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

View/download the full decision

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: