Wolverine Transportation & Storage v. Downey – 17.27

Wolverine Transportation & Storage v. Downey
Digest No. 17.27

Section 421.42

Cite as: Wolverine Transportation & Storage, Inc v Downey, unpublished opinion of the Macomb County Circuit Court, issued March 23, 2007 (Case No. 2006-4021-AE). 

Appeal pending: No
Claimant: Edward Downey
Employer: Wolverine Transportation and Storage, Inc.
Date of decision: March 23, 2007

View/download the full decision

HOLDING: The “economic reality” test set forth in McKissic v Bodine, 42 Mich App 203, 208-209; 201 NW2d 333 (1972) (Digest No. 20.04), determines whether a party is an independent contractor or an employee. The court held that Claimant was an employee under the “economic reality” test and, therefore, eligible for benefits.

FACTS: Claimant transported cars to auctions for Wolverine Transportation and Storage, Inc. (“Wolverine”). He was not working for anyone else while performing services for Wolverine.

Claimant had to abide by specific rules set by Wolverine for transporting services. Claimant testified at the ALJ hearing that he signed an independent contractor agreement with Wolverine. Claimant’s services for Wolverine ended when his manager informed him he would not get work for a week. Claimant felt he was being forced out due to work being slow. 

DECISION: Board of Review’s decision finding Claimant not disqualified from receiving benefits is affirmed. 

RATIONALE: Although the parties agreed that they signed an agreement stating Claimant was an independent contractor, labels given in a contract are not dispositive of whether a person is an independent contractor or employee. See Lincoln v Fairfield-Nobel Co, 76 Mich App 514, 520;(1977) (holding that “[t]he manner in which the parties designate the relationship is not controlling”.)

Claimant was an employee, not an independent contractor, under the economic reality test. Transporting cars was Wolverine’s only business, and Claimant was engaged in transporting cars for Wolverine. Claimant also worked full-time for Wolverine and did not work for anyone else during this time, or make himself available to the public as a transport driver.

Moreover, Claimant’s services are considered employment because Wolverine exercised sufficient control over him. Capital Carpet Cleaning and Dye Co, Inc v Employment Sec Com’n, 143 Mich App 287, 292;(1985); See, also, Foster v Michigan Employment Security Comm’n, 15 Mich App 96, 107 (1968) (”[C]ontrol or direction in performance can be implicit if the nature of the business is such that all the control the employer needs and desires to exercise can be effected by establishing a certain pattern of operation and engaging persons to participate therein knowing that if they respond normally they will conform to the established, workable and profitable pattern.”).

Digest author: Rita Samaan, Michigan Law, Class of 2017
Digest updated: 10/31/2017

Coppens v Hayes – 17.22

Larry Coppens, d/b/a Strawberry Tree & Landscaping v. Matthew L. Hayes
Digest No. 17.22

Section 421.41; Section 421.42

 

Cite as: Coppens v Hayes, unpublished opinion of the Oakland County Circuit Court, issued October 12, 2005, (Docket No. 05-064176-AE).

Appeal pending: No
Claimant: Matthew L. Hayes
Employer: Larry Coppens, d/b/a Strawberry Tree & Landscaping
Date of decision: October 12, 2005

View/download the full decision

 

HOLDING: The Board of Review’s decision is affirmed. The claimant is eligible for benefits.

FACTS: The claimant did yard work for employer until he was laid off when the employer’s machinery broke down. The UIA found the claimant was a covered employee under the Act. The ALJ agreed and the Board of Review affirmed.

DECISION: Employment relationship was reasonably found because the economic reality test and the definition of employer under MCL 421.41(1)(ii) were both satisfied.

RATIONALE: The Board’s decision was properly supported by evidence and was justified in setting the burden of proof on the claimant. Under the economic reality test’s eight factors, the Board was supported in its finding of an employment relationship because: (1) the employer didn’t incur contractual liability for terminating the claimant; (2) the claimant’s work formed an integral part of the employer’s business; (3) whether the claimant dependent of the job as a means of support was not in evidence and therefore did not factor into the analysis; (4) the employer supplied all the claimant’s work ; (5) there was no evidence the claimant held himself out to the public as ready to perform the relevant job duties; (6) there was not evidence whether the work was customarily performed by an independent contractor so this factor did not factor into the analysis; (7) the employer controlled the claimant’s work by telling him how he would be paid, when to report to work, and what to do; and (8) the purpose of the Act and deference to the agency supported the finding of the employment relationship.

The court also found an employment relationship was present under the definition of “employer” under MCL 421.41(1)(ii)  since the employer paid a total remuneration of $1000 or more per year.

