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

WISCONSIN SOCCER ASSOCIATION, Employer

UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Account No. 282886, Hearing No. S0400035MW


An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development ("department") issued a decision in this matter on May 22, 2007. That decision found that certain individuals performed soccer refereeing services for the Wisconsin Soccer Association (WSA) as independent contractors, and that certain other individuals performed services as soccer coaches and trainers for WSA as employees, within the meaning of Wis. Stat. § 108.02(12). The last day on which a petition for review of the ALJ's May 22, 2007 decision could be timely filed was June 12, 2007.

On June 12, 2007, the department filed a petition for review of the ALJ's decision that the referees were independent contractors.

WSA also filed a petition for commission review. WSA's petition, which sought review of the ALJ's decision that the coaches and trainers were employees, was filed by FAX to the department on June 12, 2007, and by mailing of two copies of the petition to the department on that same date. It is conceded by the department that at least one copy of this petition was in fact received by the department and was postmarked June 12, 2007. However, for undetermined reasons, the department did not make any entry in its computerized case record indicating that a timely petition for review had been filed by WSA. In addition, the case file which the department transmitted to the commission for it to conduct its review (pursuant to the department's filing of a petition) did not contain a copy of WSA's petition, or any other indication that WSA had filed such a petition. The commission therefore proceeded to review the case based on a belief that the only petition for review filed had been the department's. Because the department had not requested a briefing schedule, the commission conducted and completed its review without any further contact with the parties.

The commission issued a decision in the case on August 30, 2007, modifying the ALJ's decision to substitute a conclusion that the referees were employees, and affirming the decision as thus modified. The commission affirmed the part of the ALJ's decision which had found that the coaches and trainers were employees, but did so without discussion of the merits, basing that decision instead on a conclusion that the ALJ's ruling on that issue was conclusive under Wis. Stat. § 108.10(6) because WSA had not filed a petition for review.

Shortly after the commission's decision was issued, WSA contacted the commission and asserted that it had in fact filed a petition for review, with a request for a briefing schedule. In response, the commission on September 6, 2007 issued an Order under its authority in Wis. Stat. § 108.09(6)(b), which set aside its August 30, 2007 decision pending further consideration. WSA subsequently submitted materials supporting its assertions, and counsel for the department filed a response which, inter alia, acknowledged receipt of one copy of WSA's petition for review satisfying the requirements for timely filing. On that basis, the commission informed the parties that because it had been established that WSA had filed a timely petition for review and requested a briefing schedule, the commission would accept and consider briefs from the parties and would then issue a new decision.

The department filed a brief with the commission on October 10, 2007. WSA filed a brief with the commission on October 12, 2007. The commission has now considered the petitions and the written argument filed by the parties, and it has reviewed the evidence submitted to the ALJ.  (1)

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. Delete the second and third paragraphs on page 4 of the ALJ's decision, and substitute therefor the following:

The WSA has the purpose of the promotion of soccer, it provides various forms of support to soccer clubs which engage in matches that are refereed, and it sponsors and oversees the state cup tournament in which all matches must necessarily be refereed. The refereeing services provided by the referees whose status is at issue here are directly connected to, and in fact essential to, these main purposes and activities of WSA. Thus analysis of the first Keeler factor, "integration", supports a conclusion that the referees were engaging in their services as employees.

The referees obtain work refereeing state cup semi-final and final matches by being selected and assigned to particular matches by assignors who WSA engages through the Wisconsin Program for Referee Development. WSA has no say in who will referee the events. Because of this particular method of selection and assignment of referees, obtaining work refereeing state cup semi-final and final matches is not affected by any actions the referees may take to hold themselves out to WSA or its member clubs as willing and able to provide refereeing services. The type of "advertising or holding out" contemplated by the second Keeler factor is not present here.

