Gilbert v. Labor and Industry Review Com'n

• Decision Date: 26 November 2008
• Docket Number: No. 2006AP2694.,2006AP2694.
• Citation: 2008 WI App 173,762 N.W.2d 671
• Parties: Gary R. GILBERT, Plaintiff-Appellant,<SMALL><SUP>&#x2020;</SUP></SMALL> v. LABOR AND INDUSTRY REVIEW COMMISSION and Department of Workforce Development Unemployment Division, Defendants-Respondents.
• Court: Wisconsin Court of Appeals

762 N.W.2d 671

2008 WI App 173

Gary R. GILBERT, Plaintiff-Appellant,^† v. LABOR AND INDUSTRY REVIEW COMMISSION and Department of Workforce Development Unemployment Division, Defendants-Respondents.

No. 2006AP2694.

Court of Appeals of Wisconsin.

Submitted on Briefs April 16, 2007.

Opinion Filed November 26, 2008.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Sheila Stuart Kelley of Kopp, McKichan, Geyer, Skemp & Stombaugh, LLP, Platteville.

On behalf of the defendants-respondents, the cause was submitted on the brief of Peter W. Zeeh of Labor and Industry Review Commission and Department of Workforce Development Unemployment Division, Madison.

Before HIGGINBOTHAM, P.J., VERGERONT and LUNDSTEN, JJ.

¶ 1 HIGGINBOTHAM, P.J

Gary R. Gilbert appeals a decision of the Labor and Industry Review Commission (LIRC) that was affirmed by the circuit court, determining that Gilbert, d/b/a Gary Gilbert Construction, was liable for delinquent unemployment taxes with interest for calendar year 1999, the first two quarters of 2000 and the first two quarters of 2001. The two issues in this appeal are whether services performed during this period by four workers constituted employment in Wisconsin within the meaning of WIS. STAT. §§ 108.02(15)(b) and (d) (2005-06)¹ rendering Gilbert a Wisconsin employer for unemployment tax purposes, and whether the workers were Gilbert's employees within the meaning of WIS. STAT. §§ 108.02(12)(a), (b), and (bm).

¶ 2 Gilbert contends that he was not a Wisconsin employer under WIS. STAT. § 108.02(15) because the service of the workers was localized in Illinois, or in the alternative, because the direction and control of their service came from job sites in Illinois. He also contends that the workers were independent contractors rather than employees for purposes of § 108.02(12).

¶ 3 Giving LIRC's decision on whether Gilbert was a Wisconsin employer subject to unemployment tax due weight deference, we conclude that LIRC's determination that Gilbert was a Wisconsin employer within the meaning of WIS. STAT. § 108.02(15) is based on a reasonable interpretation of the statute that comports with its purpose, and that Gilbert's view that he was not a Wisconsin employer is based on an interpretation of the statute that is not more reasonable than LIRC's. Giving LIRC's decision on whether the workers were Gilbert's employees within the meaning of the statutes great weight deference, we further conclude that LIRC's determination that the workers were Gilbert's employees is based on a reasonable interpretation of WIS. STAT. §§ 108.02(12)(b) and (bm). Accordingly, we affirm the circuit court's judgment affirming LIRC's decision.

Background

¶ 4 The following facts are taken from LIRC's decision, and are not challenged by Gilbert on appeal. During the relevant period of 1999 through 2001, Gilbert was a sole proprietor of Gary Gilbert Construction, a home construction business. The majority of Gilbert's business resulted from his status as a dealer and construction contractor for Heartbilt Homes, Inc., a log home manufacturer. Gilbert maintained a business office at his home in Hazel Green, Wisconsin, but a majority of the company's construction sites were in northwestern Illinois. However, Gilbert also performed new construction work in Wisconsin and Iowa.

¶ 5 Prior to 1998, Gilbert considered all of his workers to be employees and, accordingly, paid unemployment insurance taxes on their wages. In the fall of 1997, Gilbert met with four of his employees— his son Ryan Gilbert, Russell Hilby, Mark Sheldon, and Terry Shireman—and requested that they become independent contractors beginning in 1998. The workers agreed to the change and received increased wages.

¶ 6 Following the ostensible change in relationship, the workers provided their own tools, transportation, and liability insurance. All other materials and supplies needed for the work were provided as before by Gilbert, Heartbilt Homes, or the customers. The workers contracted annually to perform services for Gilbert at an hourly rate, and billed Gilbert every two weeks for their work. Ryan Gilbert, Sheldon, and Shireman all performed services for Gilbert from 1999 through 2001, and Hilby worked for Gilbert in 1999 and 2000. All of the workers performed carpentry work, but Sheldon and Shireman also did some dry walling, roofing, and flooring work, and Ryan Gilbert performed electrical work. Gilbert paid his workers primarily on an hourly basis, although Sheldon and Shireman sometimes bid for work on a piecework basis. Additionally, Gilbert paid Ryan Gilbert on a piecework basis for electrical work, which accounted for twenty-five percent of his total labor.

