Unemployment Insurance - Worker Classification

Part 2: Five 'Keeler' Factors - Government Units

Factor Five - Proprietary Interest (Case Studies)

Whether the alleged employee owns various tools, equipment, or machinery necessary in performing the services involved, but also including whether the alleged employee has proprietary control, such as the ability to sell or give away some part of the business enterprise.

Case Studies Relevant to Factor Five

Wis. LIRC UC Decision: Wehrwein, Wayne - December 8, 2009

Wayne Wehrwein was laid off from his full time position in February of 2009. Wehrwein filed for unemployment benefits as a result of the layoff. While Mr. Wehrwein was working his full time job, he was also the successful bidder for eight Department of Natural Resources contracts for deer removal in eight Wisconsin counties for the 2007-2008 state fiscal year. The issue was whether Wehrwein performed his services for the DNR as an employee or an independent contractor.

The record showed that Wehrwein owned three trucks, a trailer, winches, and hoists which he used to perform the deer removal services and which he could sell or give away if he were no longer performing these services. Although these vehicles and equipment could be used for other purposes than deer removal, they still constituted business assets in which Wehrwein has a proprietary interest within the meaning of the fifth factor. LIRC held that this factor was satisfied.

Wisconsin Soccer Association v. LIRC and Department of Workforce Development, Case No. 08-CV-102 (Wis. Cir. Ct., Milwaukee Co., July 22, 2008)

The Wisconsin Soccer Association hired individuals to referee soccer games. An administrative law judge determined that the individuals who referred soccer games did so as independent contractors. The department appealed the decision of the administrative law judge to the LIRC. The LRIC decided that the referees were employees. The WSA appealed LIRC's decision to Milwaukee County Circuit Court. One of the factors the WSA had to satisfy to show the referees free from its direction and control was that the referees had a proprietary interest in their officiating businesses.

The court found that the proprietary interest factor also supported to some degree a conclusion that the referees were independent contractors. Even accepting LIRC's finding that referees did not have the ability to unilaterally transfer the right to officiate a match to another referee, this factor does not foreclose independently established business status from all individuals whose businesses depend on their own particular talents and not upon an extensive personnel pool or equipment inventory. The court found that the WSA satisfied this factor.

Wis. LIRC UC Decision: Lopez, Daniel - January 15, 2010

Beginning in 2007, Daniel Lopez began performing services as a Spanish interpreter for the Richland County government during out-of-court interactions between the sheriff's department and private individuals. Lopez earned wages for performing these services. The issue is whether Lopez performed his services for Richland County as an employee or an independent contractor.

One of the factors that Richland County had to satisfy to show that Lopez was an independent contractor and not an employee was that Lopez had a proprietary interest in a business. The commission found that the record did not show that Lopez owned anything of value necessary to perform the translation services, or had any ability to transfer some part of a business enterprise. The commission found that Richland County failed to prove that Lopez met this factor.

Thomson Newspapers (Wisconsin), Inc. v. LIRC and DILHR, No. 95-1355 (Wis. Ct. App. District 4 November 14, 1996)

Thomson Newspapers is a newspaper company, publishing newspapers in several Wisconsin cities. Thomson retained the services of bundle haulers as part of its distribution system. Bundle haulers distribute newspapers to various points, such street drops for foot and motor carriers, the residences of foot carriers, vending boxes, and commercial outlets. Bundle haulers pick up the newspapers at the employer's dock and then distribute them using their own vehicles. The bundle haulers can set their own order of distribution. They are expected to deliver the newspapers in good condition and on a timely basis. The bundle haulers are free to reject a particular delivery. The bundle haulers receive no fringe benefits and do not have taxes withheld from their pay. They are free to perform other delivery work, even for competitors.

The Court of Appeals upheld the LIRC decision that found that Thomson Newspapers had not satisfied its burden of establishing that the individual bundle haulers had a proprietary interest in a business. Thomson Newspapers conceded that its contracts with the bundle haulers did not permit the selling of routes. Thomson Newspapers maintained that the ability to sell routes had nothing to do with the sale of the contractor's independent business venture, which may be separate from the route but make up the right to independently perform hauling work. However, if the bundle hauler cannot sell the route, there is no business existing independent from the employer. If the bundle haulers did not have the ability to sell routes, the only asset the bundle haulers have is their vehicles and there was no evidence any bundle hauler used his vehicle exclusively to perform services as a bundle hauler.