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Unemployment Insurance - Worker Classification

Part 2: Six of Nine Conditions - General Private Employers

Condition Eight - Recurring Liabilities or Obligations (Case Studies)

The individual has recurring business liabilities or obligations.

Note: This condition is identical to condition 9 under the old test. Cases under the new law are listed first, followed by cases under the old law.

Case Studies Relevant to Condition Eight

LIRC decisions

Recurring business liabilities or obligations:

  • 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 has recurring business expenses, specifically his medical licensing fees, his board certification fees, and his continuing education expenses.

No recurring business liabilities or obligations:

  • 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. LIRC considers these kinds of expenses to involve overhead types of expenses, such as for liability insurance, continuing education expenses, membership dues and other business costs that are of a continuing or recurring nature, regardless of whether the individual is performing services at the time. Ziburski's travel expenses would not be incurred if she discontinued performing services, and she used her cell phone, landline, computer, printer, and Internet access for personal purposes, as well as business expenses, so those expenses cannot be considered business obligations. As for her membership fee to Shadow Shopper, a website that posts information about retail merchandising job opportunities, there was no evidence that these dues were obligatory in the performance of her merchandising services. Therefore, they are not considered to be a business liability or obligation.

  • 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. The only expenses established by the record were tied to his work for Acute Care and its client hospital. His malpractice insurance premium was deducted by Acute Care from his earnings, and the client hospital required that he take a certain course, the cost of which was also deducted from his earnings. If he discontinued work for Acute Care, there was no evidence presented that these expenses would continue. NOTE: This case includes analyses under both old and new laws – both identical for this condition.

  • Thomas v. Renaissance Nutrition, Inc., UI Dec. Hearing No. 12401755AP (LIRC Oct. 30, 2012) – David Thomas performed services as a salesperson for Renaissance Nutrition, Inc., a manufacturer of vitamins and supplements for dairy livestock. There was no evidence that he would have office, vehicle, or insurance expenses if he did not perform services for Renaissance. In addition, he would not be required to maintain the storage unit that he rented to keep feed for sale to customers if he did not perform services for Renaissance, and there was no evidence indicating that he could not easily discontinue his rental of the storage unit.

LIRC cases regarding "recurring business liabilities or obligations" under condition 9 of the old law

Recurring business liabilities or obligations condition met for some workers and not for other workers:

  • Quale & Assocs., Inc., UI Dec. Hearing No. S0200201MW (LIRC Nov. 19, 2004) - Quale hired workers to provide repair services to residential homeowners, including plumbing, electrical, drywall, and carpentry services. LIRC concluded that this condition requires costs of doing business that the workers would incur even when they were not performing any work for Quale. Only a few of the workers had fixed business costs. These costs included business liability insurance, the cost of a work truck, a business cell phone, a rented storage facility, and a business pager. This condition was met for those workers. For the workers who used personal vehicles or personal cell phones, those were not considered business liabilities or obligations under this condition.

No recurring business liabilities or obligations:

  • Kunst v. Energy Marketing Servs., UI Dec. Hearing No. 08400750AP (LIRC July 31, 2008) - Rhonda Kunst performed direct sales services for Energy Marketing Services (EMS). She was assigned a territory, and visited the homes of potential customers for sale of AT&T high speed internet and fiber optic services. This condition requires proof of a cost of doing business that Kunst would incur even during a period of time she was not performing work for EMS, such as the cost of an office lease, professional fees, or liability insurance. The record did not show that Kunst had such continuing costs. EMS argued that the cost to Kunst of maintaining and operating a vehicle would satisfy this condition. However, since she did not acquire and maintain this vehicle solely for business purposes, her vehicle costs would not qualify as recurring business liabilities or obligations within the meaning of this condition.

  • MSI Servs. Inc., UI Dec. Hearing No. S0600129AP (LIRC Sept. 5, 2008) - MSI Services, Inc. (MSI) utilized the services of mystery shoppers to evaluate business services or products for its clients. This condition requires proof of a cost of doing business that the mystery shoppers would incur even during a period of time they were not performing work for MSI, such as the cost of an office lease, professional fees, or professional liability insurance. The record did not show that the mystery shoppers actually incurred any such costs. MSI argued that its standard agreement required that mystery shoppers carry business liability insurance. However, there was no evidence in the record that any of the mystery shoppers carried such business liability insurance. MSI also argued that one worker's expenses for her vehicle, computer, printer, scanner, and other equipment should be considered continuing business liabilities or obligations. However, that worker acquired and used this equipment for personal as well as business purposes, and her related costs did not, as a result, satisfy this condition. Finally, MSI argued that increased vehicle insurance costs due to use of the vehicle for primarily business purposes would constitute a continuing business liability. However, MSI did not prove that any of the mystery shoppers in fact incurred such costs.

Further Reading and Research

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

  • EE 450.02h - Employee - s. 108.02(12)(bm)2.h. - recurring business liabilities/obligations.

Relevant cases under the old law:

  • EE 410.09 - recurring business liabilities.