¶ 7 In 2003, the Department of Workforce Development (DWD) assessed Gilbert for past due and delinquent unemployment insurance contributions with interest for 1999 and the first two quarters of 2000 and 2001. Gilbert appealed the assessment to an administrative law judge, who affirmed the agency's action. Gilbert sought a de novo review before LIRC, which affirmed the administrative law judge's decision with modifications. Gilbert then sought judicial review of LIRC's decision. The circuit court affirmed LIRC's decision and Gilbert appeals. Additional facts are provided as needed in the discussion section.

Standards of Review

¶ 8 This appeal is taken from a circuit court decision affirming an administrative agency's decision. We review the agency's decision, not that of the circuit court, and the scope of our review is the same as that of the circuit court. Target Stores v. LIRC, 217 Wis.2d 1, 11, 576 N.W.2d 545 (Ct.App.1998). Gilbert does not challenge LIRC's findings of fact on appeal. Gilbert instead contests LIRC's interpretation and application of WIS. STAT. §§ 108.02(12)(b) and (bm), and (15)(b) and (d), which are questions of law. Although we ordinarily review questions of law de novo, we may defer to LIRC's interpretation of law, applying either great weight or due weight deference, to correspond with its expertise in a given area of law. See Kannenberg v. LIRC, 213 Wis.2d 373, 384-85, 571 N.W.2d 165 (Ct.App.1997).

¶ 9 Great weight deference is appropriate when an administrative agency's interpretation is one of long-standing and will provide uniformity and consistency in application of the statute; the agency employed its expertise or specialized knowledge in forming the interpretation; and the statute is one the agency has been charged with administering. See Hutchinson Tech., Inc. v. LIRC, 2004 WI 90, ¶ 22, 273 Wis.2d 394, 682 N.W.2d 343. Under the great weight standard, we will uphold an agency's interpretation as long as it is reasonable and not contrary to the statute's clear meaning, even if we find a different interpretation more reasonable. UFE Inc. v. LIRC, 201 Wis.2d 274, 287, 548 N.W.2d 57 (1996). We apply due weight deference "when the agency has some experience in the area, but has not developed the expertise which necessarily places it in a better position to make judgments regarding the interpretation of the statute than a court." Id. at 286, 548 N.W.2d 57. Under the due weight standard, we will uphold the agency's decision if its interpretation is reasonable, and no other interpretation is more reasonable than the agency's, and the agency's interpretation comports with the purpose of the statute. Id. at 286-87, 548 N.W.2d 57. The de novo standard of review is appropriate when the issue is a matter of first impression or when the agency's position has been so inconsistent as to provide no real guidance. Id. at 285, 548 N.W.2d 57.

¶ 10 LIRC contends that its decision that the workers' services constituted employment in Wisconsin within the meaning of WIS. STAT. §§ 108.02(15)(b) and (d) is entitled to at least due weight deference. Gilbert takes no position on the degree of deference we afford LIRC's decision under §§ 108.02(15)(b) and (d). We conclude, given LIRC's limited degree of experience interpreting §§ 108.02(15)(b) and (d) in the present context, that its decision that the workers' service in this case is employment in Wisconsin within the meaning of §§ 108.02(15)(b) and (d) is entitled to due weight deference As LIRC explains on appeal, DWD is charged with the administration and enforcement of the unemployment insurance statutes, and LIRC has construed § 108.02(15) in at least one prior case, Broyhill Furniture Indus., Inc., UI Hearing No. S0100223MD (LIRC, October 24, 2003), aff'd sub nom. Broyhill Furniture Indus., Inc. v. Jim Haugen, LIRC & DWD, Case No. 2003CV3585 (Wis. Cir. Ct. Dane Co., March 24, 2005), that addressed whether a worker's service performed partly outside and partly inside the state was Wisconsin employment under the statute.

¶ 11 Regarding LIRC's determination that the workers were Gilbert's employees within the meaning of WIS. STAT. § 108.02(12), we conclude, and both LIRC and Gilbert agree, that the agency's decision is entitled to great weight deference. As LIRC points out, the commission has extensive experience in construing and applying this statute in determining whether a worker is an employee under the Wisconsin Unemployment Compensation Law.

Discussion

¶ 12 There are two issues in this case: (1) whether the service of Gilbert's workers constituted "employment" within the meaning of Wis. STAT. § 108.02(15) rendering his business a Wisconsin employer subject to unemployment tax; and (2) whether Hilby, Sheldon, Shireman and Ryan Gilbert were Gilbert's employees for whom Gilbert was required to pay unemployment insurance under § 108.02(12). We address each issue in turn.

I. Whether the Workers' Service Constituted "Employment" in Wisconsin under WIS. STAT. § 108.02(15) Rendering Gilbert a Wisconsin Employer Subject to Unemployment Tax

¶ 13 WISCONSIN STAT. § 108.02(15)² establishes a hierarchy of criteria for determining when a worker's services constitute "employment" in Wisconsin. These...