With respect to the third Keeler factor, "entrepreneurial risk", there was no realistic possibility that a referee who was engaged in the activity of refereeing in order to obtain income, would experience a net loss through engaging in that activity. The expenses involved in being available and prepared to referee soccer matches are primarily the cost of equipment, which may amount to a couple hundred dollars on an annual basis. However, these expenses cannot be considered to be entirely attributable to the activity of coaching state cup matches, since the investment in equipment also serves to make the referee available and prepared to referee other soccer matches in the regular WYSA season and for high school, college and adult teams, which can generate significantly more income. Referees may officiate from 3 to 10 matches in the course of a state cup. Fees for refereeing may range from $20 to $40 per match. Thus referees may earn from $60 to $400 over the course of working a state cup. Considering the limited proportional extent to which the referees' overall expenses could be attributed to state cup officiating activities, engaging in such activities presented no significant "entrepreneurial risk".

The only thing connected with their refereeing activity which the referees could freely transfer, was their clothing and equipment. However, the Keeler court explained that finding that an individual had a "proprietary interest" in a business required more than this: "it also includes the more sophisticated concept of proprietary control, such as the ability to sell or give away some part of the business enterprise". 154 Wis. 2d at 634. The only way it could be said that the referees had such an ability, would be if it had been established that a referee who had been assigned to officiate at certain state cup matches had the unfettered ability to unilaterally transfer that right to some other referee. However, this was not established by the record. On the contrary, the evidence that designation of referees to particular state cup matches was made by assignors, suggests that referees could not assume that role themselves by effectively "assigning" some other referee to matches that they had initially been assigned to. For these reasons, the fifth Keeler standard, "proprietary interest", was not shown to be satisfied.

While the referees were not economically dependent on WSA state cup matches, since these constituted but a small proportion of the refereeing work available and routinely performed by referees, the same pattern might be seen in individuals who engage in concurrent employment for a number of different employers, in work of a kind not offered in a significant enough quantity by any one employer to sustain an individual employee. More important, considering that the "economic dependence" factor is but one of five, and that analysis of each of the other four Keeler factors indicates employee status, this one cannot be seen as dispositive. The Keeler factors are not strict tests but instead guidelines, to be analyzed in light of the public policy of more fairly sharing the economic burdens of unemployment for those economically dependent on another, not those who pursue an independent business. The weight given to the various factors and the importance of each varies according to the specific facts of each case. 154 Wis. 2d at 634. Considering the peculiar nature of the activity involved here and taking that into account in considering what weight to give the factors, it is reasonable to conclude that the referees are providing their services in a way much more characteristic of an employee than of an independent business.

In view of all of the above, it is determined that the individuals performing services for WSA as referees were not performing such services in an independently established trade, business or profession in which they were customarily engaged, within the meaning of Wis. Stat. § 108.02(12)(c)2. For this reason, it is determined that the individuals performing services for WSA as referees were doing so as "employees" of WSA, within the meaning of Wis. Stat. § 108.02(12).

2. Delete the third, fourth and fifth full paragraphs on page 5 of the ALJ's decision (2),  and substitute therefor the following:

In view of all of the above, it is determined that the individuals performing services for WSA as coaches were not free from the control or direction of WSA over the performance of their services both under their contracts and in fact, within the meaning of Wis. Stat. § 108.02(12)(c)1., and that such services were not performed in an independently established trade, business or profession in which they were customarily engaged, within the meaning of Wis. Stat. § 108.02(12)(c)2. It is further determined that the individuals performing services for WSA as trainers were not performing such services in an independently established trade, business or profession in which they were customarily engaged, within the meaning of Wis. Stat. § 108.02(12)(c)2. For this reason, it is determined that the individuals performing services for WSA as coaches and trainers were doing so as "employees" of WSA, within the meaning of Wis. Stat. § 108.02(12).

3. In the first paragraph on page 6 of the ALJ's decision, delete the words "for work performed as referees and".

DECISION

The decision of the administrative law judge, as modified, is affirmed. Accordingly, Wisconsin Soccer Association is liable for contributions and interest for the four calendar quarters of 2002 and the first two calendar quarters of 2003, in the amounts to be determined by the department in accordance with this decision. This matter is remanded to the department for a determination of liability based upon the findings of fact and conclusions of law. Exhibit No. 3 which was received at the hearing provides the details necessary for these adjustments.

