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Cite as: Netmed Transcription Services v Clark, unpublished opinion of the Wexford County Circuit Court, issued June 2, 2009 (Docket No. 09-21560-AE).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

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

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

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

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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

Wiggers v Olsen Seawall Construction Co – 17.08

Wiggers v Olsen Seawall Construction Co
Digest no. 17.08

Section 42

Cite as: Wiggers v Olsen Seawall Construction Co, unpublished opinion of the Muskegon Circuit Court, issued April 21, 1980 (No. 79-13578 AE).

Appeal pending: No
Claimant: David Wiggers
Employer: Olsen Seawall Construction Co.
Docket no.: L77 6884 1537
Date of decision: April 21, 1980

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CIRCUIT COURT HOLDING: Where a construction laborer is hired and paid by a subcontractor, and the tools and material are furnished by the general contractor, the laborer is not an employee of the general contractor.

FACTS: The Referee stated: “[T]he partners hired one Tom Nelson as a subcontractor to provide labor for the construction work. He hired the labor for the jobs, kept the time, and each Friday he paid the men in cash.” The claimant was one of the laborers.

DECISION: The claimant was not an employee of Olsen Seawall Construction Co.

RATIONALE: “Testimony is that the workers, after 1974, were completely hired and fired by Mr. Nelson and under his direction for the entire time. The Olsen Seawall Company was still the one the cottage owner dealt with and Olsen did indicate where to put the seawall and how long it was to be. There is testimony that on occasion the per foot costs were changed, and these were discussed with Mr. Nelson, which would be consistent with an independent contractor since if he is to obtain the labor cost as his portion of the contract then he would be consulted, and if he were paid on an hourly basis there would be no basis for consulting with him. It was testified that this was varied when the jobs were difficult or easy. This is also consistent with the independent contractor. The fact that the tools are owned by the Olsens and the fact that they paid for the lumber and additional nuts and bolts which were included in the bid and the pricing method, is not inconsistent with the concept of the independent contractor; and the fact that one of the Olsens would occasionally assist when he was present at the work-site, is not inconsistent with an independent contractor relationship.”

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

City of Sturgis v Messner – 17.07

City of Sturgis v Messner
Digest no. 17.07

Section 42

Cite as: City of Sturgis v Messner, unpublished opinion of the St. Joseph Circuit Court, issued February 27, 1979 (No. 78-590).

Appeal pending: No
Claimant: Ann Messner
Employer: City of Sturgis
Docket no.: L77 7267 1531
Date of decision: February 27, 1979

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CIRCUIT COURT HOLDING: Where a nurse-anesthetist declines employee status, signs a contract to provide services at a hospital as an independent contractor, and retains the right to perform services elsewhere, the doctrine of “economic reality” does not apply, and the claimant is an independent contractor.

FACTS: Ann Messner was a full-time nurse-anesthetist at Sturgis Hospital. A written contract specified her status as “independent contractor”. She declined status as an employee. The hospital purchased her supplies and scheduled her hours on duty. She received 25 percent of patient billings. Ms. Messner was required to remain on call and to maintain malpractice insurance.

DECISION: The claimant was an independent contractor, and not an employee.

RATIONALE: “[T]his Court finds that it is clear from all of the testimony and evidence that claimant Messner was at all times an independent contractor; that she was not an employee; that she had a free choice of whether she would be an employee or an independent contractor and she, after consulting with independent legal counsel, opted to be an independent contractor instead of choosing to be an employee; that over and aside from her acknowledging that she was and her choosing to be an independent contractor above her written signature, all of the evidence establishes that is exactly what she was, along with another nurse anesthetist named Thaddeus Juszckak; that she had the right to perform her services at other hospitals and was not restricted to the Sturgis hospital; that in the opinion of this Court this case is not at all close on the facts as to whether she was an independent contractor or an employee.”

“In the opinion of this Court, the ‘economic reality’ doctrine has no application to personnel of this type, or to the facts in this case.”

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

Edward C Levy Co v MESC – 17.03

Edward C Levy Co v MESC
Digest no. 17.03

Section 42

Cite as: Edward C Levy Co v MESC, unpublished opinion of the Court of Appeals of Michigan, issued January 22, 1979 (Docket No. 78-1550).

Appeal pending: No
Claimant: Willie Dubose
Employer: Edward C. Levy Company
Docket no.: B75 12933 52171
Date of decision: January 22, 1979

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COURT OF APPEALS HOLDING: Where a truck owner-operator works almost exclusively for one company the claimant is an employee, even where the claimant considered himself or herself an independent contractor.

FACTS: The claimant, a truck owner-operator, considered himself an independent contractor. He worked for the Edward C. Levy Co. from 1962 to 1974. The claimant only performed services for other companies when Levy had no work for him.

