EMPLOYEE STATUS, Economic reality test
CITE AS: Industro-Motive Corp. v Wilke, 6 Mich App 708 (1967).
Appeal pending: No
Claimant: Carroll F. Wilke
Employer: Industro-Motive Corp.
Docket No: B64 4965 R0 33382
COURT OF APPEALS HOLDING: The economic reality test is to be used in unemployment compensation cases dealing with whether a person is an employee or independent contractor.
FACTS: Claimant was a designer of model automobiles. Claimant and the employer entered into a written agreement. Under the agreement each project was to be completed within 60 days of commencement. Claimant was to be paid a salary of $150 weekly plus a royalty of 1 cent for each model sold. Claimant worked in his basement, used his own tools but was reimbursed by the employer for materials. The contract could be terminated with 90 days written notice from either party. When claimant did not complete a project on schedule the employer stopped paying him and the claimant applied for unemployment benefits.
DECISION: Claimant was an employee and the remuneration he received was wages under the Employment Security Act.
RATIONALE: "By adoption of Justice Talbot Smith's dissent in Powell v Employment Security Commission (1956), 345 Mich 455, 462 (see Tata v Muskovitz /1959/, 354 Mich 695, and Goodchild v Erickson /1965/, 375 Mich 289), our Supreme Court has abrogated the use of the common law definition of "control" in interpreting social legislation, which we hold includes employment security legislation as well as workmen's compensation legislation. Control in the sense of right to control (see majority opinion in Powell, supra) is only one of many factors to be considered. Now 'The test employed is one of economic reality. It looks at the task performed, whether or not it is part of a larger common task, 'a contribution to the accomplishment of a common objective'. (citing authority) The test is far from the common-law test of control, since 'the act concerns itself with the correction of economic evils through remedies which were unknown at the common law.'"