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 C’s Barber Shop v Freiheit, unpublished opinion of the Genesee County Circuit Court, issued June 17, 1985 (Docket No. 84-700-AV).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

Wiggers v Olsen Seawall Construction Co – 17.08

Wiggers v Olsen Seawall Construction Co
Digest no. 17.08

Section 42

Cite as: Wiggers v Olsen Seawall Construction Co, unpublished opinion of the Muskegon Circuit Court, issued April 21, 1980 (No. 79-13578 AE).

Appeal pending: No
Claimant: David Wiggers
Employer: Olsen Seawall Construction Co.
Docket no.: L77 6884 1537
Date of decision: April 21, 1980

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CIRCUIT COURT HOLDING: Where a construction laborer is hired and paid by a subcontractor, and the tools and material are furnished by the general contractor, the laborer is not an employee of the general contractor.

FACTS: The Referee stated: “[T]he partners hired one Tom Nelson as a subcontractor to provide labor for the construction work. He hired the labor for the jobs, kept the time, and each Friday he paid the men in cash.” The claimant was one of the laborers.

DECISION: The claimant was not an employee of Olsen Seawall Construction Co.

RATIONALE: “Testimony is that the workers, after 1974, were completely hired and fired by Mr. Nelson and under his direction for the entire time. The Olsen Seawall Company was still the one the cottage owner dealt with and Olsen did indicate where to put the seawall and how long it was to be. There is testimony that on occasion the per foot costs were changed, and these were discussed with Mr. Nelson, which would be consistent with an independent contractor since if he is to obtain the labor cost as his portion of the contract then he would be consulted, and if he were paid on an hourly basis there would be no basis for consulting with him. It was testified that this was varied when the jobs were difficult or easy. This is also consistent with the independent contractor. The fact that the tools are owned by the Olsens and the fact that they paid for the lumber and additional nuts and bolts which were included in the bid and the pricing method, is not inconsistent with the concept of the independent contractor; and the fact that one of the Olsens would occasionally assist when he was present at the work-site, is not inconsistent with an independent contractor relationship.”

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