Unemployment Insurance - Worker Classification

Part 2: Six of Nine Conditions - Indian Tribal Government

Condition One - Held Out as a Business (Case Studies)

The individual advertises or otherwise affirmatively holds himself or herself out as being in business.

Case Studies Relevant to Condition One

Princess House, Inc. v. Department of Industry Labor and Human Relations of the State of Wisconsin

Princess House, Inc., is a Massachusetts corporation which engaged in the manufacture and sale of household products. Over 90 percent of Princess House's sales are made through individuals the company refers to as "dealers" or "consultants," whose status is at issue in this case. Every dealer executes a contract with Princess House which is titled "Independent Dealer's Agreement." The contract provides that the company will sell, and the dealer will buy for resale, the company's products on certain terms and conditions.

This case stems from the application of a worker for unemployment compensation. Upon the filing of her application for benefits after her layoff from Master Lock in Milwaukee, it was revealed that she also had been a dealer selling Princess House gifts. Thereafter, an examiner, the appellate tribunal, and the Labor and Industry Review Commission determined that Princess House was an employer and was liable to make contributions to the unemployment compensation fund. Princess House appealed the case through the courts and it was eventually heard in the Wisconsin Supreme Court.

The Supreme Court decided that one of the factors to be examined to determine if a contractor is truly independent is "advertising or holding out." The court held that a truly independent contractor will advertise or hold out to the public or at least to a certain class of customers, the existence of its independent business.

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 coaches free from its direction and control was that the referees advertised or otherwise affirmatively held themselves out as being in business.

The court ruled that the referees were independent contractors. The court found overwhelming evidence in the record of significant holding out or advertising via word of mouth, internet, email, and person to person both by the vast majority of referees who worked the State Cup games and the soccer referee community at large. This factor strongly supported a conclusion that the referees are not employees of the WSA.

Wis. LIRC UC Decision: Door County - March 28, 2007

In 1998, the Door County Department of Community Services hired two women to provide round the clock care for a cognitively disabled 63 year old woman. The County had the two women file an application to become an Adult Family Home in a condominium owned by a corporation formed by the family of the 63 year old woman. The County approved the application in October of 1998. Each caregiver was paid $2600.00 per month by the County. Both caregivers signed separate Admission and Rate Agreements with the County governing the details of the relationship between the caregivers and Door County and the nature of the care they were to provide to the 63 year old woman. These agreements were renewed annually with the two caregivers and their successors until May of 2003 when the County terminated the arrangement. The care givers filed for unemployment claiming they were employees of Door County. The County claimed they were independent contractors.

One of the factors Door County had to satisfy to show the caregivers were free from its direction and control was that the care givers advertised or otherwise affirmatively held themselves out as being in business.

LIRC found that there was no evidence that the caregivers engaged in anything in the nature of advertising or holding themselves out to the public as being engaged in an independent business of such care-giving. LIRC found that the caregivers did not meet this condition.

Wis. LIRC UC Decision: Ristau, Paul - August 23, 2006

Paul Ristau worked under annual contract for the Fox Valley Symphony Orchestra (FVSO) as principal tympanist. He also worked for four other symphony orchestras. Ristau filed for unemployment benefits in 2006. The issue is whether he performed these services for the FVSO as an employee or an independent contractor. One of the factors the FVSO had to satisfy to show Ristau was free from its direction and control was that Ristau advertised or otherwise affirmatively held himself out as being in business.

LIRC determined that although the evidence did not establish that Ristau advertised his services, it did establish that he held himself out to the "orchestral community" as a professional percussionist. The condition was met.