Apple Crest Farms v Gardner – 17.18

Apple Crest Farms v Gardner
Digest no. 17.18

Section 43(d)

Cite as: Apple Crest Farms v Gardner, unpublished opinion of the Wayne County Circuit Court, issued June 4, 1990 (Docket No. 90-002881-AE).

Appeal pending: No
Claimant: Timothy Gardner
Employer: Apple Crest Farms
Docket no.: B87-16551-109686
Date of decision: June 4, 1990

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CIRCUIT COURT HOLDING: The services the claimant performed (cutting the grass and cleaning the grounds of a plot of land where no active farming had taken place for several years) were not agricultural labor and therefore, not excluded “employment.”

FACTS: The employer consists of a 300 acre parcel of land with fruit trees, three houses and surrounding grounds. Seven years prior to the period in question, the orchard produced over 100,000 bushels of apples, peaches and pears annually. The production of fruit was discontinued. The claimant worked for the employer maintaining the grounds, weed cutting, grass cutting, clearing out trees and throwing out dead wood. At the time claimant became unemployed there was no active production of agricultural products on the farm and it was unknown if the orchard would ever resume production.

DECISION: The claimant was performing services in employment under the Michigan Employment Security Act and was eligible to receive benefits.

RATIONALE: The claimant maintained the grounds and trees. He performed work of cutting the grass and cleaning an estate-like plot of land. There is not, nor has there been for the past several years, any farming activity on the land. This was not “agricultural labor.”

Digest Author: Board of Review (original digest here)
Digest Updated:
7/99

Psychological Services v MESC – 17.14

Psychological Services v MESC
Digest no. 17.14

Sections 42, 44

Cite as: Psychological Services v MESC, unpublished opinion of the Kent County Circuit Court, issued May 4, 1990 (Docket No. 89-64789-AE).

Appeal pending: No
Claimant: N/A
Employer: Psychological Services
Docket no.: L87-07843-RO1-1978
Date of decision: May 4, 1990

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CIRCUIT COURT HOLDING: Where several licensed psychologists paid to use space and clerical services provided by the clinic owner, but conducted separate practices serving clients, they were not employees of the clinic but were independent contractors.

FACTS: Dr. Charles Laufer operates a clinic which provides psychological services. Several individuals who are licensed psychologists see clients at his facility, use the office suite, present their billing information to the office manager employed by Dr. Laufer and pay Dr. Laufer a 40% share of their receivables. Dr. Laufer provides testing supplies and clerical services in addition to office space. These are no written contracts. IRS 1099 forms are issued to the claimants. Dr. Laufer advertises the clinic in the yellow pages under his name. Some of the claimants are not fully licensed (i.e. have limited licenses) and must practice in a fully licensed establishment.

DECISION: Services provided are not in employment and remuneration received was not wages under Section 42 and 44.

RATIONALE: MESC relied on inadequate evidence in reaching its conclusion that services performed by 4 psychologists were in employment. The fact that each contributed 40% of their billings to pay for the overhead does not establish that there was an employer-employee relationship. Reliance on a form filled out only by Dr. Laufer while ignoring his sworn testimony regarding the form was error. Applying the economic reality test yields the conclusion that the psychologists did little more than share expenses at the clinic.

Digest Author: Board of Review (original digest here)
Digest Updated:
7/99

Ballenger v Michigan Department of Agriculture – 17.12

Ballenger v Michigan Department of Agriculture
Digest no. 17.12

Section 43(o)

Cite as: Ballenger v Michigan Dep’t of Agriculture, unpublished opinion of the Ingham Circuit Court, issued August 10, 1989 (Docket No. 87-60066-AE).

Appeal pending: No
Claimant: William Ballenger
Employer: Michigan Department of Agriculture
Docket no.: B85-13688-RO1-103090W
Date of decision: August 10, 1989

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CIRCUIT COURT HOLDING: Claimant’s employment as the State Racing Commissioner was a major non-tenured policymaking or advisory position and therefore excluded employment under Section 43(o)(iii)(E) of the Michigan Employment Security Act.

FACTS: The claimant was appointed by Governor Milliken to be the Racing Commissioner. He worked in that position from September 1982 until August 1985 when Governor Blanchard appointed a successor. He filed a claim for unemployment benefits.

DECISION: The services the claimant performed were excluded from consideration as employment under the Michigan Employment Security Act. The claimant was ineligible for benefits.

