COURT OF APPEALS DECISION DATED AND RELEASED AUGUST 16, 1995 |
NOTICE |
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with the Supreme Court a petition to review an adverse decision by the Court
of Appeals. See § 808.10
and Rule 809.62, Stats. |
This opinion is
subject to further editing. If
published, the official version will appear in the bound volume of the
Official Reports. |
No.
94-2889
STATE OF WISCONSIN IN
COURT OF APPEALS
DISTRICT II
PAMELA B. FOARD, d/b/a
LES ARTISTES AGENCY,
Plaintiff‑Respondent,
v.
LABOR AND INDUSTRY
REVIEW COMMISSION,
Defendant‑Appellant,
DEPARTMENT OF
INDUSTRY,
LABOR AND HUMAN
RELATIONS,
Defendant.
APPEAL
from an order of the circuit court for Waukesha County: ROBERT G. MAWDSLEY,
Judge. Affirmed.
Before
Anderson, P.J., Brown and Nettesheim, JJ.
ANDERSON,
P.J. The Labor and Industry Review Commission
(commission) appeals from an order of the circuit court reversing the
commission's decision that musicians hired by Pamela Foard constituted
employees for purposes of unemployment compensation contribution. Because we conclude that the musicians were
independent contractors, we affirm the trial court's order.
Foard
operates a sole proprietorship known as Les Artistes Agency. Les Artistes is a musical entertainment
agency placing musicians with clients seeking entertainment for gatherings and
social events. Foard stated that when a
client requests music for a particular occasion, Foard contacts musicians, asks
about their availability and tells them the compensation. If the musicians are available and willing
to do the job, Foard gives them details about the job's location and when they
should arrive. When the job is
finished, she compensates them for the agreed upon amount.
An
administrative law judge (ALJ) affirmed the Department of Industry, Labor and
Human Relations' initial determination that Foard had payroll based on services
performed by employees. The ALJ stated
that Foard “is liable for contributions based on the payroll including the
musicians performing services for her business.” Foard appealed the matter to the commission which modified and,
as modified, affirmed the ALJ's decision.
Foard subsequently appealed the commission's decision to the circuit
court. The court reversed the
commission's decision, concluding that “the musicians hired by Foard were not
her employees under § 108.02(12), Stats.” The commission appeals.
Whether
the musicians working for Les Artistes were Foard's employees for unemployment
contribution purposes requires a two-step analysis. Initially, we determine whether the alleged employees performed
services for pay. Keeler v. LIRC,
154 Wis.2d 626, 631, 453 N.W.2d 902, 904 (Ct. App. 1990). If this is answered in the affirmative, the
next step is to determine whether the individuals are exempted by the
provisions of § 108.02(12), Stats. Id. In order for employee status not to apply to the musicians, Foard
must satisfy the two-part test under § 108.02(12)(b). Section 108.02(12) provides in relevant part:
Employe. (a) “Employe” means any individual who is or has
been performing services for an employing unit, in an employment, whether or
not the individual is paid directly by such employing unit; except as provided
in par. (b) or (e).
(b) Paragraph
(a) shall not apply to an individual performing services for an employing unit
if the employing unit satisfies the department as to both the following
conditions:
1. That such individual has been and will
continue to be free from the employing unit's control or direction over the
performance of his or her services both under his or her contract and in fact;
and
2. That such services have been performed in an
independently established trade, business or profession in which the individual
is customarily engaged.
If Foard fails
to satisfy either part of the test under sub. (b), the individuals are deemed
employees. Larson v. LIRC,
184 Wis.2d 378, 385-86, 516 N.W.2d 456, 459 (Ct. App. 1994).
In this
appeal, the parties dispute the standard of review applicable to the
commission's decision under § 108.02(12), Stats. The commission argues that its holding that
the musicians did not perform their services within the context of
independently established trades, businesses or professions in which they were
customarily engaged is a finding of fact and not a conclusion of law. Thus, it asserts that the commission's
determination must be affirmed because it is supported by
credible evidence in the record. In contrast, Foard argues that the
commission's decision as to whether Foard met her burden under § 108.02(12)(b)2
is a question of law.
We
begin our analysis of the appropriate standard of review with the familiar rule
that we review the findings of the commission, not the circuit court. Larson, 184 Wis.2d at 386, 516
N.W.2d at 459. Whether the employer met
his or her burden under both parts of the test is a mixed question of fact and
law. Id. In Larson, we stated: “[T]he parties do not dispute the historical
facts in this case. Thus, this issue
involved the application of facts to the § 108.02(12)(b), Stats., standard and LIRC's
determination that Larson failed to bear his burden of proof is a conclusion of
law.” Id. at 386-87, 516
N.W.2d at 459 (citations omitted).
In
the present case, the commission argues that because the facts are not
undisputed, the commission's determination must be treated as a finding of
fact. We disagree. When dealing with a mixed question of fact
and law, we apply a mixed standard of review.
See Hemstock Concrete Prods. v. LIRC, 127 Wis.2d 437, 439,
380 N.W.2d 387, 389 (Ct. App. 1985). We
will accept the commission's findings of fact if they are supported by credible
and substantial evidence. See id. Whether the facts as found by the commission
meet the legal standard articulated in § 108.02(12)(b), Stats., is a question of law. See id.
