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Unemployment Insurance - Worker Classification

Part 2: Six of Nine Conditions - General Private Employers

Condition Four - Incurs Main Expenses (Case Studies)

The individual incurs the main expenses related to the services that he or she provides under contract.

Note: This condition is identical to condition 5 under the old test. Cases under the new law are listed first, followed by cases under the old law.

Case Studies Relevant to Condition Four

LIRC decisions

Does incur main expenses:

  • Salvi v. Cullen, Weston, Pines & Bach, LLP, UI Dec. Hearing No. 12004296MD (Mar. 12, 2013) – Frank Salvi performed services as a physician, reviewing medical records and preparing a medical report, for Cullen, Weston, Pines & Bach, LLP, a law firm. He bore all of the expenses of reviewing the medical records and preparing his written report. In addition, he had costs relating to maintaining the medical licensure required for the work, as well as his medical board certification and continuing education costs. Although Cullen, Weston, Pines & Bach had minor expenses in contracting with him and paying him, it is obvious that his expenses exceeded those of the law firm.

Does not incur main expenses:

  • Rohland v. GO2 IT Group, UI Dec. Hearing No. 12202959EC (LIRC Feb. 14, 2013) aff’d sub nom. Career Connections Staffing Services, Inc. v. LIRC, No. 13-CV-179 (Wis. Cir. Ct. La Crosse Cnty. Oct. 23, 2013) – Albert Rohland performed services as an IT specialist for GO2 IT Group, a staffing agency. Although he had expenses related to travel, some lodging, and maintenance of tools, GO2 IT Group also had expenses related to the work performed, including administrative costs related to the parties' four agreements, coordination of specific assignments, and compensating Rohland for his services. The circuit court, noting that this condition is identical to condition 5 under the old test, agreed with LIRC that, since the parties' respective expenses were not quantified in the record, it was not possible to determine which party bore the main expenses and, therefore, the condition was not met.

  • Ali v. Acute Care, Inc., UI Dec. Hearing No. 13600624MW (LIRC Aug. 7, 2013) - Zulfiqar Ali performed services as an emergency room physician for Acute Care, Inc., a business that contracted with hospitals to staff their emergency rooms. Although he had expenses associated with his services, including the costs of medical malpractice insurance and medical courses required by the hospital in which he worked, Acute Care and the hospital in which he worked (Acute Care's client) also had expenses, including administrative costs associated with the performance of his services and the costs of diagnostic machine, laboratory services, and other equipment and materials he used in performing his services. These expenses were not quantified in the record, and it is not obvious that Ali's costs would exceed those of Acute Care and its client hospital. Citing previous cases, LIRC noted that the costs of obtaining an education and experience in one's field is not an expense considered in this condition. NOTE: This case includes analyses of employment status under both the old law and the new law – both identical for this condition.

  • Koeser v. Pinnacle Health & Fitness, Inc., UI Dec. Hearing No. 12002891MD (LIRC Nov. 16, 2012) – Matthew Koeser performed services as a massage therapist for Pinnacle Health & Fitness, Inc., a health club. Although he had expenses for lotions and presumably for licensure and insurance, there was no evidence in the record establishing the amount of those expenses. The cost of his labor, including education and training, is not one of the expenses contemplated in this condition. In addition, Pinnacle bore a great deal of the expenses, including the rental expense for the workplace and the expense of virtually all of the furnishings. Since the expenses were not quantified, and it was not obvious that Koeser incurred the main expenses of performing his services, this condition was not met.

LIRC cases regarding "main expenses" under condition 5 of the old law

Does not incur main expenses:

  • Schumacher v. Spar Marketing Services, Inc., UI Dec. Hearing No. 11203182EC (LIRC Mar. 21, 2012) – Sherry Schumacher performed services as a merchandiser for Spar Marketing Services, Inc., a merchandising company. She had expenses associated with her merchandising work, including worker's compensation insurance taken out of her earnings and travel expenses. However, Spar also had administrative costs associated with contracting with her, providing her with weekly assignments, employing a manager who provided assistance to her when needed, processing her invoices and compensating her for her services. In addition, online training was provided to her, as well as detailed instructions each week, and boxing and delivery expenses of returned DVDs were incurred by Spar or its client. NOTE: This case includes an analysis under the old law and an analysis under the new law – both identical for this condition.

  • Bentheimer v. Bankers Life & Casualty Company, UI Dec. Hearing No. 10006546JV (LIRC Aug. 16, 2011) – Kathleen Bentheimer performed services as an insurance salesperson for Bankers Life & Casualty Company, an insurance company. She had travel expenses and the cost of business cards and her insurance license. However, Bankers Life was responsible for all of her office expenses, including all materials and equipment, as well as the administrative costs associated with her marketing and sales of the insurance product. NOTE: This case includes an analysis under the old law and an analysis under the new law – both identical for this condition.

  • Spencer Siding, Inc., UI Dec. Hearing No. S0300142GB (LIRC June 2, 2006) – Spencer Siding, Inc. (Spencer) entered into oral contracts with 34 individuals to perform roofing, siding, and framing services for various general contractors. The services performed under the contracts included providing roofing, siding, and framing labor, but not materials, to builders and homeowners.

    A threshold question was whether the cost of the materials utilized by the workers, e.g., roofing shingles, siding, and lumber, should be considered an expense "related to" the performance of their services. LIRC does not consider construction materials to be a subject of the contracts at issue. Moreover, LIRC has looked to the practice in the particular industry to answer this question, and has determined that materials installed by workers in the construction trades, such as the workers here, should not be considered as a related expense. As a result, the cost of materials should not be factored into the apportionment of expenses for purposes of this test.

    Here, the workers generally provided their own insurance and transportation, and their own tools and equipment. Spencer provided a home office where he presumably spent at least a portion of his work week on matters relating to the workers. Given the lack of evidence specifically quantifying the cost of any of these items, the record does not support a conclusion that the workers bore the main expense related to the services they performed under their contracts with Spencer. As a result, LIRC determined that this test was not satisfied.

Further Reading and Research

Read and research further LIRC, circuit court and court of appeals cases on Condition Four:

  • EE 450.02d - Employee - s. 108.02(12)(bm)2.d. - main expenses.

Relevant cases under the old law: