An interpreter for the hearing-impaired will be available on request for these hearings. Please make reservations for a hearing interpreter by October 6, 1995 either by writing to Judy Jung, P.O. Box 8911, Madison, WI 53708-8911 or by calling (608) 224-4972 or via the Division's TDD telephone (608) 224-5058. Handicap access is available at the hearings.

Statutory authority: s. 100.20 (2)

Statute interpreted: s. 100.20

Currently, under ch. ATCP 116, Wis. Adm. Code, the Department of Agriculture, Trade and Consumer Protection (“Department”) regulates work recruitment schemes that are aimed at getting money from job applicants, not just recruiting them as workers. This rule strengthens and clarifies the Department's current rules, which have not been updated since 1962.

CURRENT RULES

The current rules apply when a business recruits workers to sell “products,” but requires them to make a “purchase or investment” in order to get the job. The current rules prohibit a recruiter from doing any of the following:

○ Requiring recruits to make a “purchase or investment” unless the recruitment ads disclose the purchase or investment requirement.

○ Misrepresenting the nature of the work or the amount that a worker will earn.

○ Selling sales kits, inventory or other “goods” to a recruited worker, unless all of the following apply:

○ The contract for the sale of goods is in writing, and a copy is furnished to the sales worker. The sale contract must state whether it is assignable.

○ The sale contract discloses the total price of the goods, including interest and other charges.

○ The sale contract describes the terms and conditions of the sales work for which the worker was recruited, including the nature of the work, the worker's rate of pay, the usual hours of work and any minimum work commitment.

○ The sale contract describes the “territory,” if any,which is assigned to the sales worker, and states whether the territory is exclusive.

PROPOSED RULE

This rule strengthens and clarifies the Department's current rules. Like the current rules, this rule regulates recruitment schemes that are aimed at getting money from job applicants, not just recruiting them as workers. This rule does not affect other businesses that recruit and hire workers.

Coverage

This rule expands the coverage of the current rules. The current rules apply when a business requires a “purchase or investment” from prospective employes, agents or independent contractors whom the business recruits to sell “products.”

This rule applies, more broadly, when a businesses requires or solicits a “purchase or investment” from either of the following:

○ Prospective employes, regardless of the work for which they are recruited.

○ Prospective sales workers, regardless of whether they are recruited as employes, agents or independent contractors. “Sales work” means any work that involves soliciting persons to purchase or lease goods, services or contract rights (not just “products”) which the recruiter is in the business of selling or leasing.

“Purchase or Investment” Defined

The current rules do not define what is meant by a “purchase or investment.” This rule clarifies that a “purchase or investment” means a direct or indirect payment to the recruiter. This definition is consistent with the Wisconsin Court of Appeals decision in Schinker v. Farmers Insurance Exchange et al., Case No. 89-0959, which held that an insurance agent required to establish his own office was not required to make a “purchase or investment” within the meaning of the current rules. (To establish his own office, the agent was not required to make any payment to the insurance company that recruited him.)

Required “Purchase or Investment;” Disclosure

This rule requires a recruiter to disclose, in every work advertisement or solicitation, the nature and amount of every “required purchase or investment.” A “required purchase or investment” means any “purchase or investment” that a recruit must make in order to obtain a work offer, or to have a reasonable prospect of achieving the potential earnings claimed by the recruiter.

“Purchase or Investment” Documented

Under this rule, a recruiter must document every “purchase or investment” in writing, and must provide a copy of that document to the recruit before the recruit agrees to make the “purchase or investment.” The document must include all of the following:

○ The name of the recruit.

○ The name and permanent address of the recruiter.

○ The nature of the “purchase or investment,” and the terms under which it is made.

○ The amount of the “purchase or investment,” including any interest or other charges that may apply.

○ The consideration given by the recruiter in return for the “purchase or investment.”

○ If the “purchase or investment” involves any separate contract or note, a copy of that contract or note. Each contract and each note must state whether it is subject to assignment.

○ The terms and conditions of any work offer to which the “purchase or investment” is related. The terms and conditions must include all of the following:

○ The nature of the work offered.

○ The source from which the recruit will receive his or her earnings, if other than the recruiter.

○ The form, such as wages, salaries, commissions, or direct profits from sales, in which the recruit will receive his or her earnings.

○ The agreed rate of pay if applicable, or the agreed method by which earnings will be determined.

○ Fringe benefits if any.

○ Applicable work terms and conditions, including work hours and location. If a recruit is offered sales work in a specific territory, the work offer must describe that territory and state whether it is exclusive.

Earnings Claims

Under this rule, if a recruiter makes any statement of potential earnings to recruits from whom the recruiter solicits any purchase or investment, the recruiter must disclose all of the following in connection with that statement:

○ The source from which the worker would receive the earnings, if other than the recruiter.

○ The form, such as wages, salaries, commissions, or direct profits from sales, in which the recruit would receive the earnings.

○ The basis on which the earnings would be paid or received, such as per unit of time worked, per unit of work completed, or per volume of sales. The basis must be stated so that a recruit can readily understand, compare and evaluate the stated earnings.

○ Requirements which the recruit must meet in order to qualify for the stated earnings, including any training or probationary service requirement.

○ The nature and amount of every purchase or investment which the recruit must make in order to have a reasonable prospect of achieving the stated earnings.

Prohibited Practices

Under this rule, no recruiter who solicits a “purchase or investment” from any recruit may do any of the following:

○ Make any false, deceptive or misleading representation to that recruit.

○ Misrepresent the nature of the work which the recruiter offers or may offer to that recruit.

○ Misrepresent the nature or amount of earnings which the recruit may make.

○ Misrepresent that an offer to engage that recruit as an independent contractor is an offer to engage that recruit as an employee.

○ Engage in a “bait and switch” scheme whose purpose is not to recruit workers to perform work.

○ Misrepresent the recruiter's identity.

Employment Services

This rule prohibits any person from misrepresenting an advertisement or offer of employment service as an advertisement or offer of work. An “employment service” is a service designed to help individuals obtain work, other than work offered by the provider of the employment service. For example, “employment service” includes assistance with any of the following:

○ Finding work announcements or obtaining work offers.

○ Preparing resumes or portfolios.

○ Obtaining or completing work application forms.

The adoption of the proposed rule revisions will have no state or local fiscal effect.

See 09-15-95 Wis. Adm. Register, page 5.

The State of Wisconsin Department of Agriculture, Trade and Consumer Protection announces that it will hold public hearings on proposed amendments to ch. ATCP 70, Wis. Adm. Code, relating to food processors. The hearings will be held at the times and places shown below. The public is invited to attend the hearings and comment on the proposed rules. Following the public hearing, the hearing record will remain open until October 27, 1995 for additional written comments.

A copy of this rule may be obtained free of charge, from the Wisconsin Department of Agriculture, Trade and Consumer Protection, Division of Food Safety, 2811 Agriculture Drive, P.O. Box 8911, Madison, WI 53708-8911 or by calling (608)224-4700. Copies will also be available at the public hearings.

An interpreter for the hearing impaired will be available on request for these hearings. Please make reservations for a hearing interpreter by October 6, 1995 either by writing to Margaret Maly, 2811 Agriculture Drive, P.O. Box 8911, Madison, WI 53708-8911, (608/224-5023) or by contacting the message relay system (TTY) at 608/224-5058. Handicap access is available at the hearings.

Testimony at all four hearings will be taken from 10:00 AM to 2:00 PM or until all parties have been heard.