17. Employee Status

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Cite as: Wolverine Transportation & Storage, Inc v Downey, unpublished opinion of the Macomb County Circuit Court, issued March 23, 2007 (Case No. 2006-4021-AE).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

17. Employee Status

Roadway Package Systems v Storey – 17.25

Roadway Package Systems v Storey
Digest No. 17.25

Section 421.42(1) and (5), and 421.44(1)

Cite as: Roadway Package Systems, Inc v Storey, unpublished opinion of the Wayne County Circuit Court, issued July 27, 2006 (Docket No. 05-535515-AE).

Appeal pending: No
Claimant: Craig Storey
Employer: Roadway Package Systems, Inc.
Date of decision: July 27, 2006

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HOLDING: A claimant who owns his own truck and delivers packages for an employer is still considered an employee when the employer exercises a significant level of control over the claimant’s actions.

FACTS:  Claimant worked as a truck driver delivering packages for the employer. The contract between the parties required Claimant to provide daily delivery service for a period of three years, to pick up and deliver packages on dates and times compatible with the schedules and requirements of the employer’s customers, to provide proof of timely maintenance and inspection of his truck, to use his truck exclusively for delivering RPS packages, to identify his truck with RPS logos to identify the truck as part of the RPS system, to wear the RPS approved uniform, and to permit RPS personnel to ride along.

DECISION: The Circuit Court affirmed the Board of Review decision that Claimant was an employee. Claimant is not disqualified from receiving benefits.

RATIONALE:  The Board of Review applied the “economic reality” test and found that due to the nature of the relationship between the parties and the level of control exerted by the employer, Claimant was an employee. The Board of Review distinguished this from other cases where claimants who own their own vehicles were considered independent contractors by stating that in those cases the determinative factor was that the claimants also drove for other employers. In the current case, Claimant was precluded from driving for anyone else and was required to wear a uniform and outfit his truck as an RPS truck.

The Circuit Court affirmed the Board of Review decision. The Circuit Court disagreed with the argument put forth by RPS that the Board of Review has misapplied the legal precedent. In addition, the Circuit Court held that the fact that Claimant owned the truck is not determinative since he had to outfit the truck to very specific specifications put forth by RPS.

Digest author: Andrea M. Frailey, Michigan Law, Class of 2017
Digest updated: November 4, 2017

17. Employee Status

Mr C’s Barber Shop v. Freiheit – 17.26

Mr C’s Barber Shop v. Freiheit
Digest No. 17.26

Section 421.42(1) and (5)

Cite as: Mr. C’s Barber Shop v Freiheit, unpublished opinion of the Genesee County Circuit Court, issued June 17, 1985 (Docket No. 84-700-AV).

Appeal pending: No
Claimant: Karen Freiheit
Employer: Mr. C’s Barber Shop
Date of decision: June 17, 1985

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HOLDING: Claimant is considered an employee under MCL 421.42 despite the fact that when she was hired, she signed a lease agreement renting out a chair in the barber shop.

FACTS:  Claimant was an apprentice at the employer’s barber shop from January 1980 until July 25, 1981. Claimant signed a lease with the employer to rent a chair at the barber shop for $95 per week. The employer determined what hours Claimant worked, when Claimant would take a lunch break, and when the shop would be open (it was closed for deer-hunting season). The employer also granted vacation requests and determined how much vacation could be taken. Claimant provided her own shears and tools, but the employer provided all lotions, shampoos, and other products. The employer became dissatisfied with Claimant’s work and tried to fire her. Claimant asked to be allowed to stay for two more weeks and finish her apprenticeship. The employer agreed.

Claimant filed for UI benefits and was denied because the Agency said her work at the barber shop was not employment. Claimant appealed and the ALJ found that Claimant was not an employee. The Board of Review affirmed the ALJ decision, but upon a request for rehearing put forth by the Claimant, the Board of Review reversed the ALJ decision and found Claimant to be an employee. The employer appealed.

DECISION: The Board of Review’s decision finding that Claimant was an employee was affirmed by the Circuit Court. Claimant is not disqualified from receiving benefits.

RATIONALE:  Upon reviewing the economic reality test that had been adopted by Michigan Courts, the Circuit Court found that the determination of whether a claimant is an employee or an independent contractor must be done on a case by case basis. The Circuit Court reviewed the fact of this case in light of the Michigan Employment Security Act’s purpose to lighten the burden caused by unemployment.

The Circuit Court believed that the Board of Review’s decision was consistent with the standards laid out in McKissic v Bodine, 42 Mich App 203 (1972). The Court pointed to the fact that the employer set vacations, furnished supplies, set hours, and could discharge Claimant at will. Based on the fact that the employer “fired” Claimant instead of terminating the lease means that, despite calling this a lease agreement, it was, in fact, an employment agreement.

Digest author: Andrea M. Frailey, Michigan Law, Class of 2017
Digest updated: 10/31/2017

17. Employee Status

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:

01. Public Policy

Godsol d.b.a. Nu-Enamel Michigan Co v MUCC – 1.01

Godsol d.b.a. Nu-Enamel Michigan Co v MUCC
Digest no. 1.01

Section 2, 41(3)

Cite asGodsol v MUCC, 302 Mich 652 (1942).

Appeal pending: No
Claimant: John T.Willcox
Employer: Arnold H. Godsol d.b.a. Nu-Enamel Michigan Co.
Docket no.: AB 4163 556
Date of decision: September 8, 1942

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APPEAL BOARD HOLDING: The definition of “employer,” under former MES Act Section 41(3), since amended, was not limited to situations where the “employer” had legally enforceable control over the employing unit. Section 41 was not violative of the equal protection provision of the Fourteenth Amendment.

FACTS: Claimant was employed by Nu-Enamel Michigan, owned by Arnold Godsol. Helen Godsol, Arnold’s wife, operated Nu-Enamel Detroit. Neither of those businesses employed eight or more employees, the then requisite number for “employer” status under the MES Act. Combined they did have more than eight employees. Nu-Enamel Detroit was a sub-distributorship of Nu-Enamel Michigan and was established solely with Mrs. Godsol’s separate funds. In operating the business Mrs. Godsol relied on her husband for advice and assistance. He frequently visited her stores, gave directions to employees, received daily business reports, hired and discharged employees. At that time Section 41(3) provided for treatment of multiple employer units as a single employer, if owned or controlled, by legally enforceable means or otherwise, directly or indirectedly, by the same interests. The MESC treated the businesses as a single employer. As a result claimant was eligible for benefits. The Godsols challenged the Commissions interpretation of the word “control” and also challenged then Section 41(3) on equal protection grounds.

DECISION: Section 41(3) is not unconstitutional. Employer is a covered employer under the Act. Claimant entitled to benefits if otherwise eligible and qualified.

RATIONALE: “The purpose of the unemployment compensation act is to relieve the distress of economic insecurity due to unemployment. It was enacted in the interest of public welfare to provide for assistance to the unemployed, and as such is entitled to a liberal interpretation.”

Digest author: Board of Review (original digest here)
Digest updated: 6/91