Digest author: Austin L. Webbert, Michigan Law, Class of 2017
Digest updated: October 25, 2017

Detroit Medical Center Corp v Yff – 17.13

Detroit Medical Center Corp v Yff
Digest no. 17.13

Sections 42, 43(o)

Cite as: Detroit Medical Center Corp v Yff, Emmet Circuit Court, No. 97-4502-AE (June 18, 1998); lv den Mich App No. 213896 (December 30, 1998).

Appeal pending: No
Claimant: Michael Yff
Employer: Detroit Medical Center Corporation
Docket no.: L97-00001-2658
Date of decision: June 18, 1998

View/download the full decision

CIRCUIT COURT HOLDING: Even though the primary function of the medical residency was to provide additional training, the claimant functioned as an employee. Furthermore, his services were not statutorily excluded.

FACTS: Claimant filed for unemployment benefits after completing his medical residency. He had worked for employer pursuant to a written contract for his services in exchange for compensation of $30,000+ per year with benefits. He was required by his contract to provide medical services to clients of employer at its facility.

DECISION: Claimant’s services are in covered employment under Section 42 and are not excluded under Section 43(o).

RATIONALE: Section 43(o)(5) does not apply to the claimant, claimant was not involved in an unemployment work-relief or work-training program financed by a governmental entity. Claimant worked under the express direction and control of the employer. Services provided by claimant fit the definition of employment in all pertinent respects.

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

Maguire v Charter Township of Shelby – 17.17

Maguire v Charter Township of Shelby
Digest no. 17.17

Sections 42, 43(o)(iii)(E)

Cite as: Maguire v Charter Twp of Shelby, unpublished opinion of the Macomb Circuit Court, issued February 28, 1996 (Docket No. 95-1828-AE).

Appeal pending: No
Claimants: Joseph Maguire, Frances Gillett, Kirby Holmes
Employer: Charter Township of Shelby
Docket no.: L91-11605-2320
Date of decision: February 28, 1996

View/download the full decision

CIRCUIT COURT HOLDING: Where claimants resigned from non-tenured policymaking/advisory positions to which they were elected and were then hired or appointed to tenured, non-policymaking, non-advisory positions, their services were not excluded even if they essentially continued the same type of work as before.

FACTS: Claimants were elected to positions as township clerk, supervisor and treasurer in November 1988. They all resigned in June 1989, and were appointed to subordinate positions within the township. They were all removed following the November 7, 1990, election. Employer argues the claimants should be denied benefits because of the Section 43(o)(iii)(E) exclusion of high level policymakers in that they were performing policymaking functions even after they left office for their appointed positions and could no longer vote at trustee meetings.

DECISION: The claimants’ employment was not statutorily excluded under Section 43(o)(iii)(E).

RATIONALE: Claimants no longer had ultimate policymaking authority after June 1989, even though they may have rendered great assistance to the policymakers who replaced them.

Digest Author: Board of Review (original digest here)
Digest Updated: Unknown

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

View/download the full decision

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

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

View/download the full decision

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

View/download the full decision

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

View/download the full decision

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

View/download the full decision

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

Memorial Park Cemetery Sales v MESC – 17.15

Memorial Park Cemetery Sales v MESC
Digest no. 17.15

Section 42

Cite as: Memorial Park Cemetery Sales v MESC, unpublished opinion of the Oakland Circuit Court, issued October 15, 1980 (Docket No. 80-200-878-AE).

Appeal pending: No
Claimant: N/A
Employer: Memorial Park Cemetery Sales
Docket no.: L-76-18035-1564
Date of decision: October 15, 1980

View/download the full decision

CIRCUIT COURT HOLDING: When salespeople had no set hours, sales quotas or specific territory to cover, and are paid only on a commission and bonus basis, the salespeople are not under the “control or direction” of the employer and, hence, are not employees.

FACTS: Memorial Park Cemetery Sales is the exclusive selling agent for lots and memorials at White Chapel Cemetery. Memorial Park engages the services of sales representatives for the purpose of selling cemetery lots and memorials under the terms and conditions established by White Chapel. The sales representatives are paid on a commission and bonus basis set by White Chapel. The salespeople set their own hours, use such sales aids and equipment as they desire, are assigned no specific sales territory, furnish their own transportation, and are not required to report to the office at all. The relationship was terminable at will.

DECISION: The services provided by the salespersons were not in covered employment under Section 42 of the Michigan Employment Security Act.

RATIONALE: While the public policy of the Act (Section 2) is directed against involuntary unemployment and in favor of encouraging employers to provide stable employment, the sales representatives here are not under the control or direction of the employer. “As noted above, the relations involved herewith are terminable at will, the salesmen set their own hours and are not required to report to the office at all. The work in question leaves the stability strictly up to the salesmen.” This is not a relationship of the type to be protected under Powell v ESC, 345 Mich 455, (1956).

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