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Part 2: Six of Nine Conditions - Indian Tribal Government
Condition Eight - Recurring Liabilities or Obligations (Case Studies)
The individual has recurring business liabilities or obligations.
Case Studies Relevant to Condition Eight
Preferred Financial is a licensed mortgage broker. In 2004 and 2005, fifteen individuals performed services for pay for Preferred Financial as loan originators. Loan originators were required to be licensed, and were prohibited from performing services for more than one mortgage broker at a time. The loan originators sought customers for new purchase home mortgage loans, loans for refinancing existing home mortgages, and home equity loans. The loan originators would research whether an interested customer met the income/credit requirements of the lenders with which Preferred did business; refer customers meeting such requirements to a particular lender; prepare the necessary paperwork and otherwise process the loan once it was approved by the lender; and attend the closing. The loan originators received a commission for each loan they closed, at the rate established in their fee agreement with Preferred. The issue is whether the subject individuals performed services for the employer as statutory employees during the time period at issue.
Condition Eight requires proof of a cost of doing business which the worker would incur even during a period of time he was not performing work through the employer, such as the cost of an office lease, professional fees, or liability insurance. The loan originators' licensing fees satisfy this condition. The commission has not interpreted the relevant statutory language to require a certain dollar minimum in order to satisfy Condition Eight. Therefore, Condition Eight is satisfied.
Quale provided repair services to residential homeowners, including plumbing, electrical, drywall, and carpentry services. Prospective customers who were interested in their services contacted Quale directly. After obtaining preliminary information about the nature of the services to be done, a worker was sent out to the job site to determine how long the job would take, the cost of the labor, and the materials that would be needed.
Workers provided their own transportation both to and from the job site and their travel expenses were not reimbursed by Quale. While one individual purchased an automobile specifically for the worker's duties for Quale, most of the vehicles used by the workers were also for personal use. There was also no evidence to indicate that the worker's vehicles were specially equipped for the type of duties that Quale workers would have to complete.
While some workers purchased their own liability insurance, others did not. However, Quale carried liability insurance that covered the actions of all of its workers. Likewise, some of the workers had their own cell phones or pagers that were used occasionally for work purposes, but were purchased primarily for personal use.
The commission concluded that this condition requires an indication of the costs of doing business which the worker would incur even when they were not performing any work for the employer. Only a few of the individuals had fixed business costs. These costs included business liability insurance, cost of work truck, business cell phone, rented storage facility, and a business pager. The condition was met for those workers. For the workers that used personal vehicles or personal cell phones, those were not considered as business liabilities or obligations under this condition.
Quale and Associates subsequently appealed the commission's decision to Milwaukee County Circuit Court. The court affirmed the commission's decision.
The claimant, Rhonda Kunst, performed direct sales services for Energy Marketing Services (EMS) during January and February of 2008. She was assigned a territory and visited the homes of potential customers for sale of AT&T high speed internet and fiber optic services.
Condition Eight requires proof of a cost of doing business which the worker would incur even during a period of time she was not performing work through the employer, such as the cost of an office lease, professional fees, or liability insurance. The record does not show that Kunst had such continuing costs. EMS argues that the cost to Kunst of maintaining and operating a vehicle satisfies 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. The condition was not met.
MSI Services, Inc. (MSI) utilized the services of mystery shoppers to evaluate business services or products for its clients. During the time period at issue, 130 individuals provided mystery shopper services for MSI in Wisconsin. Mystery shoppers entered into a standard agreement with MSI defining the overall terms of the relationship. MSI posted assignment opportunities online. This posting included the general nature and location of an assignment as well as the amount MSI was offering for completing it. Mystery shoppers could indicate online their interest in a particular assignment, as well as their willingness to either complete the assignment for the posted amount or for a higher "pre-authorized distance (PAD)" amount. MSI would then review the online responses and select a mystery shopper for the assignment. Once a mystery shopper was selected, MSI would conduct an orientation for the assignment, including detailed instructions. These instructions were generally specified by the client.
Condition Eight requires proof of a cost of doing business which the worker would incur even during a period of time he or she was not performing work through the employer, such as the cost of an office lease, professional fees, or professional liability insurance. The record does not show that the mystery shoppers actually incurred any such costs, and, as a result, this condition is not met. MSI argues that its standard agreement requires that mystery shoppers carry business liability insurance. However, the record does not show that any of the mystery shoppers carried such business liability insurance. MSI also argues 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 do not, as a result, satisfy Condition Eight. Finally, MSI argues 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. This condition was not satisfied.
Further Reading and Research
If you wish to read and research further LIRC, circuit court and court of appeals cases on Condition Eight, please click on the following hyperlink from the LIRC Decision Digest: EE 410.09 recurring business liabilities.