Dated and mailed December 7, 2007
soccerassoc2 . smd : 110 : 8  EE 412  EE 413

/s/ James T. Flynn, Chairman

/s/ Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner


MEMORANDUM OPINION

The audit and resulting determination in this status case found that certain individuals performed coaching, refereeing and other services for Wisconsin Soccer Association ("WSA") as its employees rather than as independent contractors. WSA appealed. After hearing, the ALJ decided that the individuals who performed coaching and other services were WSA's employees, but that the individuals who performed refereeing services were independent contractors. The department has petitioned for review, objecting to the decision that the referees were independent contractors. WSA has also petitioned for review, objecting to the decision that the coaches and trainers were employees.

The threshold question in an appeal of a department determination that certain individuals were "employees" of a putative employer, is whether the department met the burden imposed on it by Wis. Stat. § 108.02(12)(a) to show that those individuals performed services "for" that putative employer. If the department establishes that, then the burden of proof shifts to that putative employer to establish an applicable exceptions as provided for in Wis. Stat. § 108.02(12)(b), (bm), (c), (d), (dm) and (dn).

There appears to be no dispute that the individuals at issue here provided services "for" WSA within the meaning of Wis. Stat. 108.02(12)(a).  (3)   Thus, WSA bore the burden of establishing that all of the conditions necessary to the applicability of an exception were satisfied. Because the WSA is a nonprofit organization, the exception which would have to be established is subs. (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.
 

Referees -- "Independently established" --

DWD specifically disclaimed any challenge to the ALJ's determination that the referees provided their services "free from... direction and control" of WSA within the meaning of Wis. Stat. § 108.02(12)(c)1. The question is therefore whether the referees were shown to have satisfied the "independently established" test.

In Keeler v. LIRC, 154 Wis. 2d 626, 631 (1990), the Court of Appeals identified five "interrelated factors" to be analyzed in deciding whether the "independently established" test was met:

1. Integration. This factor is best explained by example as the court did in [Moorman Mfg. Co.] The court illustrated this factor by using the example of a tinsmith called upon to repair a company's gutters when the company is engaged in a business unrelated to either repair or manufacture of gutters. Because the tinsmith's activities are totally unrelated to the business activity conducted by the company retaining his services, the services performed by the tinsmith do not directly relate to the activities conducted by the company retaining these services and these services were therefore not integrated into the alleged employer's business.

2. Advertising or holding out. This factor cited in [Princess House], deals with the concept that a truly independent contractor will advertise or hold out to the public or at least to a certain class of customers, the existence of its independent business.

3. Entrepreneurial risk. The supreme court in Princess House noted that a truly independent businessman will assume the financial risk of the business undertaking. Id.

4. Economic dependence. If an examination of the economic relationship establishes that the alleged employee is independent of the alleged employer, performs services and then moves on to perform similar services for another, it is proof of an independent trade or business. On the other hand, if the economic relationship shows a strong dependence by the alleged employee on the alleged employer, the public policy behind the Unemployment Compensation Act would suggest that the dependent person have access to unemployment compensation benefits. Id.

5. Proprietary interest. In Transport Oil, 54 Wis. 2d at 256, 195 N.W.2d at 649, the factor of whether the alleged employee had a proprietary interest in his business is used to determine whether the business was independently established. While the factor includes the ownership of the various tools, equipment, or machinery necessary in performing the services involved, it also includes the more sophisticated concept of proprietary control, such as the ability to sell or give away some part of the business enterprise.

154 Wis. 2d at 633-34.

The department argues, in its petition for review and again in its brief, that the ALJ failed to properly apply or consider the "independently established" test in Wis. Stat. § 108.02(12)(c)2., and that the appropriate decision based on this record is that the referees did not perform their services in an independently established trade, business or profession in which they were customarily engaged. Specifically, the department argues that the referees' services were integrated with the activities of WSA's business since one of its activities was sponsorship of a State Cup tournament of which referees were a necessary part. It argues with respect to the advertising or holding out factor that there was little or no evidence of real solicitation of work other than through directory listings, and it also points to the fact that the WSA used schedulers to obtain and schedule the services of referees. It argues with respect to the entrepreneurial risk factor that there was no serious possibility that the small investment necessary for referees to perform their services would not be recouped through the performance of those services. It argues with respect to the economic dependence factor that while they performed services for other entities, there was little evidence of a real business enterprise, that their work for a number of entities was in the nature of concurrent employment, and that there simply was not enough work for any given entity or organization for a referee to perform services solely for one organization. Finally, it argues with respect to the proprietary interest factor that referees could not transfer an assignment without the participation of WSA, and that there was no testimony as to referees having anything to transfer as a going business.

For its part, WSA acknowledges that the question of whether the referees' services were integrated with the activities of WSA's business was a "close call," and it essentially does not argue the point, noting only that assuming for the sake of argument it is found that their services are integrated with WSA's activities, this in itself would not be dispositive. It argues with respect to the advertising or holding out factor that there was in fact evidence that the referees had to and did "hustle" for business, through e-mails, the internet, telephone calls, and word of mouth, and that these activities constituted "holding out". With regard to the entrepreneurial risk factor, it disputes the notion that the extent of risk is relevant, and argues that the extent of the necessary financial investment in refereeing gear was significant enough, and carried with it the possibility that referees could lose money. (4)   It argues with respect to the economic dependence factor that the department's argument about work for multiple employers is faulty since work for multiple employers is what is expected in the case of an independent trade; pointing to the fact that only about a tenth of the refereeing done by the individuals at issue is for WSA, it argues that this shows they are not economically dependent on WSA. Finally, it argues with respect to the proprietary interest factor that the evidence did establish an ability on the part of referees to transfer an assignment; it also argues that in any event where an individual's business depends on their particular knowledge and talents, an inability to transfer those things does not mean there cannot still be a "proprietary interest".

The commission has carefully considered the arguments of the parties. Based on its weighing of all of the evidence in the record in light of the applicable legal standards, and giving due regard for the fact that the question is one as to which the burden of proof rests on WSA, it has concluded that the referees were not shown to have satisfied the "independently established" test, and must therefore be deemed "employees" for UI purposes. The commission's reasons for arriving at that conclusion are set out above in the modifications made to the ALJ's decision and for that reason will not be repeated here.
 

Coaches -- "Direction and control" --

In its brief, the department argues that coaches were not totally free of WSA's direction or control in that they did not have unbridled authority to hire their own assistant coaches. The department also argues that WSA had the authority to terminate the relationship with a team coach or other clinician based upon failure to be timely, or for absence without excuse from a previously scheduled activity. For its part, WSA argues that it is undisputed that coaches are not evaluated, are not required to follow a particular curriculum, and are not held to a particular standard of performance involving the way in which they instruct or how well they do. Recognizing that they are required to be certified for coaching and to "show up," WSA notes that "so is every independent contractor who hopes to stay in business."

The record supports the department's argument about the roles played by WSA as opposed to individual coaches in the selection of assistant coaches. WSA's witness Launder testified that WSA "...actually name[s] all of the coaches. It's often done in consultation with the head coach of a team, to make sure that they are able to work well together." (T. 144-45). Thus, coaches did not have any authority to name their own assistants, and the most they could expect was that they might be "consulted" with by WSA before it decided who the assistant coach would be. This shows a degree of direction and control of the way in which the head team coach carries out his or her function of coaching the team.

Beyond this, the commission believes that there are other reasons for finding that the coaches are not free from the direction and control of WSA.

One matter which bears on the question of direction and control has to do with the coaches' "certification" or "licensure". In its brief, WSA asserts in passing that the coaches are "required to be certified", but this begs the questions of who imposes this requirement, and who "certifies" them. The terms "certification" and "licensure" carry with them a gloss of official status, but there are in fact no Wisconsin laws providing for any required state "certification" or "licensure" of soccer coaches. The "certification" or "licensure," and the requirement for it, is entirely WSA's: it requires that coaches participate in certain training programs, which it operates. This is an element of direction and control. The periodic "eligibility" checks on coaches which WSA carries out (T. 96) are similarly an element of direction and control.

