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DWD Worker Classification
Labor Standards - Worker Classification
Six Part Test
There is a six part test that employers must utilize to determine if their workers are employees or independent contractors. The test is not statutory, meaning that the test is not found in the Wisconsin Statutes. Rather, the test is based on the common law, meaning the test is based on precedents, which are legal principles developed in earlier case law.
The Bureau of Labor Standards uses a six part test sometimes referred to as the "economic realities" test to determine whether the worker is economically dependent upon the employer.
- Part One: The degree of control exercised by the employer;
- Part Two: The worker's opportunity for profit or loss based upon his/her managerial skills;
- Part Three: The worker's investment in equipment or employment of helpers;
- Part Four: The degree of special skill required for the work;
- Part Five: The degree of permanence of the relationship between the parties;
- Part Six: Whether the services constitute an integral part of the employer's business.
- Part One, the control test, is the most important. None of the other five parts is given more or less weight, as the test is articulated.
Not all or even a majority of the six parts of the test need be met. The determination of whether a worker is an employee or an independent contractor must be based on all of the circumstances in the relationship between the parties, regardless of whether the parties refer to it as an employee or an independent contractor relationship.
Every employment situation is unique. The parties must carefully analyze the services provided by the worker and the relationship between the employer and the worker. The parties must then compare them against all of the factors in the six part test to determine if the worker is an employee or an independent contractor.