site of the "place from which such service is directed or controlled;"
(4) the site of the employee's residence.
It should be noted that the fact that Broyhill may have reported the wages at issue here to North Carolina in relation to the assessment of contributions for unemployment insurance in that state, is not material to the determination of whether Haugen's work in 2000/2001 constituted "employment" in Wisconsin within the meaning of Wis. Stat. § 108.02(15). See, Commonwealth ex rel. Division of Unemployment Ins. v. Goheen, supra.
The first question then is whether the services Haugen performed for the employer during the relevant time period were "localized" in Wisconsin. Wisconsin Statutes § 108.02(15)(d) provides that, in order for the record to support such a conclusion, the work performed by Haugen in Upper Michigan and in North Carolina would have to be incidental to the services he performed for the employer in Wisconsin, i.e., temporary or transitory in nature or consisting of isolated transactions.
LIRC precedent includes three cases decided in the 1960's and 70's. In the first (Case No. 64-A2193(C)), the claimant was a sales representative for a Wisconsin manufacturing company whose office and residence were in New York. LIRC concluded that occasional visits to Wisconsin for sales meetings were incidental and that the claimant's services, as a result, were localized in New York. In the second (Case No. 71-A-583), the claimant was a commission salesman for a Wisconsin corporation whose sale territory was located in Illinois but who made sales contacts with one retailer in Milwaukee, one in Neenah, and one in Madison, and these contacts occurred during 10 of the 38 weeks at issue. LIRC concluded that the Wisconsin contacts were incidental and that the claimant's services, as a result, were localized in Illinois. In the third case (Case No. 74-A-131EE), an equipment operator for a construction company generally worked in Wisconsin but had worked six weeks on a job site in Minnesota. LIRC concluded that the work performed in Minnesota was incidental to that performed in Wisconsin, and that the claimant's services, as a result, were localized in Wisconsin.
Cases from other jurisdictions provide further guidance. In Iverson Construction v. Dept. of Employment Svcs., 449 N.W. 356 (Iowa 1989), the Iowa Supreme Court, quoting Claim of Mallia, supra., and Heller v. International Transp., Inc., 94 Idaho 91, 481 P.2d 602 (1971), held that services that are a major, regular, enduring, and frequent part of the services performed for the employer are not incidental. In Iverson, the claimants worked for a Wisconsin construction company and rotated between projects in Iowa and projects in Wisconsin. The court concluded that the services of these claimants were not localized in Wisconsin or in Iowa.
In Baker v. County of Marquette, UI Hearing No. 01003754BO (LIRC Dec. 20, 2001), aff'd sub nom. County of Marquette v. LIRC and Baker et al., Case No. 02 CV 7 (Marquette Co. Cir. Ct. 2002), the commission, in interpreting the term "temporary" in another section of Wis. Stat. § 108.02(15), i.e., 108.02(15)(f)(5), held that "temporary" is not the same as "intermittent" or "irregular."
Considering the guidance provided by these decisions, Haugen's sales activities in Upper Michigan were not incidental to those in Wisconsin, i.e., they were a permanent and regular part of his sales activities, not a temporary part, and they occurred too frequently to be considered "isolated transactions."
The next question then is whether Haugen's "base of operations" was in Wisconsin. Although there is no LIRC or other Wisconsin precedent in regard to this question, there is guidance from other jurisdictions which have interpreted the uniform law in this regard.
Broyhill first cites in support of its position here an ATD issued on September 4, 1998, by DWD ALJ Paul Gordon in 1989 (In the Matter of Spartan Tool LLC, UI Hearing No. S9800109MW). Although this is clearly not precedent for the commission, this decision was reviewed. The claimant was a salesman for an Illinois company whose territory consisted of parts of Wisconsin and parts of Illinois. The claimant lived in Wisconsin and performed approximately 5% of his work responsibilities at the home office he had established at his residence, where he had a business telephone line, a FAX machine, and where he stored some of the employer's product. The remainder of the claimant's work time was spent in his van travelling to call on customers. The appeal tribunal concluded that the work the claimant performed at his office could have been performed in his van, and did not establish Wisconsin as his base of operations. The fact situation here is distinguishable. Haugen performed a significantly more substantial percentage of his work responsibilities in his home office and spent significantly more work time there than the employee in Spartan Tool. In addition, in the commisson's opinion, the appeal tribunal did not focus sufficiently on the types of work activities the claimant engaged in while present in his office in concluding that this office did not establish the claimant's base of operations in Wisconsin.