WSA had and communicated expectations as to the approach coaches are to take in the coaching of younger as opposed to older players (T. 94). There was evidence that ODP training coaches (the ODP program coaches who provide instruction in camps and clinic for young ODP participants) take direction on the job from ODP head coaches (T. 90), who are conceded employees of WSA. Assistant and auxiliary assistant coaches are also subject to direction and control by the ODP head team coaches. These are all elements of control and direction.

For all of the foregoing reason, the commission agrees with the ALJ that it was not shown that the coaches were "free from" direction and control by WSA within the meaning of Wis. Stat. § 108.02(12)(c)1. 
 

Coaches -- "Independently established" --

There is no dispute with respect to the "integration" element of the Keeler test: WSA expressly concedes that the coaches at issue here are "fully integrated" with the business of WSA. WSA Brief, p. 19. A conclusion that the services are integrated with the business of the putative employer of course militates in favor of a finding of employee status. However, as WSA notes, such a conclusion on this single factor is not necessarily dispositive on the ultimate question.

With respect to advertising or holding out, WSA equates the coaches to the individuals who the commission found to be independent contractors in Ristau v. Fox Valley Symphony Orchestra Association Inc. (LIRC, Aug. 23, 2006) and Eichman v. Wisconsin Technical College System Foundation (LIRC, Jan. 18, 2007). In those cases the second Keeler factor was considered met, even in the absence of advertising, when the individuals involved were found to have held themselves out to the community in which their services were used. WSA's argument rests on its contention that the coaches "actively market themselves with WYSA personnel, through websites, e-mail, phone conversations, and personal visits." However, the evidence as to what activities the coaches actually engaged in, and to what extent they did so, was limited to the testimony of WSA's State Coaching Director. Notably, his testimony that some coaches had business cards and that more commonly they used websites and e-mail, was not corroborated by any evidence of such business cards, websites or e-mails. No individual coach testified. Unlike Ristau and Eichman, in which it appeared that there was evidence specifically about the individuals whose status was at issue, here there are only general assertions by one witness for the putative employer that this occurs. The commission agrees with the department, that the kinds of contacts coaches are described as engaging in to find work are less like the efforts of an independently established business to find new customers and clients, than they are like the efforts of employees who typically work on a casual or sporadic basis for many employers in a field in which this is the norm.

The department argues that there was no entrepreneurial risk as contemplated by Keeler because the referees had no realistic possibility of losing money out of their own pockets absent the total inability to obtain work. It bases this argument on the assertion that "they had little or no out-of-pocket expenses except for some clothing and some minor equipment." It asserted that costs of travel were effectively compensated by per diems; the testimony from WSA's witness was indeed that gas expenses were typically paid and that per diems were provided for food and that lodging was generally provided at camps. (T. 96.) WSA argues the coaches spend more than the woodcutters who were the focus of Larson v. LIRC, 184 Wis. 2d 378, 516 N.W.2d 456 (Ct. App. 1994), and it asserts they have no guarantee that they will get it back, and could lose money if they performed services only for WSA. However, speculating about how the coaches could lose money if they only worked in WSA-paid coaching assignments is essentially like speculating about how any sort of worker who has a certain fixed level of equipment-and-supply overhead could lose money if they chose to work only a very small proportion of all the work actually available to them. It is simply not realistic. If the quantity of work generally available to an individual is sufficient that, if they perform it, they will be assured of making enough income to cover their fixed expenses for equipment and such things, then it is difficult to see how there is any genuine entrepreneurial risk. The commission also notes that WSA failed to offer any evidence of any specific coach actually managing to lose money in the course of providing this service.

WSA argues that the factor of economic independence is met because of the fact that the individuals at issue here make most of their money from providing coaching services elsewhere than from WSA. It points to the language of Keeler in describing this factor: "If an examination of the economic relationship establishes that the alleged employee is independent of the alleged employer, performs services and then moves on to perform similar services for another, it is proof of an independent trade or business". The department argues that this factor looks to the question of whether the individual had an economically independent business.

