Varsity Tutors LLC v. LIRC (Worker Classification)

In Varsity Tutors LLC v. LIRC (2018AP1951), the Court of Appeals District I held that a worker was an independent contractor, not an employee, of an online business connecting tutors and students.

Varsity Tutors hosts online profiles of contracted tutors and allows students to browse and select tutors. Once students have selected and been accepted by a tutor, the tutor is responsible for organizing dates and locations, procuring materials, and arranging their own transportation. Varsity does not require a minimum number of tutoring hours, nor does it train or assess tutors using its platform.

Holland Galante entered into a contract with Varsity Tutors to tutor students as a side job. Two years after beginning tutoring via Varsity, Galante applied for unemployment benefits. The Department of Workforce Development determined she was an employee of Varsity for the purposes of unemployment benefits, and the Labor & Industry Review Commission (LIRC) affirmed.

The court found that Galante was not eligible for unemployment benefits because she was an independent contractor, not an employee, of Varsity. Wis. Stat. § 108.02(12)(bm) provides that a worker is not an employee if 1) the worker’s services are performed without control or direction of the employer and 2) the worker meets six or more conditions for classification as an independent contractor. LIRC agreed with Varsity that Galante’s tutoring was performed without Varsity’s control or direction. The court overturned LIRC’s decision finding that Galante did not meet six of the classification conditions. The court found that

  1. Galante advertised and held herself out as being in the tutoring business by creating a profile on Varsity’s website. (§ 108.02(12)(bm)2.a.)
  2. Galante tutored in locations of her own choice, using her own equipment. (§ 108.02(12)(bm)2.b.)
  3. Galante incurred the main expenses to her tutoring services because she provided her own training, curriculum, transportation, etc. (§ 108.02(12)(bm)2.d.)
  4. Galante was obligated to redo unsatisfactory work for no additional compensation or would be subject to a monetary penalty for unsatisfactory work. (§ 108.02(12)(bm)2.e.)
  5. Galante’s tutoring services did not directly relate to Varsity’s business of connecting students and tutors via its website. Varsity was not itself in the business of tutoring. (§ 108.02(12)(bm)2.f.)
  6. Galante had recurring business liabilities, such as Varsity’s requirement that she obtain automobile insurance. (§ 108.02(12)(bm)2.h.)

Because Galante’s work met six of the classification conditions, the court found she was not an “employee” of Varsity eligible for unemployment benefits.

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