Opinion ID: 1937458
Heading Depth: 2
Heading Rank: 1

Heading: The Localization Test.

Text: The hearing officer concluded that the employer failed to establish that the services of the employees identified in the refund claim were not localized in this state. Under Iowa Code section 96.19(6)(e), service is localized in a state if (1) the service is performed entirely within the state or (2) the service is performed both within and without the state, but the service performed without the state is incidental to the service performed within the state. For example, if the service performed outside the state is temporary or transitory in nature or consists of isolated transactions, then the service is localized within the state. Merely because some services are performed in a state does not render the employment localized in that state. An Iowa administrative rule provides: Services performed in a state are considered localized in that state and contributions are payable to such state. 345 Iowa Admin.Code § 3.24(1)(a)(1986). Such a rule ignores the time element of service in employment and runs contrary to the manifest purpose of the statute to allocate an individual's employment to one state during reporting periods. The employer's representative testified at the hearing that the wages reported on the amended forms for 1985 were paid to Wisconsin employees that were part of a Wisconsin crew. He added that they had worked in Wisconsin part of the year and then went down to Iowa and worked. Every one of them was an employee of Iverson before and after working in Iowa. He testified they were Wisconsin residents, they were directed from the Wisconsin office, and their only work in Iowa concerned the particular contract or group of contracts. He indicated the construction crews rotatedthat they might go to Iowa for two months, come back to Wisconsin for a month and then go back to the Iowa project. This evidence is undisputed. The conclusion of the agency runs directly contrary to the undisputed evidence presented at the hearing, and indicates a misapplication of law, affecting its decision and prejudicing substantial rights of the employer. See Iowa Code § 17A.19(8). The services of the employees were neither performed entirely within Iowa nor were the services performed outside Iowa incidental to the services performed within Iowa. Accordingly, the services of the employees were not localized in Iowa. Under the same analysis, the services of the employees were not localized in Wisconsin, either. During the reporting periods, the services performed within Iowa were so substantial that they may not be characterized as incidental to the services performed in Wisconsin. The Iowa services were a major, regular, enduring, and frequent part of the services performed on the employer's behalf during the reporting periods. See Heller v. International Transp., Inc., 94 Idaho 91, 92-93, 481 P.2d 602, 603-04 (1971); In re Mallia, 299 N.Y. 232, 86 N.E.2d 577, 9 A.L.R.2d 636 (1949); Puget Sound Bridge & Dredging Co. v. State Unemployment Compensation Comm'n, 168 Or. 614, 623, 126 P.2d 37, 41 (1942). Consequently, the services were not localized in either state.