RATIONALE: The claimant was appointed to the position of Racing Commissioner by the Governor. A position is “major” if filled by gubernatorial appointment. The position was not covered by the Civil Service system and as such was non-tenured. The claimant admitted the position was policymaking or advisory. The policymaking/advisory nature of the position was confirmed by the position description submitted by the claimant. Thus the position was a major, non-tenured, policymaking or advisory position and was properly excluded from consideration as covered employment.

Digest Author: Board of Review (original digest here)
Digest Updated:
7/99

General Motors Corp v Walworth – 17.16

General Motors Corp v Walworth
Digest no. 17.16

Sections 43(m), 43(q)(ii)

Cite as: General Motors Corp v Walworth, unpublished opinion of the Genesee Circuit Court, issued November 22, 1988 (Docket No. 88-000970-AV).

Appeal pending: No
Claimant: Renee Walworth
Employer: General Motors Corporation
Docket no.: B87-06444-105587
Date of decision: November 22, 1988

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CIRCUIT COURT HOLDING: Services performed by the claimant through a co-op program were excluded from covered employment under the Michigan Employment Security Act.

FACTS: The claimant was an accounting student at the University of Michigan, Flint. In September of 1985 the claimant, through the school’s co-op program, applied and was hired for a position in a General Motors Corp. accounting and financial department at the Flint Truck and Bus Assembly Plant. In the Spring of 1986 the claimant enrolled in a class at school entitled “Management Cooperative Experience” for which she received three credits. Later the claimant was laid off and applied for unemployment benefits. The school’s director of co-op programs wrote a letter to verify the claimant was considered a co-op student and was placed in a co-op position at General Motors Corp while she was enrolled in business administration and accounting course work.

DECISION: The claimant was ineligible for benefits under Section 43(m) and 43(q)(ii) of the Michigan Employment Security Act.

RATIONALE: Claimant would not have gotten the job if she was not designated a co-op student. She received three credits for a class because of these work experiences. She did not need to receive co-op credit for her entire work experience to be excluded under the Act. Rather, she needed only to be involved in a full-time program at the school. Further, although the school’s letter used the term “verify,” it satisfied the “certification” requirement contained in Section 43(m).

The Referee also observed the class claimant took appears to fit exactly into Section 43(q)(ii)  of the Michigan Employment Security Act.

Digest Author: Board of Review (original digest here)
Digest Updated:
7/99

Berlin v Northwestern National Life Insurance Co – 17.04

Berlin v Northwestern National Life Insurance Co
Digest no. 17.04

Section 43(h)

Cite as: Berlin v Northwestern Nat’l Life Ins Co, unpublished opinion of the Court of Appeals of Michigan, issued February 26, 1986 (Docket No. 77624).

Appeal pending: No
Claimant: Steven Berlin
Employer: Northwestern National Life Insurance Company
Docket no.: B81 14302 80900
Date of decision: February 26, 1986

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COURT OF APPEALS HOLDING: Claimant was not an independent contractor under the “economic reality” test enunciated in Powell v ESC, 345 Mich 455 (1956).

FACTS: Claimant worked full-time for employer as an insurance agent and was paid $1600/mo. Social Security tax was withheld. Commissions generated by claimant amounted to $351.23, while he received total compensation in excess of $8000. Claimant worked exclusively for employer and reported to supervisors daily. He was provided with an office, secretarial help, computer, supplies, and training.

DECISION: Claimant was not in excluded employment under the MES Act.

RATIONALE: Employer provided extensive services and training. Claimant represented himself solely as employer’s agent and employer exercised a significant amount of control over claimant’s day-to-day activities. Claimant’s work was an integral part of employer’s business. Claimant was an employee under the “economic reality” test. The court distinguished this case from Farrell v Auto Club of America, 148 Mich App 165 (1986). “Here, claimant was apparently being paid by respondent at a steady rate during the development or probationary period. His income does not appear to have fluctuated according to the number of units he was able to sell.”

Digest Author: Board of Review (original digest here)
Digest Updated:
11/90

Farrell v Automobile Club of Michigan – 17.05

Farrell v Automobile Club of Michigan
Digest no. 17.05

Section 43(h)

Cite as: Farrell v Auto Club of Michigan, 148 Mich App 165 (1986).

Appeal pending: No
Claimant: Bruce Farrell
Employer: Auto Club of Michigan
Docket no.: B82 14055 89503W
Date of decision: January 6, 1986

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COURT OF APPEALS HOLDING: If the compensation depends upon Claimant’s efforts and a sale being brought to a conclusion, the compensation is a commission.

FACTS: Claimant, as an insurance salesman for the employer, received compensation for selling insurance policies on a sliding scale, whereby fixed dollar amounts were assigned to various “units” of a policy. Ninety percent of Claimant’s income was calculated on a fixed fee computation, instead of a percentage of the total amount of the policy sold.

