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80 Op. Att'y Gen. 154, 161 (1992)

  In my opinion, the company in this fact situation does not qualify as an employe service company. As indicated, based on the clear language of sections 108.02(12m) and 108.065 and the expressed legislative intent, a company must meet all of the criteria listed in section 108.02(12m) "in fact" to be considered an employe service company.

80 Op. Att'y Gen. 154, 161 (1992)

  A company's declaration that it is an employe service company and a binding ruling that the employes who work at clients' locations are considered employes of the employe service company for federal unemployment purposes has no effect on meeting the statutory definition of section 108.02(12m). First, the clear statutory language states that a company can be considered an employe service company only if the company makes a factual showing with regard to the five conditions listed in section 108.02(12m). Once the five conditions are met in section 108.02(12m) and a company is considered an employe service company, a company may invoke section 108.065 only if the company is taxed under the federal unemployment tax act on the basis of the employment surrounding the employe service company. Only after conditions in section 108.065 have been met will a company be considered an "employer" for state UC purposes. To allow a company to circumvent the clearly stated requirements under sections 108.02(12m) and 108.065 obviously contravenes legislative intent.

80 Op. Att'y Gen. 154, 161-162 (1992)

  Second, the fact that a company has a binding ruling making it, in effect, the "employer" for federal unemployment purposes has no bearing on whether a company is considered an employe service company for state UC purposes. The federal and state determinations of employer status for employe service companies are separate and distinct. Just because a company is considered an "employer" for federal unemployment purposes does not necessarily mean that the state will consider the company an employer under section 108.065. To be considered an employer for state unemployment purposes under section 108.065, a company must be an employe service company as defined by section 108.02(12m) and then meet the additional requirements in section 108.065.

80 Op. Att'y Gen. 154, 162 (1992)

  In the second fact situation, you ask:

80 Op. Att'y Gen. 154, 162 (1992)

  If the company can show that at least one employe meets the criteria listed under [section] 108.02(12m), does that then qualify the company to use [section] 108.065 to assume sole liability for the State Unemployment for all its employes who have been determined to be its employes under the Federal Unemployment Act?

80 Op. Att'y Gen. 154, 162 (1992)

  In my opinion it does not. Your question involves a two-step analysis. First, a company must meet all of the requirements of section 108.02(12m). Second, once the company is defined as an employe service company, the requirements of section 108.065 must be met.

80 Op. Att'y Gen. 154, 162 (1992)

  In terms of section 108.02(12m) and the first step of analysis, I conclude that one employe's compliance with the five requirements, where there are several employes, does not automatically mean that the
entire
company qualifies under section 108.02(12m). The clear statutory language of section 108.02(12m) states that a company must satisfy the five conditions "in fact." It therefore is apparent that the Legislature intended that the company make a factual showing with regard to all of its employes who are engaged in the type of employment contemplated in the statutory definition. If the Legislature had intended the factual showing to be satisfied by only one individual's compliance with the five conditions, it would have been clearly stated.

80 Op. Att'y Gen. 154, 162-163 (1992)

  If, however, a company could meet all five conditions with all covered employes, the second step of analysis and section 108.065 would be invoked. Section 108.065 provides that, "An employe service company is the employer of an individual who is engaged in employment performing services for a client or customer of the employe service company if the employe service company is taxed under the federal unemployment tax act (26 USC 3301 to 3311)
on the basis of that employment
." It is clear that the phrase "on the basis of that employment" refers to the individual's work which qualifies the company as an employe service company. If the federal government taxed the company on the basis of an individual's work not performed in connection with the employe service company, this would be outside the statutory provision of section 108.065. Thus, the employe service company would not qualify as an "employer" for state UC purposes because it would not meet the section 108.065 criteria.

80 Op. Att'y Gen. 154, 163 (1992)

  This conclusion also accords with the expressed legislative purpose. As discussed earlier, one of the problems identified by the Legislature before adopting section 108.065 was the fact that the federal determination of employer status of an employe service company did not always coincide with the state determination of employer status for employe service companies. It is my understanding that sometimes the federal determination would make the client of the employe service company the employer while the state would determine the employe service company to be the employer. The requirement in section 108.065 that an employe service company be taxed under the federal unemployment tax act on the basis of an individual's employment with the employe service company before the state would consider the employe service company an employer, better ensures that the federal and state determinations would coincide. Thus, only when the federal government determines an employe service company to be the employer will the state recognize an employe service company as the employer.