Alternatively,
the commission argues that if its decision is a conclusion of law, we should
give some deference to the commission's conclusions. We reject this assertion because it is contrary to this court's
decision in Larson. As
stated in that case:
Although great weight is given to the construction and
interpretation of a statute adopted by the administrative agency charged with
the duty of applying it, this deference is due only if the administrative
practice of applying the statute is long continued, substantially uniform and
without challenge by governmental authorities and courts. [Emphasis, alterations and quoted source
omitted.]
Larson, 184 Wis.2d at 387, 516 N.W.2d at 459-60. In Larson, we concluded that the commission's
application of § 108.02(12), Stats.,
had not gone unchallenged by the courts; thus, there was no clear
administrative precedent regarding this issue.
Id. at 387, 516 N.W.2d at 460. We therefore determined that we were not bound by the
commission's interpretation or application of the facts to this section and
would review the issue de novo. Id.
at 387-88, 516 N.W.2d at 460. We
proceed in the same manner in the present case.
It
is undisputed that the alleged employees performed services for pay. We therefore move on to the next step where
Foard must make a prima facie showing as to each part of the test under §
108.02(12)(b), Stats. See Larson, 184 Wis.2d at
387-88, 516 N.W.2d at 460. However,
because the commission conceded the first part of the test, namely, that the
musicians in question have been and will continue to be free from Foard's
control or direction over the performance of their services both under their
contracts and in fact, the only issue remaining is whether Foard met the second
part of the test.
We
must decide whether Foard made a prima facie showing that the musicians
performed their services in an independently established profession in which
they were customarily engaged. In Keeler,
this court articulated five interrelated factors which were used in determining
this question. Keeler,
154 Wis.2d at 632, 453 N.W.2d at 904.
The factors were listed as follows:
integration, advertising or holding out, entrepreneurial risk, economic
dependence and proprietary interest. Id.
at 633-34, 453 N.W.2d at 905.
Importantly, the court in Keeler stated that these factors
were “not to be mechanically applied, but analyzed in light of the public
policy of more fairly sharing the economic burdens of unemployment for those
economically dependent on another, not those who pursue an independent
business.” Id. at 632-33,
453 N.W.2d at 904. We stress that these
factors are merely guidelines to assist in the analysis as to whether an
employer/employee relationship exists.
As the court stated in Keeler: “The weight given to the various factors and the importance of
each varies according to the specific facts of each case.” Id. at 634, 453 N.W.2d at 905.
In the
present case, we conclude that Foard presented evidence sufficient to establish
a prima facie case that the musicians performed their services in an
independently established profession in which the musicians were customarily
engaged. We agree with Foard that the
commission applied the five factors mechanically and in a manner inconsistent
with the purpose of the Unemployment Compensation Act. First, looking at the integration factor, we
restate our position in Larson:
[I]f the alleged employee performs services not directly
related to the alleged employer's business, this fact would tend to show that
the individual is not an employee.
However, the converse is not true—all individuals who perform services
related to the activities conducted by the company retaining these services are
not by that factor alone deemed employees under the Unemployment Compensation
Act.
Larson, 184 Wis.2d at 391 n.7, 516 N.W.2d at 461. The commission's reliance on the fact that the services performed
by the musicians were similar to Foard's business was misplaced. Whether the services were similar does not
determine the type of relationship that existed between Foard and the
musicians.[1]
As
for entrepreneurial risk, we must also analyze this factor in light of the
musical entertainment industry. The
musicians invested time and money in their own musical instruments and expenses
associated with their services. They
were also responsible for their own practice time. Although the musicians' entrepreneurial risk might not have been
as great as Foard's, the magnitude of the risk is not, by itself,
determinative. Id. at
394, 516 N.W.2d at 462. “Instead, the
proper consideration is whether the facts are probative of an enterprise
created and existing separate and apart from the relationship with the
particular employer.” Id. (quoted
source omitted). The facts referred to
above are probative of the musicians' involvement in enterprises created and
existing separate and apart from the relationship with Foard.[2]
More
telling of the relationship between Foard and the musicians is the factor of
economic dependence. The record
illustrates that the musicians were economically independent. The musicians were not guaranteed work and
they were free to decline work. The
musicians' percentage of income from the agency was generally less than five percent
of their total annual income. The
musicians were also known to go out and get their own business. There is no evidence that the musicians were
economically dependent on Foard for their livelihood. Evidence indicates that their independently established
professions would survive the termination of their relationship with
Foard. See Larson, 184
Wis.2d at 393, 516 N.W.2d at 462. Because we hold that
Foard satisfied her burden under both parts of § 108.02(12)(b), Stats., we affirm the order of the
circuit court.
By
the Court.—Order affirmed.
Not
recommended for publication in the official reports.
[1] This is also
true with the advertising factor which may not be applicable to the
entertainment industry. As the trial
court stated: “[T]he musicians in this
case are engaged in a profession in which reputations and services are spread
more through word-of-mouth than by formal advertising.”
[2] We further
conclude that the proprietary interest factor does not apply in this particular
situation. We agree with this court's
position in Larson that independently established business status
is not foreclosed to all people “whose businesses depend on their own
particular talents and not upon an extensive personnel pool or equipment
inventory.” Larson v. LIRC,
184 Wis.2d 378, 395, 516 N.W.2d 456, 463 (Ct. App. 1994).