DECISION: Claimant is excluded from covered employment.

RATIONALE: The court cited Smith v Starke, 196 Mich 311 (1917): “The word ‘commission’ implies a compensation to a factor or agent for services rendered in making a sale.”

The court went on to cite American National Insurance Co v Keitel, 186 SW2d 447, “(the word ‘commission, when used to denote compensation for work performed, as is ordinarily understood, means compensation paid upon results achieved’).” [T]he distinguishing feature of a commission is that payment of a commission is contingent upon the successful completion of sale transactions.”

Digest Author: Board of Review (original digest here)
Digest Updated:
11/90

Mr C’s Barber Shop v. Freiheit – 17.26

Mr C’s Barber Shop v. Freiheit
Digest No. 17.26

Section 421.42(1) and (5)

Cite as: Mr. C’s Barber Shop v Freiheit, unpublished opinion of the Genesee County Circuit Court, issued June 17, 1985 (Docket No. 84-700-AV).

Appeal pending: No
Claimant: Karen Freiheit
Employer: Mr. C’s Barber Shop
Date of decision: June 17, 1985

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HOLDING: Claimant is considered an employee under MCL 421.42 despite the fact that when she was hired, she signed a lease agreement renting out a chair in the barber shop.

FACTS:  Claimant was an apprentice at the employer’s barber shop from January 1980 until July 25, 1981. Claimant signed a lease with the employer to rent a chair at the barber shop for $95 per week. The employer determined what hours Claimant worked, when Claimant would take a lunch break, and when the shop would be open (it was closed for deer-hunting season). The employer also granted vacation requests and determined how much vacation could be taken. Claimant provided her own shears and tools, but the employer provided all lotions, shampoos, and other products. The employer became dissatisfied with Claimant’s work and tried to fire her. Claimant asked to be allowed to stay for two more weeks and finish her apprenticeship. The employer agreed.

Claimant filed for UI benefits and was denied because the Agency said her work at the barber shop was not employment. Claimant appealed and the ALJ found that Claimant was not an employee. The Board of Review affirmed the ALJ decision, but upon a request for rehearing put forth by the Claimant, the Board of Review reversed the ALJ decision and found Claimant to be an employee. The employer appealed.

DECISION: The Board of Review’s decision finding that Claimant was an employee was affirmed by the Circuit Court. Claimant is not disqualified from receiving benefits.

RATIONALE:  Upon reviewing the economic reality test that had been adopted by Michigan Courts, the Circuit Court found that the determination of whether a claimant is an employee or an independent contractor must be done on a case by case basis. The Circuit Court reviewed the fact of this case in light of the Michigan Employment Security Act’s purpose to lighten the burden caused by unemployment.

The Circuit Court believed that the Board of Review’s decision was consistent with the standards laid out in McKissic v Bodine, 42 Mich App 203 (1972). The Court pointed to the fact that the employer set vacations, furnished supplies, set hours, and could discharge Claimant at will. Based on the fact that the employer “fired” Claimant instead of terminating the lease means that, despite calling this a lease agreement, it was, in fact, an employment agreement.

Digest author: Andrea M. Frailey, Michigan Law, Class of 2017
Digest updated: 10/31/2017

Capital Carpet v MESC – 17.02

Capital Carpet v MESC
Digest no. 17.02

Section 42

Cite as: Capital Carpet v MESC, 143 Mich App 287 (1985).

Appeal pending: No
Claimant: N/A
Employer: Capital Carpet Cleaning and Dye Company, Inc.
Docket no.: L80-03459-R01-1683
Date of decision: May 2, 1985

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COURT OF APPEALS HOLDING: Whether a business is an employer of a worker for purposes of the MES Act depends upon the economic reality of their relationship; under the economic reality test, among the factors to be used are (1) control of the worker’s duties, (2) the payment of wages, (3) the right to hire and fire and the right to discipline, and (4) the performance of the duties as an integral part of the employer’s business towards the accomplishment of a common goal.

FACTS: Carpet cleaners worked under a contractual agreement with Capital Carpet [CC]. They reported to CC every morning and received work assignments for the day. The cleaners used CC’s office to make appointments.

The cleaners received a commission which ranged from 50-60%. All income was turned over to CC and the cleaners were given a paycheck. Income and social security taxes were not withheld. The cleaners rented equipment and purchased chemicals from CC. The costs were deducted from their paychecks. They could purchase their own equipment but chemicals had to be purchased from CC.

The cleaners were in control of the jobs themselves, were not supervised by CC and were responsible for hiring and paying their own help. The cleaners were encouraged to wear CC T-shirts. The cleaners represented themselves as associated with CC’s business and promoted that business. None of the cleaners cleaned on their own or for any other company.

DECISION: The cleaners were employees for MESA purposes.

RATIONALE: CC controlled the overall direction of the cleaners’ employment situation. Moreover, CC paid their wages, and the work done was so integral to CC’s business, neither could exist without the other. In light of the principals of the “economic reality” test, it was clear they were employees.

Digest Author: Board of Review (original digest here)
Digest Updated:
7/99

Socher v Allegan General Hospital – 17.01

Socher v Allegan General Hospital
Digest no. 17.01

Section 42

Cite as: Socher v Allegan Gen Hosp, unpublished opinion of the Court of Appeals of Michigan, issued December 29, 1983 (Docket No. B81 07346 80683); lv den 422 Mich 882 (1985).

Appeal pending: No
Claimant: Robert Socher
Employer: Allegan General Hospital
Docket no.: B81 07346 80683
Date of decision: December 29, 1983

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SUPREME COURT HOLDING: In lieu of granting leave to appeal the Michigan Supreme Court reversed the Court of Appeals and trial court and reinstated the Board of Review decision because that decision was supported by competent, material and substantial evidence. The Board found the proper test to be applied is the “economic reality” test.

FACTS: Claimant, an emergency room physician, had an oral contract with the employer. Compensation was $25 per hour or 85% of the patient billings attributed to the claimant, whichever was greater. Taxes were not withheld, nor did he receive fringe benefits. The equipment, medication and instruments were provided by the hospital.

DECISION: The services involved were employment as defined by Section 42 of the MES Act

RATIONALE: The “economic reality” test looks to the totality of the circumstances surrounding the work performed and focuses on the relationship of the worker and his work to the employer’s business operation. See McKissic v Bodine, 42 Mich App 203 (1972). The claimant was not subject to any control as to the manner in which he performed his professional services for any given patient but could assess fees therefor only within the limits prescribed by the hospital and who was obligated to report for work and continue working at such times and throughout such periods as directed by the hospital. He could not hire or fire anyone who assisted him but instead had to accept those provided by the hospital and, at least understood, that he could not perform professional services elsewhere. The claimant’s services were a part of a larger common task, i e., the provision of hospital care to those in need. He was not an independent contractor.

Digest Author: Board of Review (original digest here)
Digest Updated:
11/90

Haas v Flint Institute of Music, Inc – 17.06

Haas v Flint Institute of Music, Inc
Digest no. 17.06

Section 42

Cite as: Haas v Flint Institute of Music, Inc, unpublished opinion of the Genesee County Circuit Court, issued December 28, 1982 (Docket No. L81 02161 1694).

Appeal pending: No
Claimant: Marc W. Haas
Employer: Flint Institute of Music, Inc.
Docket no.: L81 02161 1694
Date of decision: December 28, 1982

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BOARD OF REVIEW HOLDING: The test of employment is one of “economic reality” and not “control and direction” exclusively.

FACTS: Claimant signed a contract with the employer for the 1979-1980 concert season, which incorporated the provisions of the master contract between the American Federation of Musicians and the employer. The claimant furnished his own instrument and clothing. Claimant was paid $25 for each rehearsal and performance. Claimant also performed with the Michigan Chamber Orchestra, the Detroit Symphony Orchestra, and also offered his services as a teacher.

DECISION: Claimant’s services are not excluded under Section 42(1) and (5) of the MES Act.

RATIONALE: McKissic v Bodine, 42 Mich App 203, 208 (1972) sets forth the principal factors to be considered in determining whether there is an employment relationship: First, what liability, if any, does the employer incur in the event of the termination of the relationship at will? Second, is the work being performed as an integral part of the employer’s business which contributes to the accomplishment of a common objective? Third, is the position or job of such a nature that the employee primarily depends upon the emolument for payment of his living expenses? Fourth, does the employee furnish his own equipment and materials? Fifth, does the individual seeking employment hold himself out to the public as one ready and able to perform tasks of a given nature? Sixth, is the work or the undertaking in question customarily performed by an individual as an independent contractor? Seventh, control, although abandoned as an exclusive criterion upon which the relationship can be determined, is a factor to be considered along with payment of wages, maintenance of discipline and the right to engage or discharge employees. In this case, the integrity of Claimant’s services to the employer’s overall objective was persuasive.

Digest Author: Board of Review (original digest here)
Digest Updated:
11/90