80 Op. Att'y Gen. 154, 164 (1992)

  You also ask whether a qualified employe service company could use the provisions of section 108.065 "to assume sole liability for the State Unemployment for all its employes who have been determined to be its employes under the Federal Unemployment Act?" Based on the above discussion, it is my opinion that an employe service company could qualify as an employer and assume liability for state UC taxes as long as the employe service company is taxed under the federal unemployment tax act on the basis of an individual's employment in connection with the employe service company.
See
sec. 108.065, Stats.

80 Op. Att'y Gen. 154, 164 (1992)

  In your third fact situation, you ask:

80 Op. Att'y Gen. 154, 164 (1992)

  If the client, the employe, and the company all agree that the company is acting as the employe service company and the company has a binding Federal ruling to that effect, is that enough for the company to meet the definition of an employe service company which will then allow the company to make use of the provisions of [section] 108.065?

80 Op. Att'y Gen. 154, 164 (1992)

  In view of the answers to your previous questions, I conclude that these facts, standing alone, would not qualify a company as an employe service company. As already indicated, a company must, at minimum, satisfy the criteria of section 108.02(12m) with a factual showing. An agreement between the client, the employe and the company that the company is acting as an employe service company and a binding federal ruling to that effect may or may not be relevant to meeting the specific requirements of section 108.02(12m).

80 Op. Att'y Gen. 154, 164 (1992)

  In the fourth fact situation, you ask:

80 Op. Att'y Gen. 154, 164-165 (1992)

  Does the fact that all agencies of both the State and Federal government, other than the Wisconsin Unemployment division, including the Wage and Hour Division and Workers Compensation Division, both operating under the same umbrella of the Department of Industry, Labor, and Human Relations, all recognize the company to be the employer lend any weight to its meeting the definition of an employe service company which will allow the company to make use of the provisions of [section] 108.065?

80 Op. Att'y Gen. 154, 165 (1992)

  Weight, yes; controlling effect, not necessarily. The fact that all agencies of both state and federal government except the Wisconsin unemployment compensation division recognize the company to be the employer, does not relieve the Wisconsin unemployment compensation division from its responsibilities under the statutes to determine employer status as an employe service company. First, notwithstanding the other federal and state agency determinations, the Legislature created specific statutory provisions to define an employe service company and to determine employer status for UC tax purpose. It is presumed that the Legislature was aware of the other agency statutes, such as workers' compensation, when sections 108.02(12m) and 108.065 were adopted in 1987.
Kindy v. Hayes
, 44 Wis. 2d 301, 314, 171 N.W.2d 324 (1969), citing
Town of Madison v. City of Madison
, 269 Wis. 609, 614, 70 N.W.2d 249 (1955). Thus, the Legislature clearly intended for a company to comply with the specific statutory mandates in terms of unemployment compensation. Therefore, the other federal and state agency determinations have limited relevance with respect to the Wisconsin unemployment compensation division's application of the statutes to a given set of facts.

80 Op. Att'y Gen. 154, 165-166 (1992)

  Second, the clear language of section 108.02(12m) requires that a factual determination be made that the five conditions are satisfied before the company can be considered an employe service company. Other agency determinations of employer status are not included within the required factual showing of section 108.02(12m).¯
12
Thus, I conclude that a showing by the company of other agency determinations which found the company to be an employer is not necessarily sufficient to meet the
specific
statutory requirements of section 108.02(12m).

80 Op. Att'y Gen. 154, 166 (1992)

  Overall, it is my opinion that the unambiguous statutory language and the legislative history clearly set out the interrelationship between sections 108.02(12m) and 108.065 for unemployment compensation purposes. Section 108.02(12m) states the criteria which must be met in order for a company to be considered an employe service company. Once these requirements are met, a company can invoke section 108.065 which determines whether an employe service company qualifies as an employer for state UC purposes. It is clear that a company must satisfy all of the requirements in sections 108.02(12m) and 108.065 to be considered an employe service company and an employer.