DECISION: The claimant was an employee, and not an independent contractor.

RATIONALE: “There is little doubt that Mr. Dubose considered himself an independent contractor. However, his belief as to his status is not determinative. The Michigan Employment Security Act defines an employee, in part, as:

‘ … [A]n individual who by lease, contract, or arrangement places at the disposal of a person, firm, or corporation a piece of motor vehicle equipment and under a contract of hire, which provides for the individual’s control and direction, is engaged by the person, firm, or corporation to operate the motor vehicle equipment shall be deemed to be employment subject to this Act.’ MCL 421.42; MSA 17.545. Mr. Dubose certainly placed his trucks at plaintiff’s disposal and then operated them under the direction and control of plaintiff. It is true that plaintiff did not exercise direct day-to-day control over Mr. Dubose’s operation, but it did control the overall direction of Mr. Dubose’s employment situation.”

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

Askew v Macomber – 20.05

Askew v Macomber
Digest no. 20.05

Section 42

Cite as: Askew v Macomber, 398 Mich 212 (1976).

Appeal pending: No
Claimant: Carrie Askew
Employer: Alicia Macomber
Docket no.: N/A (This case arose under the Workers’ Compensation Act)
Date of decision: December 7, 1976

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SUPREME COURT HOLDING: The test of whether a person or business is liable for workers’ compensation benefits as the employer of a claimant is not a matter of terminology, oral or written, but of the realities of the work performed; control of the claimant is a factor, as is payment of wages, hiring and firing, and the responsibility for the maintenance of discipline, but the test of economic reality views these elements as a whole, assigning primacy to no single one.

FACTS: Carrie Askew claimed worker’s compensation benefits against defendants M. Alicia Macomber, the Second National Bank of Saginaw, and Michigan Mutual Liability Company. Mrs. Macomber, because of her advanced age, had entered into an agency agreement with the bank for the management of her property which authorized the bank to pay for Mrs. Macomber’s care. The bank hired the plaintiff as a practical nurse for Mrs. Macomber and the plaintiff was injured in the course of that employment.

DECISION: Alicia Macomber, not the bank, was the employer of Carrie Askew.

RATIONALE: The bank was operating pursuant to an express agency agreement. The employment of nurses was not an integral part of the bank’s business. The bank was not operating as a labor broker. Although the bank drafted the check for Carrie Askew’s wages, the funds came from the Macomber estate, a separate account. Although the bank discussed wages and hours with Carrie Askew and arranged the hiring of her for Mrs. Macomber, it took no part in the day-to-day control or supervision of Ms. Askew’s duties. There was no evidence of any intent by the bank to supervise or discipline Ms. Askew. The bank’s actions on behalf of Ms. Macomber were those of an agent on behalf of a principal.

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

McKissic v Bodine – 20.04

McKissic v Bodine
Digest no. 20.04

Section 42

Cite as: McKissic v Bodine, 42 Mich App 203 (1972); lv den 388 Mich 780 (1972).

Appeal pending: No
Claimant: John S. McKissic
Employer: Harold Bodine
Docket no.: N/A (This case arose under the Worker’s Comp Act.)
Date of decision: July 26, 1972

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COURT OF APPEALS HOLDING: The test to determine whether an employee-employer relationship exists for purposes of the Worker’s Compensation Act is the “economic reality test”, and the factors used to apply the test are whether: (1) the employer will incur liability if the relationship terminates at will; (2) the work performed is an integral part of the employer’s business; (3) the employee primarily depends upon the wages for living expenses; (4) the employee furnishes equipment and material; (5) the employee holds himself out to the public as able to perform certain tasks; (6) the work involved is customarily performed by an independent contractor. Along with (7) the factors of control, payment of wages, maintenance of discipline, and the right to engage or discharge employees; and (8) weighing those factors which will most favorably effectuate the purposes of the Act.

FACTS: Claimant worked full-time at a Fisher Body plant. During the period in issue he was off work recovering from an injury. He advertised as a handy man and painted a sign “McKissic Contracting” on his truck. He furnished his own materials, engaged his own workers and worked on his own schedule. He did repairs and general maintenance and while doing such work for Bodine claimant fell and injured himself.

DECISION: Claimant was primarily employed by Fisher Body, and his relationship to Bodine was one of an independent contractor.

RATIONALE: “The plaintiff was primarily employed by another. The doing of odd jobs was a method of securing extra cash for his own enjoyment. He furnished his own tools. He worked for Bodine only when he was available. He contracted each job for a given price, and held himself out to the public as a handyman…. If he desired protection while acting as an independent contractor, he could have made arrangements for accident insurance….”

Digest Author: Board of Review (original digest here)
Digest Updated: 12/91