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Unemployment Insurance - Worker Classification

Part 2: Six of Nine Conditions - General Private Employers

Condition Seven - May Realize Profit or Loss (Case Studies)

The individual may realize a profit or suffer a loss under contracts to perform such services.

Note: This condition is identical to condition 8 under the old test. Cases under the new law are listed first, followed by cases under the old law.

Case Studies Relevant to Condition Seven

LIRC Decisions

May realize a profit or suffer a loss:

  • 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. It is possible that she could realize a profit by earning more than she paid in expenses. However, it is also possible that since she was paid by commission, i.e., paid only if she sold an insurance product, her expenses, including travel, license, and business card expenses, could exceed her earnings. Therefore, this condition is met. NOTE: This case includes analyses under both old and new laws – both identical for this condition.

May not realize a profit or suffer a loss:

  • 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. He was paid an hourly rate for each assignment; he could select which assignments he accepted; and his expenses were not substantial. The circuit court affirmed LIRC's decision that this condition was not met, finding its conclusion to be reasonable.

  • Ziburski v. Castforce Inc., UI Dec. Hearing No. 13202144EC LIRC Nov. 22, 2013) – Patricia Ziburski, a merchandiser, performed merchandising services for Castforce, Inc., a retail merchandising business. She received a flat fee for each assignment, and her expenses were not substantial. If she performed the work properly, she would make a profit, and it was not likely that she would suffer a loss. The proper test in this condition assumes successful completion of the services performed. There was no "unpredictability inherent in the business enterprise," that risk of loss that exists in a real business, as described in Dane County Hockey Officials Ass'n, cited below in the old law cases.

  • 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. Although he might realize a profit by earning more than he had to spend in expenses, it is not likely that he would suffer a loss given that he was guaranteed an hourly rate. As noted in Quality Commc'ns Specialists, Inc., cited below in the old law cases, there is no realistic prospect of experiencing a loss under a contract when fixed, predictable expenses are more than offset by the income earned in providing the services.

  • Cortez-Robles v. Pro-One Janitorial Inc., UI Dec. Hearing No. 11403642AP (LIRC May 3, 2012) – Samuel Cortez-Robles signed a franchise agreement with Pro-One Janitorial Inc., to perform cleaning and janitorial services. Although he might realize a profit by earning more than he had to spend for his expenses, it is not likely that he would suffer a loss given that he was being paid for each service he provided for customers each day, regardless of whether the customers paid Pro-One for the services.

LIRC cases regarding "profit or loss" under condition 8 of the old law

May not realize a profit or suffer a loss:

  • Quality Commc'ns Specialists, Inc., UI Dec. Hearing Nos. S0000094MW, S0000095MW (LIRC July 30, 2001) - Quality Communications Specialists (QCS), a cable television wiring service, hired workers to connect, service, and disconnect cable television service in subscribers' homes. LIRC found that these workers had certain fixed, predictable expenses that were more than offset by the income they could earn through providing services if they did the work which was available to them. There was no realistic prospect of experiencing a loss under a contract to provide services for QCS.

  • Dane Cnty Hockey Officials Ass'n, UI Dec. Hearing No. S9800101MD (LIRC Feb. 22, 2000) – The Dane County Hockey Officials Association, Inc., a non-profit organization whose members perform hockey officiating services for teams sponsored by amateur and youth hockey leagues and associations, collected officiating fees on behalf of the officials. The association also distributed the fees to the officials who provided the services, minus a service charge. LIRC found that the officials' situation did not appear to be significantly different from a situation in which a person who provides services as an employee has certain fixed, predictable expenses of employment, which are more than offset by the income they can earn through employment, if they engage in that employment. LIRC found that if the officials chose not to work very much, they would be out some quantity of money, but that such a choice did not involve the risk of loss contemplated in this condition. Instead, in a real business a genuine risk of loss exists due to the "unpredictability inherent in the business enterprise."

May realize a profit or suffer a loss:

  • Preferred Fin. of Wis., Inc., UI Dec. Hearing No. S0600240MW (LIRC Oct. 23, 2008) – Fifteen individuals performed services for pay as loan originators for Preferred Financial, a licensed mortgage broker. They were paid by commission, i.e., only paid if they closed a loan. Therefore, in addition to a realistic prospect of realizing a profit, there was also the realistic prospect that they could suffer a loss.

Further Reading and Research

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

  • EE 450.02g - Employee - s.108.02(12)(bm)2.g. - profit or loss.

Relevant cases under the old law:

  • EE 410.08 - may realize profit, suffer loss.