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Part 2: Six of Nine Conditions - Indian Tribal Government
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.
Case Studies Relevant to Condition Seven
Quality Communications Specialists (QCS) is a cable television wiring service that was contracted by Time Warner Cable to connect, service and disconnect cable television service in subscribers' homes. QCS hired five individuals as independent contractors to do this work. The issue in this case was whether the five individuals were employees or independent contractors. One of the conditions the five individuals had to meet was that they may realize a profit or suffer a loss under contracts to perform such services.
LIRC held that the five individuals had certain fixed, predictable expenses which 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. QCS did not establish that the five individuals in question satisfied this condition.
The Dane County Hockey Officials Association, Inc. (DCHOA) is a non-profit organization whose members perform hockey officiating services for teams sponsored by amateur and youth hockey leagues and associations. DCHOA collected officiating fees on behalf of the officials, and minus a service charge, distributed the fees to the officials who provided the services. This issue in this case is whether the officials were providing services as employees of the DCHOA or as independent contractors. One of the conditions the officials had to meet was that they may realize a profit or suffer a loss under contracts to perform such services.
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. However, LIRC held that that this does not involve a situation of risk of business profit or loss. LIRC found that DCHOA did not meet its burden to establish that this condition has been met.
Acute Care contracted with physicians to staff emergency rooms in rural hospitals. During 2004, the period at issue, Acute Care had a contract with Dr. Kahn. The issue is whether Khan performed services for Acute Care during 2004 as an employee or as an independent contractor. One of the conditions Dr. Kahn had to meet was that he may realize a profit or suffer a loss under contracts to perform such services.
The administrative law judge (ALJ) in an earlier hearing found that since Dr. Kahn was virtually guaranteed being paid by Acute Care if he completed the work he was offered, Dr Kahn could not realize a loss. LIRC disagreed with the ALJ and found there were additional relevant factors. LIRC found that Dr. Kahn was not guaranteed work by Acute Care. Dr Kahn also had expenses, including malpractice insurance, the state's patient compensation fund, and continuing education costs, which would continue regardless of whether Acute Care offered him work. LIRC found that Dr. Kahn could suffer a loss. This condition was satisfied.
Ryan Zander performed snow clearing services for the Mortenson Investment Group, a property management group responsible for a number of apartment buildings. Zander used his personal truck, to which he mounted a plow and salter, to clear the parking lots of the apartment buildings. He was paid $900.00 per snowfall. He used a truck he already owned and purchased a new plow and salter for $7000.00. The issue is whether Zander performed his services for Mortenson as an employee or an independent contractor. One of the conditions Zander had to meet was that he may realize a profit or suffer a loss under contracts to perform such services.
LIRC found that in a season in which a large capital equipment purchase has actually been made, the amounts received under that contract may, depending upon the number of snowfalls that season, be less than the amount spent in that season. LIRC found that in this particular situation, it is reasonable to conclude that there may be a loss within some individual seasons. LIRC found that the condition was satisfied.
Further Reading and Research
If you wish to read and research further LIRC, circuit court and court of appeals cases on Condition Seven, please click on the following hyperlink from the LIRC Decision Digest: EE 410.08 may realize profit, suffer loss.