Unemployment Insurance - Worker Classification

Part 2: Six of Nine Conditions - Indian Tribal Government

Condition Two - Office, Materials, Equipment, etc (Case Studies)

The individual maintains his or her own office or performs most of the services in a facility or location chosen by the individual and uses his or her own equipment or materials in performing the services.

Case Studies Relevant to Condition Two

Wis. LIRC Decision: Lozon Remodeling - September 24, 1999

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 one of Lozon's workers, Steve Asher, clearly acted in response to Lozon's 1995 statement that Asher would be considered by Lozon to be an independent contractor at the beginning of 1996. The commission found that Mr. Asher did so by increasing his personal investment in tools and equipment by $8000.00, or 50 percent, at a time when it was clear he could no longer rely upon getting any substantial amount of continuing work or payments from Mr. Lozon. Mr. Asher had approximately $25,000 invested in tools and equipment at the time of the commission hearing in 1998. Mr. Asher also had a business office in his home for some time, including all of 1997.

While Mr. Asher's personal investment in tools and equipment rose $8000, or 50 percent, in the period from January 1, 1996 through 1997, he received no work or payments from Mr. Lozon in 1996 and he received $4962 for work performed for Mr. Lozon in 1997. In 1997, Mr. Asher performed services for four companies besides Mr. Lozon's company, and the payment Mr. Asher received from Mr. Lozon represented only 21% of his total income of $23,148 for 1997. Under these circumstances, the survival of Mr. Asher's was not dependent upon work from Mr. Lozon in 1997.

The commission found that in 1997 Mr. Asher maintained a separate business with his own office and equipment. The condition has been met.

Wis. LIRC UC Decision: Dibbles & Dibbles - January 12, 2005

Dibbles and Dibbles is a corporation which owns and operates a retail furniture and flooring store. Three individuals performed flooring installation services of Dibbles & Dibbles 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.

Wis. LIRC UC Decision: Gronna (Floor Guys) - February 22, 2000

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 a putative employer of that individual. A putative 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 employes 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.

Wis. LIRC Decision: Prince Cable, Inc. - February 23, 2001

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 Time Warner.

Prince contends that the installers were independent contractors who worked on a per job basis. The contractors obtained work assignments and jobs each day from a dispatcher who worked for Prince. The jobs were geographically listed and were not assigned to any particular contractor but whoever arrived at the office on a first come first serve basis. The contractors had a right to refuse work. The amount of work, the time of work, and the methodology and manner in which the work was undertaken was also under the discretion of the installers. Prince did not provide any specific training or manuals to these individuals. Some of the more experienced installers did train new installers and received additional compensation from Prince for this training. Although Prince did not require its installers to wear shirts or any uniforms bearing its insignia, Time Warner required such. The installers were able to rent the uniforms from Prince. Time Warner also required that signs be placed on their trucks indicating "Time Warner Cable" and that they wear identification badges indicating that they were cable installers for Time Warner and/or Prince.

The contractors were free to hire assistants or helpers to get their jobs done. Time Warner furnished the materials, which the installers used to install the cable. The installers generally owned their own trucks, paid for their own worker's compensation, auto and personal liability insurance, clip board, pencils, pens, pads, cell phone, and file cabinets. Prince personnel did not accompany any of the installers to their jobs but did retain the right to deduct any amount of compensation from a job that was not done or not done satisfactorily.

The commission held that the mere presence or utilization of one type of resource, such as a home office, does not mandate a finding that a separate business is being maintained. Prince argued that it provided no office and that as a precondition of its agreement (that all its independent contractors are required to sign), the installers had to maintain their own separate offices. The installers, however, did not maintain offices as a separate business with their own resources, especially since Time Warner provided the materials for installation. Also, the installers performed services only for Prince during the relevant time period.

Prince also argued that the employer may be able to show that an individual maintains a separate business by means of "other facilities" such as the cleaner in Struck and Irwin Fence, Inc, Hearing No. S9700192MD, (LIRC October 30, 1998). Although the installers can be likened to the cleaner in Struck, in that their services must be performed at other locations, the appellant failed to establish that the individuals maintained separate businesses with their own resources for the reasons discussed above.

Under the circumstances, it was not shown that these men had separate businesses apart from their services for the appellant. The commission determined that 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 Two, please click on the following hyperlink from the LIRC Decision Digest: 410.03 separate business w. office, equipment, materials

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