The department argues that the relationship between the coaches and WSA was in the nature of a personal services agreement, and that there was nothing in that relationship which a coach would be able to transfer to another individual. This is self-evidently true. There was also direct evidence from WSA's witness Mariahazy, that coaches could not send another coach to do coaching services they had contracted with WSA to do, without "notifying...or communicating" with WSA. (T. 179-80.) For its part, WSA argues that the coaches were like the individual at issue in Eichman, in that their "businesses" depend upon their particular knowledge and talents as instructors, which is by its very nature not transferable to another person.

Even if the economic independence and proprietary interest factors are deemed to weigh in favor of viewing the coaches as independent contractors, the commission sees them as being outweighed in this case by the other factors of integration, lack of demonstrated evidence of advertising or holding out, and lack of any significant entrepreneurial risk. On balance, it finds the evidence insufficient to establish that the coaches provide their services in the course of an independent trade, business of profession in which they are customarily engaged, within the meaning of Wis. Stat. § 108.02(12)(c)2.  
 

Trainers --

The trainers were regular employees of Purdue or Marquette, who WSA contracted with on an ad hoc and occasional basis to perform trainer services for WSA events held on the premises of those colleges. While by the very nature of their relationship the trainers were arguably providing their services free from the direction and control of WSA, the record is far from establishing that they were engaged in independently established "businesses" as trainers. While it could be speculated that they were "economically independent" of WSA, if only because they provided services for it so irregularly compared to their regular jobs, this is the only Keeler factor that is arguably established by the evidence here. Their services were directly integrated with the activities of WSA. There was essentially no evidence introduced that any of these trainers engaged in any kind of advertising or holding out, or that they took any entrepreneurial risk or had any sort of proprietary interest, as contemplated by the Keeler test. The commission finds the evidence insufficient to establish that the trainers provide their services in the course of an independent trade, business of profession in which they are customarily engaged, within the meaning of Wis. Stat. § 108.02(12)(c)2.

cc:
Attorney Peter W. Zeeh
Attorney Michael J. Fischer
Daniel J. LaRocque


Appealed to Circuit Court.  Reversed, July 22,2008.   [Summary of Circuit Court Decision]

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


Footnotes:

(1)( Back ) That evidence includes a transcript of the hearing, which was prepared and filed with the ALJ prior to his issuance of his decision. The commission did not consider this transcript in its initial review in this case, because it had not been included with the case file which the department forwarded to the commission, and the commission was unaware of its existence. The commission instead arranged for preparation of a synopsis of the testimony from the audio tapes, which is what it used in its initial review. The transcript has been used in the commission's subsequent review because all of the conditions of Wis. Admin. Code   LIRC 1.04 for use of a transcript are satisfied.

(2)( Back ) These paragraphs of the ALJ's decision had to do with the fact that some of the individuals listed on the audit reports as casual laborers and event workers actually performed services as referees while some listed as referees actually performed services as coaches. This was material because of the ALJ's conclusion that the coaches were employees while the referees were independent contractors. The commission has deleted these paragraphs of the ALJ's decision because, given the commission's conclusion that the referees were also employees, the matter of how these individuals were designated on the audit report is no longer material.

(3)( Back ) In its brief, WSA states: "The issue presented by this case concerns whether individuals performing services for the Wisconsin Youth Soccer Association ("the WYSA") as referees, coaches and athletic trainers in 2002 and 2003 were statutory employees under chapter 108, Wis. Stats." It then argues that "[t]he fact that the individuals in question provided such services is not in and of itself sufficient to render them employees," referring to the question of the applicability of Wis. Stat. 108.02(12)(c). Thus the "performing services for" issue appears to be conceded.

(4)( Back ) WSA also argues that a rationale stated by the commission in its original August 30, 2007 decision in this case -- that the evidence that a substantial motivation in the activities of the referees in refereeing State Cup games was professional development rather than earning income, cut against the "entrepreneurial risk" factor -- was erroneous. The commission does not rely on this rationale in this decision. It relies simply on its finding and conclusion that the evidence does not establish any significant risk that referees performing the work made available to them would ever actually lose money as a result of their activities.

 


uploaded 2007/12/12