80 Op. Att'y Gen. 154, 166 (1992)

JED:JDN

80 Op. Att'y Gen. 154, 154 (1992) - Footnote
Destination-275  
1
For the history behind this legislation,
see
Draft, Employer Status in the Leasing Industry for UC Purposes
(hereinafter "Draft"), at 2-4, 6-7, Statute Drafting File to 1987 Act 255, LRB 5433/7, Wisconsin Legislative Reference Bureau, State Capitol, Madison, Wis.

80 Op. Att'y Gen. 154, 154 (1992) - Footnote
Destination-276  
2
The employer-employe relationship has also been addressed by the courts in an analogous situation. The issue of whether an employer-employe relationship exists typically arises in cases involving independent contractors and workers' compensation. In order to determine whether an "employer-employe" relationship exists in the independent contractor situation for the purposes of state workers' compensation, the company and the individual must meet certain statutory qualifications. This has been characterized by reviewing courts as a question of fact.
See
United Way of Greater Milwaukee v. DILHR
, 105 Wis. 2d 447, 453, 313 N.W.2d 858 (Ct. App. 1981).

80 Op. Att'y Gen. 154, 154 (1992) - Footnote

  Similarly, in the unemployment compensation situation, a company or an individual must meet certain statutory qualifications to be considered an employer or an employe.
Cf.
,
Keeler v. LIRC
, 154 Wis. 2d 626, 453 N.W.2d 902 (Ct. App. 1990);
Tri-State Home Improvement v. LIRC
, 107 Wis. 2d 748, 322 N.W.2d 700 (Ct. App. 1982),
aff'd
, 111 Wis. 2d 103, 104-05, 330 N.W.2d 186 (1983); and
Princess House, Inc. v. DILHR
, 105 Wis. 2d 743, 314 N.W.2d 922 (Ct. App. 1981),
aff'd
, 111 Wis. 2d 46, 49, 330 N.W.2d 169 (1983).

80 Op. Att'y Gen. 154, 154 (1992) - Footnote
Destination-277  
3
See
Statute Drafting File to 1987 Wisconsin Act 255, LRB 5433/7, Wisconsin Legislative Reference Bureau, State Capitol, Madison, Wis.
See
also
Draft, at 1 and 4.

80 Op. Att'y Gen. 154, 154 (1992) - Footnote
Destination-278  
4
See
Draft, at 1.

80 Op. Att'y Gen. 154, 154 (1992) - Footnote
Destination-279  
5
Additionally, the representatives of the leasing industry requested that the law be changed so that the leasing company was considered the employer.
See
Draft, at 1.

80 Op. Att'y Gen. 154, 154 (1992) - Footnote
Destination-280  
6
See
Draft, at 8-10.

80 Op. Att'y Gen. 154, 154 (1992) - Footnote
Destination-281  
7
See
Memorandum, Policy Paper on Leasing Firms
, at 1-2, Statute Drafting File to 1987 Wisconsin Act 255, LRB 5433/7, Wisconsin Legislative Reference Bureau, State Capitol, Madison, Wisconsin.

80 Op. Att'y Gen. 154, 154 (1992) - Footnote
Destination-282  
8
Id.
, at 2-3.

80 Op. Att'y Gen. 154, 154 (1992) - Footnote
Destination-283  
9
Section 108.02(12m) created by 1987 Wisconsin Act 255 5. Section 108.065 created by 1987 Wisconsin Act 255 34 and 44.

80 Op. Att'y Gen. 154, 154 (1992) - Footnote
Destination-284  
10
See
Statute Drafting File to 1987 Wisconsin Act 255, LRB 5433/7,
Analysis by the Legislative Reference Bureau
, at 1-2, Wisconsin Legislative Reference Bureau, State Capitol, Madison, Wisconsin.
See
also
Draft, at 6-12.

80 Op. Att'y Gen. 154, 154 (1992) - Footnote
Destination-285  
11
This provision was included to resolve the lack of coordination between the federal and state determinations of employer status with regard to leasing companies.
See
Draft, at 11.

80 Op. Att'y Gen. 154, 154 (1992) - Footnote
Destination-286  
12
Whether administrative
res
judicata
or collateral estoppel can be applied in a particular case is beyond the scope of this opinion.
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