Labor Standards - Worker Classification

Six Part Test

Case Studies

The following are case studies from state and federal court decisions and from LIRC decisions relevant to the factors that make up the employee/independent contractor tests for Labor Standards:

Worth v. Tyer, 276 F.3d 249 (7th Cir. 2001)

In June of 1994 Lisa Worth was terminated from her position at U.S. Title Division of Grundy II, a title insurance company owned by Robert H. Tyer, II. Worth filed suit against Tyer and his companies, charging that they had violated Title VII of the Civil Rights Act of 1964 and that her supervisor had committed a battery in violation of state tort laws. The jury found for Worth and awarded compensatory and punitive damages for both for the Title VII claims and the battery. The defendants appealed, alleging that the district court erred on denying their judgment as a matter of law or, in the alternative, to amend the verdict or for a new trial. The defendants also claimed that the district court lacked jurisdiction over Worth's claims.

In their appeal the defendants asserted that Worth was an independent contractor and not an employee. Because independent contractors are not protected under Title VII, the defendants contended that the district court erred in denying their motions for judgment as a matter of law or, in the alternative, for a new trial. The defendants contended that the district court misapplied the applicable law and that the court of appeals should determine if Worth was an employee.

In its decision, the court of appeals examined five factors to determine if an individual is an employee or an independent contractor. Those five factors are:

  1. The extent of the employer's control and supervision over the worker, including directions on scheduling and performance of work;
  2. The kind of occupation and nature of skill required, including whether the skills are obtained in the workplace;
  3. Responsibility for the costs of operation, such as equipment, supplies, fees, licenses, workplace, and maintenance of operations;
  4. Method and form of payment and benefits; and
  5. Length of job commitment and/or expectations.

The court found that that the employer's right to control the worker's actions is the most important factor.

The five factor test is known as the economic realities test.

Based upon those five factors, the court determined that Worth was an employee. The court affirmed the decision in favor of Worth.

This case is significant because the ruling was made by the US 7th Circuit, which has jurisdiction in Wisconsin. This test is utilized throughout the 7th Circuit as a means of determining if a worker is an employee or an independent contractor.

Spirides v. Reinhardt, 613 F.2d 826 (D.C. Cir 1979)

The test for determining whether a person is an employee under the Wisconsin Fair Employment Act is the test in Sprides v. Reinhardt. In this case, the court stated the employer's right to control the means and manner of the worker's performance is the most important factor. However, the court stated that there are eleven additional factors that a court must consider in order to determine whether a person is an "employee." No one factor is determinative. The entirety of the circumstances regarding the relationship between the worker and the employer must be considered.

Moore v. LIRC, 175 Wis. 2d 561, 499 N.W. 2d 289 (Ct. App. 1993)

In Moore v. LIRC, the Wisconsin Court of Appeals adopted the test in Spirides v. Reinhardt as the test for an "employee" under the Wisconsin Fair Employment Act. The court stated that it looked at the three prevailing tests utilized by courts to determine whether a worker is an employee. The court found that the Spirides test allows the deciding court to look to the widest variety of factors and is the broadest of the three tests.

Wis. LIRC ER Decision: Sneed, Lois - June 17, 2003

Lois Sneed entered into a professional services contract with the Milwaukee Board of School Directors to provide services as a hearing interpreter for deaf and hearing impaired students. Snead was terminated from her position. Snead appealed her termination, claiming that she was an employee and not a contractor. In her petition for review to LIRC, Snead cited an IRS ruling, where the IRS set forth several factors it uses to determine if a worker is an independent contractor. LIRC rejected Snead's argument, stating that Wisconsin adopted the Spirides test for determining whether an individual is an employee under the Wisconsin Fair Employment Act.

Wis. LIRC ER Decision: Watt, Shelby - August 31, 2004

Shelby was a contract driver for FedEx Ground Package System. His contact was terminated by FedEx. Watt appealed the termination, alleging that he was an employee and was terminated based upon his arrest and conviction record, a violation of the Wisconsin Fair Employment Act. LIRC held that Watt was an independent contractor, finding that FedEx did not control the means and manner of Watts' work as a driver.

Wis. LIRC ER Decision: Ingram. Gary - June 27, 2005

Gary Ingram was hired as a placement, recruitment and retention specialist by Bridgeman Machine Tooling and Packaging. His relationship with the firm ended on May 15, 2003. Ingram filed a wage complaint on May 15, 2003. The issue in this case was whether Ingram provided his services as an employee or independent contractor. LIRC stated that Ingram, as the plaintiff, had the burden of proof as to whether he was an employee or an independent contractor. LIRC found that Ingram failed to prove the existence of an employment relationship.

Wis. LIRC ER Decision: Berglund - January 31, 2001

Karalee Berglund, the complainant, delivered newspapers for The Post Crescent Company under an "Independent Carrier Contract" with the company. The company terminated its relationship with Berglund. Berglund then appealed claiming she was an employee. LIRC found that there were some facets between Berglund and the Post Crescent that would suggest that the relationship was that of an employee-employer. However, considering all of the circumstances surrounding the relationship, LIRC found that Berglund was an independent contractor and not covered under the Wisconsin Fair Employment Act.

Wis. LIRC ER Decision: Omegbu, Fidelis - December 21, 1995

Fidelis Omegbu is the president and sole shareholder of the Kasa Corporation, a general contractor located in Milwaukee, Wisconsin. The Kasa Corporation was the successful bidder on a construction project for the Mequon-Thiensville School District. The Kasa Corporation was required by the school district to file a performance bond. The Kasa Corporation did not obtain a performance bond, and the school district released Kasa from its contract for its failure to do so. Omegbu filed a complaint with the Equal Rights Division alleging race and national origin discrimination. An ALJ issued a finding that Omegbu was not an employee of the school district and dismissed the complaint. Omegbu appealed to LIRC. LIRC found that Omegbu was not an employee and was an independent contractor because the school district did not control the means and manner of his work.

Wis. LIRC ER Decision: Schaefer, Mary - November 17, 1995

Mary Schaefer is a real estate broker and entered into a contract to manage a real estate brokerage firm for Elmer Sommers and New Berlin Reality, Inc. Schaefer was ultimately dismissed and filed a complaint with the Equal Rights Division, alleging that she was an employee. An ALJ found that Schaefer was an independent contractor and not an employee. Schaefer then appealed to LIRC. LIRC found that Schafer failed to establish that the owner of the real estate company exercised the type of direction and control over her in the performance of her work as a real estate broker that would support a finding of employee status. A real estate broker is a specialist and a professional working without supervision by the very nature of the work.

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