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17. Employee Status

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Cite as: Berlin v Northwestern Nat’l Life Ins Co, unpublished opinion of the Court of Appeals of Michigan, issued February 26, 1986 (Docket No. 77624).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

Categories
17. Employee Status

Farrell v Automobile Club of Michigan – 17.05

Farrell v Automobile Club of Michigan
Digest no. 17.05

Section 43(h)

Cite as: Farrell v Auto Club of Michigan, 148 Mich App 165 (1986).

Appeal pending: No
Claimant: Bruce Farrell
Employer: Auto Club of Michigan
Docket no.: B82 14055 89503W
Date of decision: January 6, 1986

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COURT OF APPEALS HOLDING: If the compensation depends upon Claimant’s efforts and a sale being brought to a conclusion, the compensation is a commission.

FACTS: Claimant, as an insurance salesman for the employer, received compensation for selling insurance policies on a sliding scale, whereby fixed dollar amounts were assigned to various “units” of a policy. Ninety percent of Claimant’s income was calculated on a fixed fee computation, instead of a percentage of the total amount of the policy sold.

DECISION: Claimant is excluded from covered employment.

RATIONALE: The court cited Smith v Starke, 196 Mich 311 (1917): “The word ‘commission’ implies a compensation to a factor or agent for services rendered in making a sale.”

The court went on to cite American National Insurance Co v Keitel, 186 SW2d 447, “(the word ‘commission, when used to denote compensation for work performed, as is ordinarily understood, means compensation paid upon results achieved’).” [T]he distinguishing feature of a commission is that payment of a commission is contingent upon the successful completion of sale transactions.”

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