Netmed Transcription Services v Clark – 17.24

Netmed Transcription Services v Clark
Digest No. 17.24

Section 421.42(1) and (5); 421.44(1)

Cite as: Netmed Transcription Services v Clark, unpublished opinion of the Wexford County Circuit Court, issued June 2, 2009 (Docket No. 09-21560-AE).

Appeal pending: No
Claimant: Theresa Clark
Employer: Netmed Transcription Services
Date of decision: June 2, 2009

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HOLDING: A claimant is an employee and not an independent contractor where the claimant’s services are integral to the employer’s business, the claimant depends on wages from the employer for living expenses, the claimant does not operate her own business, and the employer could discharge the claimant, had quality assurance standards and specific deadlines; and required the claimant to contact them to have work assigned.

FACTS:  Claimant worked as a medical transcriptionist for the employer. Despite Claimant being hired as an independent contractor and receiving a 1099, she considered herself an employee. Claimant had to rent a computer from the employer, but the employer provided the software. Claimant had to provide her own reference material, phone, and internet connection. The employer provided clients and required that items were due in 24 hours. Claimant went to her supervisor, Tami Gregg, if she was having any problems or needed to go on vacation. The ALJ found that Claimant was an employee. The Board of Review affirmed.

DECISION: The Circuit Court affirmed the Board of Review’s decision. Claimant is not ineligible for benefits.

RATIONALE:  The Board of Review applied the eight factor test laid out in McKissic v Bodine, 42 Mich App 203 (1972). Factor eight requires the factors to be weighed to “favorable effectuate the purposes of the Michigan Employment Security Act.” In doing so, the Board found that factors two, three, five, and seven predominated in favor of finding that Claimant was an employee.

Factor Two: Claimant’s services were integral to the employer’s business.

Factor Three: Claimant testified that she depended on wages from the employer for living expenses.

Factor Five: Claimant did not operate her own business.

Factor Seven: The employer could discharge Claimant, the employer had quality assurance standards and specific deadlines, and Claimant had to contact the employer for coverage or to have work reassigned.

Digest author: Andrea M. Frailey, Michigan Law, Class of 2017
Digest updated: November 3, 2017

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

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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

Roadway Package Systems v Storey – 17.25

Roadway Package Systems v Storey
Digest No. 17.25

Section 421.42(1) and (5), and 421.44(1)

Cite as: Roadway Package Systems, Inc v Storey, unpublished opinion of the Wayne County Circuit Court, issued July 27, 2006 (Docket No. 05-535515-AE).

Appeal pending: No
Claimant: Craig Storey
Employer: Roadway Package Systems, Inc.
Date of decision: July 27, 2006

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HOLDING: A claimant who owns his own truck and delivers packages for an employer is still considered an employee when the employer exercises a significant level of control over the claimant’s actions.

FACTS:  Claimant worked as a truck driver delivering packages for the employer. The contract between the parties required Claimant to provide daily delivery service for a period of three years, to pick up and deliver packages on dates and times compatible with the schedules and requirements of the employer’s customers, to provide proof of timely maintenance and inspection of his truck, to use his truck exclusively for delivering RPS packages, to identify his truck with RPS logos to identify the truck as part of the RPS system, to wear the RPS approved uniform, and to permit RPS personnel to ride along.

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

RATIONALE:  The Board of Review applied the “economic reality” test and found that due to the nature of the relationship between the parties and the level of control exerted by the employer, Claimant was an employee. The Board of Review distinguished this from other cases where claimants who own their own vehicles were considered independent contractors by stating that in those cases the determinative factor was that the claimants also drove for other employers. In the current case, Claimant was precluded from driving for anyone else and was required to wear a uniform and outfit his truck as an RPS truck.

The Circuit Court affirmed the Board of Review decision. The Circuit Court disagreed with the argument put forth by RPS that the Board of Review has misapplied the legal precedent. In addition, the Circuit Court held that the fact that Claimant owned the truck is not determinative since he had to outfit the truck to very specific specifications put forth by RPS.

