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Employment Blog

Independent Contractor, Not Employee?

Authored by Dean R. Dietrich
Posted on January 30, 2015
Filed under Employment

There has been a lot of discussion about independent contractor status and initiatives by the Department of Labor to investigate whether a particular worker has been improperly classified as an independent contractor and not an employee of a company. The State of Wisconsin has signed on to cooperate directly with the Department of Labor in these type of investigations. Wisconsin employers should know their determinations of employee status/independent contractor status will now be subject to more intense review by the Department of Workforce Development in cooperation with the Department of Labor. 

There are a number of tests that can be looked at to determine whether an individual worker is considered an employee of the company or an independent contractor providing services to the company. Many of the elements of independent contractor status fall under the “right to control” test. This test looks at whether the employer controls the hours of work and working conditions or the worker has the right to set hours of work and working conditions as well as provide his/her own tools for getting the work done. The focus of this test is to determine whether the worker has independent status to determine how best to do the job and when to do the job or whether the employer controls the many aspects of the job suggesting the worker is actually an employee of the company. 

Another test focuses on the entrepreneurial aspects of the payments made to the worker. If the worker is paid for a job and is able to reap the benefits of his/her work plan and work activities, the worker will likely be considered an independent contractor. This is compared to a payment by the hour for work performed which closely suggests the worker is an employee of the company. 

These are simple explanations about a very complex topic. Employers must understand the Wisconsin Department of Workforce Development will be very closely scrutinizing these situations where an individual worker is considered an independent contractor and not an employee of the company. Employers should take steps to fully investigate how they classify workers that provide services to the company.