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Part 2: Five 'Keeler' Factors - Nonprofit Employers
Factor Four - Economic Dependence (Case Studies)
Whether the alleged employee is independent of the alleged employer, performs services and then moves on to perform similar services for another.
Case Studies Relevant to Factor Four
Beginning in 2007, Daniel Lopez began performing services as a Spanish interpreter for the Richland County government during out-of-court interactions between the sheriff's department and private individuals. Lopez earned wages for performing these services. The issue is whether Lopez performed his services for Richland County as an employee or an independent contractor.
One of the conditions that Richland County Government had to satisfy to show that Lopez was an independent contractor and not an employee was that Lopez was not economically dependent on Richland County. Lopez testified at the hearing that he had not performed Spanish interpreter services for any other entity. Richland County asserted that there may have been evidence that Lopez provided translator services for another government entity, but Richland County did not provide that evidence at the hearing. The commission held that given the circumstances of this case, the fact that Lopez may have been providing Spanish interpreter services for another entity would not be sufficient alone to support a conclusion that he was engaged in an independently established trade, business, or profession. An individual can perform services as an employee for more than one entity. The commission found that Richland County failed to prove that Lopez satisfied this factor.
Thomson Newspapers (Wisconsin), Inc. v. LIRC and DILHR, No. 95-1355 (Wis. Ct. App. District 4 November 14, 1996)
Thomson Newspapers is a newspaper company, publishing newspapers in several Wisconsin cities. Thomson retained the services of bundle haulers as part of its distribution system. Bundle haulers distribute newspapers to various points, such street drops for foot and motor carriers, the residences of foot carriers, vending boxes, and commercial outlets. Bundle haulers pick up the newspapers at the employer's dock and then distribute them using their own vehicles. The bundle haulers can set their own order of distribution. They are expected to deliver the newspapers in good condition and on a timely basis. The bundle haulers are free to reject a particular delivery. The bundle haulers receive no fringe benefits and do not have taxes withheld from their pay. They are free to perform other delivery work, even for competitors.
The Court of Appeals upheld the LIRC decision that found that Thomson Newspapers had not satisfied its burden of establishing that the individual bundle haulers were not economically dependent on it. Thomson Newspapers argued that the bundle haulers were free to perform services for others and that "the burden of opportunity" was on the individual bundle hauler and it is the bundle hauler who should assume the risk for his lack of enterprise. However, the commission stated that "burden of opportunity" was not the standard. The issue was not whether an individual had the opportunity to perform services for other employing units and failed to avail himself of that opportunity, but whether he in fact did perform services for other entities in an independent business. Thomson Newspapers did not establish that the bundle haulers at issue were not economically dependent on it.
The Milwaukee Teacher Education Center (MTEC), a nonprofit, offers a masters degree program in urban education. Williams was selected as an instructor by MTEC, which established the class schedule after consulting with Williams, and to which Williams submitted her syllabus/instruction plan. Williams instructed one of the core courses in this program during the fall of 2006 and the spring of 2007. Williams filed for unemployment benefits in October of 2006. During the relevant time period, Williams entered into contracts with twenty school districts to teach a three-hour science lab program she had developed for K-12 students. Prior to October of 2006, she had been employed as an instructor by Cardinal Stritch University, the University of Wisconsin-Whitewater, and Waukesha County Technical College; and by the Medical College of Wisconsin to present science education programs to K-12 students.
MTEC appealed the decision of the administrative law judge that Williams was an employee and not an independent contractor to the Labor and Industry Review Commission (LIRC). MTEC claimed that Williams was an independent contractor, not an employee.
The commission held that Williams was not economically dependent on MTEC. The commission held that economic dependence is not a matter of how much money an individual makes from one source or another, but refers to the survival of the individual's independently established business if the relationship with the employer ceased to exist. Here, if Williams' relationship with MTEC ceased to exist, her business would continue. Likewise, the ability of Williams to work for others, as well as the fact that she did work for others, further establishes the separateness of her business from MTEC.
Randy Eichman, the claimant, is well know within the emergency preparedness community and is highly regarded within this community as a trainer. The Wisconsin Technical College System Foundation (WTCS Foundation), a nonprofit 501(c) (3) organization, in serial contracts with Eichman, each covering a period of months, utilized his services to present emergency preparedness workshops to students and staff in public school districts. Eichman provided these services on an ad hoc basis during each contract period. During 2006, the time period relevant here, Eichman had contracts with entities other than the WTCS Foundation, including Rock, Dane, and Green Counties and the City of Whitewater, to provide emergency preparedness training.
The issue is whether Eichman provided the services for the WCTS Foundation as an
employee or an independent contractor. One of the factors that the WCTS
Foundation had to prove to establish that Eichman was an independent contractor
was that he was not economically dependent on the WCTS Foundation.
The commission stated economic dependence is not a matter of how much money an individual makes from one source or another, but refers to the survival of the individual's independently established business if the relationship with the employer ceased to exist. If Eichman's relationship with the WCTS Foundation ceased to exist, his business would continue. Likewise, the ability of Eichman to work for others, as well as the fact that he did work for others, further establishes the separateness of his business from the foundation's business.
Further Reading and Research
If you wish to read and research further LIRC, circuit court and court of appeals cases on Factor Four, please click on the following hyperlink from the LIRC Decision Digest: EE 410.00 multi-factor tests, generally