In Heller, supra., the court defined base of operations as "the place of a more or less permanent nature from which the claimant commences his work and to which he customarily returns in order to receive instructions and communications;" and concluded that factors such as "the place of beginning the service for which compensation is being paid, the place of re-supply of materials needed in the service, the place of repair of the machinery used in the service, the source of orders or directions for the services rendered, and the permanency of any of these places if they exist" should be considered in determining if there is a base of operations and where it is located. The court in Heller determined that, although the claimant's residence was in Idaho, the fact that only 5% of the loads he hauled originated in Idaho and only 3% terminated in Idaho, that he received his instructions from the employer when he reached his destination, and that he hauled loads all over the country, led to the conclusion that the claimant did not have a base of operations in Idaho.
In Iverson, supra., the court, citing Heller, supra., Claim of Mallia, supra., and Walco Leasing v. Bilich, 383 N.W.2d 374 (Ct. App. Minn. 1986), clarified that the focus of the term "base of operations" is upon the employee, not the employer. The court went on to conclude, citing Claim of Mallia, supra., that the employees had bases of operation in both Wisconsin and Minnesota; had not, as a result, satisfied the "base of operations" test; and the analysis would have to proceed to the next statutory test.
In Vale, supra., the New Jersey appellate court reiterated the test that the "base of operations" is the place of more or less permanent nature from which the claimant commences his work and to which he customarily returns in order to receive instructions and communications; and stated that relevant circumstances may include the place the employee receives his paycheck; the business address he has on his business cards; the place to which his business mail is addressed; the place where he receives his telephone orders; and the place he prepares any business correspondence, including expense vouchers.
In Walco Leasing, supra., the court held that, since all of the employee/driver's loads originated in Minnesota, he reported to the employer's offices in Minnesota to receive all his instructions, and his only connection to Wisconsin was the fact that transport vehicles were stored there, the facts of record supported a conclusion that the employee's base of operations was in Minnesota. See, also, Distribution Services, Inc., v. Comm. of Jobs and Trng, 435 N.W.2d 101 (Ct. App. Minn. 1989).
In Claim of Normyle, 550 N.Y.S.2d 118 (N.Y. Ct. App. 1989), the claimant worked as a sales representative for the employer, and would travel from her home for up to a week or two at a time, calling on retail stores in her territory, which included all or part of several states; the employee's home was not in New York and New York was not part of her sales territory; the employer would fix her schedule and send samples, display units, and promotional materials directly to the retailers; the claimant had no office and kept no "tools of the trade" at her home; sales orders would be forwarded directly from the retailer to the employer's New York corporate office; and the claimant sold no goods in New York but would come to New York City approximately three or four times a year to attend training programs and informal meetings with sales executives. The court held that a "base of operations" must involve something more than the place where an employee starts and finishes a business trip and receives occasional telephone calls from her employer and concluded, as a result, that neither New York nor the claimant's state of residence was her "base of operations."
In S.E.A. Trucking v. State of Montana, 269 Mont. 108, 887 P.2d 236 (1994), the Montana Supreme Court defined "base of operations" as: the place of more or less permanent nature from which the employee starts his work and to which he customarily returns in order to receive instructions from the [employer] or communications from his customers or other persons, to replenish stock or other materials, repair equipment, or to perform any other function necessary to exercise his trade or professions at some other point or points. Applying this test, the court held that drivers who were dispatched out of Montana by the employer which had an office in Montana responsible for maintaining day-to-day contact with and supervising these drivers, prepared its payroll in Montana, made its final hiring decisions in Montana, and performed most of its truck maintenance in Montana, had their base of operations in Montana even though the employer's corporate offices were in Wyoming.
Here, the guidance provided by these cases, as well as common sense, dictates that Haugen's base of operations was in Wisconsin. He did more than receive occasional phone calls from the employer there. Instead, his home office in Stevens Point was the permanent place from which he communicated with the employer and with his retail customers, to which the employer directed many of its communications to him, where he maintained an office in which he conducted business, where the employer sent sales and promotional materials and the claimant maintained them, and from which the claimant left for sales trips and to which he returned. The employer argues that North Carolina should be regarded as the claimant's base of operations since the sales orders he took from retail customers were subject to the approval of the corporate office in North Carolina, and because the claimant was closely supervised by the regional sales manager located in North Carolina. However, these are elements of the third factor, i.e., direction and control. Just as the location of an employee's base of operations is not determined by his state of residence (the fourth factor), it is also not determined by the source of direction and control over his services(third factor).
The commission concludes that the record here establishes that Haugen's most substantial employment contacts were in the state of Wisconsin.
Attorney Jeff Cowan
Attonrey Jorge L. Fuentes
Appealed to Circuit Court. Affirmed March 24, 2005.
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(1)( Back ) Commonwealth ex rel. Division of Unemployment Ins. v. Goheen, 372 S.W.2d 782 (Ct. App. Ky. 1963); Vale v. Gaylords National Corp., 127 N.J. Super. 45, 316 A.2d 56 (Sup. Ct. N.J. 1974); Claim of Mallia, supra.