Digest author: Andrea M. Frailey, Michigan Law, Class of 2017
Digest updated: November 4, 2017

 

Dean v. Thrifty Services, Inc., UIA – 11.06

Dean v. Thrifty Services, Inc., UIA
Digest No. 11.06

Section 421.29(5)

Cite as: Dean v Thrifty Services, Inc, unpublished opinion of the Montmorency County Circuit Court, issued April 15, 2006 (Docket No. 05-1219 AE).

Appeal pending: No
Claimant:
John Dean
Employer: Thrifty Services, Inc.
Docket no.: 05-1219 AE
Date of decision: April 15, 2006

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HOLDING: A claimant’s employee status does not cease when the client failed to renew the contract.

FACTS: Claimant initially worker for Automobile First and provided personnel and employee leasing services to Thrifty Services. Claimant worked for Thrifty Services from May 30, 2001 until June 20, 2004 as a mechanic/manager. On June 30, 2004 Automobile First sold facility to SAD Inc who did not continue the contract with Thrifty Services. Claimant became an employee of SAD Inc.

DECISION: Claimant is not disqualified under Section 29(1)(a).

RATIONALE: The Court affirmed claimant not disqualified under Section 29(1)(a), even though the employee leasing company transferred him to the client company’s payroll, shortly before the client ceased operations. After reviewing the record, the Board finds that there has not been an abuse of discretion. Therefore, the Referee’s order, a copy of which is attached and incorporated by this reference, should be affirmed.

Digest Author: Katrien Wilmots, Michigan Law, Class of 2017
Digest Updated: 3/1/2016

Bureau of Worker’s and Unemployment Compensation v Detroit Medical Center – 17.21

Bureau of Worker’s and Unemployment Compensation v Detroit Medical Center
Digest no. 17.21

Section 421.43(o)(v) & (q)(ii)

Cite as: Bureau of Unemployment Compensation v Detroit Medical Ctr, 267 Mich App 500 (2005).

Appeal pending: No
Claimant: Marquetta Jones
Employer: Detroit Medical Center
Docket No.: 252777
Date of decision: July 26, 2005

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HOLDING: Claimant’s medical residency was not excluded from the Act’s coverage as (1) a work training program because the residency had no purpose to alleviate unemployment, poverty, or welfare dependence; nor (2) student employment because the employer was an non-profit organization.

FACTS: Claimant was a former medical resident (still registered as a full-time student during residency). After the UIA determined that medical residency was employment covered by the Act, an ALJ reversed. The board and circuit court affirmed. On appeal, the parties stipulated that the claimant was subject to the employer’s control and received remuneration.

DECISION: It was clear error for the ALJ, Board and circuit court to exclude the claimant’s employment as a medical resident from coverage under Section 421.43(o)(v) & (q)(ii).

Claimant’s medical residency was not excluded from the Act’s coverage as (1) a work training program because the residency had no purpose to alleviate unemployment, poverty, or welfare dependence; nor (2) student employment because the employer was an non-profit organization.

RATIONALE: Relying on Dana v American Youth Foundation, 257 Mich App 208; 668 NW2d 174 (2003), the court explained that interpretation of the work-relief and work-training exclusions in the Federal Unemployment Tax Act, 26 U.S.C. § 3301 et seq. are highly persuasive authority in resolving the similar exclusion in MCL § 421.43(o)(v). Dana followed U.S. Department of Labor guidance to interpret the exclusion, and held that in order to qualify as an exclusion from employment, a work-relief or work-training program must satisfy all mandatory requirements of the Department of Labor guidance (including that the products or services must be secondary to providing financial assistance, training, or work-experience to individuals to relieve them or unemployment or poverty). The court decided that the medical residency’s product or service was secondary to the purpose of training future doctors, but that there was no purpose of relieving the residents of unemployment, or poverty, or welfare dependence. Therefore, the medical residency could not be an excluded work-training program and it was clear error to hold otherwise.

It was also clear error to exclude Claimant’s medical residency as student employment under MCL § 421.43(q)(ii) because it was undisputed that the employer was a non-profit organization (which are excepted from the student employment exclusion).

Digest author: Austin L. Webbert, Michigan Law, Class of 2017
Digest updated: October 24, 2017

 

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

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