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Part 2: Six of Nine Conditions - Indian Tribal Government
Condition Three - Multiple Contracts (Case Studies)
The individual operates under multiple contracts with one or more employing units to perform specific services.
Case Studies Relevant to Condition Three
John A. Lozon had been doing business for 12 years as J. Lozon Remodeling, a sole proprietorship. At the end of 1995 Mr. Lozon informed his employees that they would become independent contractors as of January 1, 1996.
The commission found that this test can be met by either multiple serial contracts or multiple contemporaneous contracts in existence during the time in issue. All such multiple contracts can be considered, whether the other party contracting with the individual whose employment status is in issue is the putative employer or some other business or individual.
Mr. Asher, one of Lozon's workers, had multiple contracts to perform specific services for specific amounts of money for a total of five clients or customers in 1997. He also controlled the means and method by which he performed his services under the multiple contracts. The commission determined that, as an experienced worker, Asher would have been able to perform his services by appropriate means and methods without direction or control from anyone else even in an acknowledged employe-employer relationship.
The commission found that this condition has been met.
The employer (Acute Care) contracted with physicians to staff emergency rooms in rural hospitals. During 2004, the period at issue, Acute Care had contracts with a physician in Wisconsin, Dr. Khan.
To meet this condition it must be established that Khan operated under contracts to perform specific services for specific amounts of money, and that under these contracts he controlled the means and method of performing the services. Even though Khan was subject to the protocols and procedures of the hospitals in which he provided emergency medical services, given the nature of the industry, this would be true whether he was an employee or an independent contractor.. The fact that Khan exercised his independent medical judgment in examining, diagnosing, and providing medical care established that he controlled the means and method of performing the subject services.
This test also requires multiple contracts. These may take the form of multiple contracts with separate entities, or multiple serial contracts with the employer if such contracts are shown to have been negotiated "at arm's length," with terms that will vary over time and will vary depending on the specific services covered by the contract. The existence of legitimate multiple contracts tends to show that the individual either has multiple customers, or that he has periodic opportunities for "arm's length" negotiation with the employer as to the conditions of their relationship.
The record shows that Dr. Khan had contracts to provide emergency medical services with multiple entities, including the Veterans Administration and EmCare in addition to Acute Care. The commission found that this condition has been met.
Spencer Siding, Inc. (Spencer), during 2001 and 2002, entered into oral contracts with 34 individuals (workers) to perform roofing, siding, and framing services for various general contractors. Spencer essentially functioned as an expediter for these general contractors and, for his efforts, deducted 10-12.5 percent from the amount the general contractors paid to Spencer for the roofing, siding, and framing services provided by the workers.
Spencer must establish that the workers operate under contracts to perform specific services for specific amounts of money, and that, under these contracts, the workers control the means and method of performing the services. The workers here exercised enough independence and discretion in carrying out their construction responsibilities to satisfy the second part of the test.
This condition also requires multiple contracts. These may take the form of multiple contracts with separate entities, or multiple serial contracts with the employer if the contracts are shown to have been negotiated "at arm's length," with terms that will vary over time and will vary depending on the specific services covered by the contract. The existence of legitimate multiple contracts tends to show that the individual either has multiple customers, or that he has periodic opportunities for "arm's length" negotiation with the employer as to the conditions of their relationship, and that he is not dependent upon a single, continuing relationship that is subject to conditions dictated by a single employing unit There was no specific evidence as to the existence of contracts between any of the workers and entities other than Spencer. The contracts under which the workers performed services for Spencer in 2001 and 2002 were project-specific oral contracts in which Spencer essentially established a piecework rate for roofing, siding, and framing work based upon what the project's general contractor was willing to pay.
These contracts do not satisfy the requirement of having been negotiated at arms length. The "bids" submitted to Spencer by the workers appear to have served no practical purpose, i.e., the actual piecework rate for a project was established by increasing or decreasing a worker's "bid" based upon the amount the general contractor was willing to pay for roofing, siding, or framing services for the project, not by arms length negotiations between Spencer and the workers.
The commission found that this test was not met.
Prince Cable, Inc., (Prince) was retained by Time Warner Cable on a contractual basis to provide cable installation to the City of Milwaukee. The contractual relationship between Time Warner Cable and Prince began in 1994. As a result, Prince began to hire cable installers as well as cable collectors (of money and boxes) to perform cable installation work on behalf of its client, Time Warner. Prince contends the various cable installers and collectors were independent contractors and not its statutory employees.
Prince argued that these individuals signed agreements with Prince to do specific work for a specific amount of money and that these agreements were multiple serial contracts to perform specific services. In addition, the Prince argued that the individuals controlled their time, methodology and means of the performance of their services since Prince merely obtained their services on behalf of its client, Time Warner.
The threshold requirement of multiple contracts can be satisfied either by proof of multiple serial contracts or multiple contemporaneous contracts. Multiple contracts that an individual enters into with multiple business entities are most indicative of that individual's economic independence from a particular employer. However, multiple serial or contemporaneous contracts with a particular employer may also satisfy the criterion if the contracts are shown to have been negotiated "at arms length." The commission held that in genuine independent contractor relationships, negotiations would typically result in terms that will vary over time and vary depending on specific services covered by the contract.
Here, there was no proof of other contracts for cable installation with other businesses or that the installers negotiated with Prince regarding fees. Prince informed these individuals how much they would be paid per job by the type of tasks they performed at a customer's home. Consequently, there was no negotiation between Prince and the installers. While the employer offered an argument that the day-to-day assignments by Prince's dispatcher created multiple serial contracts or multiple contemporaneous contracts, this characterization fails to accurately describe the actual relationship between the installers and Prince.
The commission found that Prince did not satisfy this test.
Further Reading and Research
If you wish to read and research further LIRC, circuit court and court of appeals cases on Condition Three, please click on the following hyperlink from the LIRC Decision Digest: EE 410.04a contracts for specific services for specific amounts.