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Prior to January 1, 2011
Condition Three - Equipment (Case Studies)
The individual maintains a separate business with his or her own office, equipment, materials and other facilities.
Case Studies Relevant to Condition Three
Beginning in 1997, Ryan Gronna, Philip Lewis and Terry Osmanski performed paid services consisting of the installation of carpet and wall coverings for Thomas Gronna.
In J. Lozon Remodeling, (LIRC, September 24, 1999), a case involving siding installers, the commission held that the focus of this test is determining whether a separate business is being maintained with the individual's own resources.
The commission previously held that the mere presence or utilization of one type of resource; e.g., a home office, does not mandate a finding that a separate business is being maintained. Moreover, the list is not exclusive.
The expressly stated terms "office, equipment, and materials" are examples of kinds of resources that may be kept "at the ready" by an individual who is maintaining a business that is separate from the business of an employer of that individual. An employer may also be able to show that an individual is maintaining a separate business by means of "other facilities."
This test does not expressly assign weight to the cost or monetary value of the resources that are kept "at the ready" by an individual who is allegedly maintaining a separate business. The commission considers, however, and has held, that such cost or value may reasonably be weighed in determining whether a separate business is in fact being maintained.
Here, there is no real evidence that any of the three individuals in issue maintained a carpet installation business separate from their relationship with Gronna. Gronna testified that in 1997 each of the individuals owned about $1,000 worth of tools, that Gronna did not supply anything, and that the materials to be installed were supplied by the carpet store with which Gronna had a contractual arrangement.
There is no evidence that any of the individuals in issue had a business office or business equipment related to office functions; e.g., a computer or business telephone number. There is also no evidence that any of them maintained a stock of materials, and there is no evidence of any other facilities that would be indicative of the existence and maintenance of a separate business. The individuals' personally owned hand tools were not of such substantial value that their possession would indicate a separately maintained business. Acknowledged employees in various trades customarily supply and own hand tools of equal or greater value. Moreover, unlike such indicia as office rent or the maintenance of an inventory of materials, the occasional replacement of a hand tool does not represent a substantial and continuing outlay of funds to keep a business intact during periods when there may be no work and therefore no revenues. The tradesperson whose endeavor or "business" involves providing his or her own hand tools for use while performing paid services can lay those tools down when unemployed and incur little if any cost of maintaining those means of responding to the next opportunity to perform services for pay.
The commission found that Thomas Gronna did not meet his burden of showing that any of the individuals maintained a separate business with their own office, equipment, or materials.
Speedmark is a business that gathers customer service information for other businesses by assigning "mystery shoppers" to act as shoppers or by having the mystery shoppers conduct merchandizing surveys by questioning customers and recording their responses.
The issue in this case is whether Tracy Campbell provided services for Speedmark as an employee or an independent contractor. One of the conditions that Speedmark had to satisfy to demonstrate that Campbell was an independent contractor and not an employee was that Campbell maintained a separate business with her own office, equipment, materials and other facilities.
Tracy Campbell began performing mystery shopping services for Speedmark in 2005. At that time, Campbell applied for the mystery shopping position online at the petitioner's website. Campbell was required to electronically sign an "independent contractor agreement" as a part of the application process. The agreement was drafted by Speedmark. Upon completing the application process, Campbell received e-mails from Speedmark informing her of potential mystery shopping assignments which involved traveling to a client's store and evaluating the location and customer service. The e-mail contained the amount Campbell would earn for each assignment, the locations, and the times and dates when she must perform the mystery shopping services. Campbell would then accept or reject the assignment based upon the information contained in the e-mails. The e-mails from Speedmark also informed the employee of any special requests made by the clients as to how she must conduct the mystery shopping services.
Campbell was required to purchase at least $5 in product during the mystery shopping evaluation which was reimbursed by Speedmark upon the completion of her services. Campbell was required to use the evaluation forms drafted by Speedmark on Speedmark's website. The claimant was not reimbursed for any of her travel expenses; however, she coordinated her mystery shopping evaluations with other personal errands. Although she was required to maintain insurance on her vehicle, she would have done this anyway even if she was not performing services for Speedmark. Upon completing the evaluation, Campbell was required to enter the information on a form on Speedmark's website. If Campbell failed to perform the evaluation as set forth by Speedmark, she would not receive payment. Campbell would receive feedback from the Speedmark with suggestions on how she could improve her mystery shopping evaluations.
Campbell performed similar mystery shopping services for other companies while she performed services for Speedmark. Campbell's name was never provided to the clients of any of the companies including those of Speedmark. She also performed telephone sales services from home for different online businesses. Due to her telephone sales services, Campbell maintained a home office with a computer, printer, and internet access. She also used this home office and equipment for personal reasons and would have had them regardless of whether she was performing services for Speedmark. Although Campbell filed self-employment or business tax returns in 2005, 2006, and 2007, they were related to her separate business activity of doing home telephone sales and did not report income from the services provided for Speedmark. Campbell obtained a Federal Employer Identification number in 2007, in connection with the telephone sales services she performed for a different employer.
Campbell did not assert, and there is no evidence, that she had a separate free-standing office of any kind. She did testify that she had a "computer room" in her home, but she acknowledged that she used that space and the equipment in it mostly for her business activity of doing home sales for another company, and also for personal purposes, and that she would still have it even if she did not do her mystery shopper work. While she used her car to transport herself to the locations at which she did mystery shopper work, she usually arranged things so that she did that work at locations she would have been going to anyway, and she also acknowledged that even if she had not been doing the mystery shopper work she would still have had the expense associated with that car.
The facts that Campbell had a space in her home where she sometimes did things connected to her services as a mystery shopper, and that she owned some equipment which she sometimes used in connection with those services, are not necessarily indicative of a separate business of the type contemplated by this condition. Most individuals have a home of some kind which contains at least some space -- be it a separate room, a desk in a bedroom, or just a kitchen counter -- that they can use to perform "office" functions connected to work they may be doing. Many individuals have telephones, and computers with internet connections and printers, in their homes. Many individuals have a car which they can use to transport themselves. Individuals with these resources routinely use them for personal purposes, and they would have them and use them in this fashion whether or not they were also engaging in any kind of independent business. Ownership and use of such things for personal purposes is now so common, that in and of itself it simply cannot be taken as an indication that the individual is operating a separate business.
It was not established that either Campbell's "home office" or the equipment she used were acquired by her for the purpose of using them in doing her mystery shopper work. In addition, it was not established that Campbell used these resources primarily for the purpose of doing her mystery shopper work; on the contrary, Campbell expressly acknowledged that she used her home office area, computer, printer, internet connection, and telephone for purposes of her unrelated telephone sales activities and for personal purposes. In these circumstances, ownership of these resources is not determinative. Condition Three is not met.
Dibbles and Dibbles is a corporation which owns and operates a retail furniture and flooring store. Three individuals performed flooring installation services of the Dibbles and Dibble's products.
The commission determined that the installers maintained separate businesses and used their own equipment (vehicle, carpet stretcher, tile breaker, seam iron, compressor, staple gun, wet saw, towels, knee kicker, floats) and materials/supplies (glue, tack stripes, tape). The commission concluded that the installers ran their businesses from their offices in their homes.
Finally, the lack of separate facilities, which would be consistent with the nature of the business in which the installers were engaged, would not be dispositive here. As a result, the commission determined that this factor has been met.
Further Reading and Research
If you want to read and research further LIRC and circuit court cases on Condition Three, please click on the following hyperlink from the LIRC Decision Digest: