Unemployment Insurance - Worker Classification

Loggers

Part 2: Independently Established Business

Wisconsin Administrative Code § DWD 107 (Employment Relationships in the Logging Industry) determines whether or not loggers (piece cutters and skidding operators) are employees for the purposes of unemployment insurance. (See Wis. Admin. Code § DWD 100.02 for definitions of "forest products manufacturer", "logging contractor", "piece cutter", and "skidding operator" and Wis. Stat. § 108.02(18m) for the definition of "logger".)

According to Wis. Admin. Code § DWD 107, a logging contractor or forest products manufacturer must examine the following six factors to determine whether the piece cutter or skidding operator is performing services in an independently established business in which the piece cutter or skidding operator is customarily engaged:

  1. The piece cutter or skidding operator negotiated a contract with the employer for the right to cut timber or the right to skid logs.
  2. The piece cutter or skidding operator negotiated the compensation to be paid for cutting timber or skidding logs.
  3. The piece cutter or skidding operator has an ownership interest in a business. In determining whether the piece cutter or skidding operator has an ownership interest in a business, the employer shall consider whether the piece cutter or skidding operator:
    1. May sell or give away the business without restriction from the employer.
    2. Has an expectation of profit or bears the risk of loss while performing services for the employer.
    3. Has a monetary investment in the trade, such as tools, equipment and inventory, which are usual and customary in the industry.
  4. The piece cutter or skidding operator is represented to logging contractors or forest products manufacturers as a person who provides timber cutting or log skidding services.
  5. The piece cutter or skidding operator is free to solicit contracts, enter into contracts and perform services under contract for more than one logging contractor or forest products manufacturer at or about the same time.
  6. The piece cutter or skidding operator determines the rate of pay, is liable for paying the wages, and actually pays the wages of individuals, including other piece cutters and skidding operators, engaged by the piece cutter or skidding operator to meet the contract obligations.

If these six factors are present, the piece cutter or skidding operator shall be deemed to be performing services in an independently established business in which the piece cutter or skidding operator is customarily engaged.

If one or more of the six factors above are not present in the relationship between the employer and the piece cutter or skidding operator, the employer will have to consider the following five additional factors:

  1. The business of the piece cutter or skidding operator could continue when the contractual relationship with the employer ends.
  2. The piece cutter or skidding operator is free to perform services for other logging contractors or forest products manufacturers while performing services for the employer.
  3. The piece cutter or skidding operator bears the principal burden of maintaining personal expenses such as meals, lodging and transportation, while performing services.
  4. The piece cutter or skidding operator has a reputation in the community generally on which to rely for business as a piece cutter or skidding operator.
  5. The piece cutter or skidding operator may incur liability for damages if there is a breach of contract by the piece cutter or skidding operator.

Under the law, the five factors are considered, but no one factor or particular combination of factors controls the determination of whether the piece cutter or skidding operator is performing services in an independent business in which the piece cutter or skidding operator is customarily engaged.

If the piece cutter or skidding operator is not performing services in an independent business in which the piece cutter or skidding operator is customarily engaged, the piece cutter or skidding operator is an employee for the purposes of unemployment insurance.

If, after applying the above test, the piece cutter or skidding operator is found to be performing services in an independent business in which the piece cutter or skidding operator is customarily engaged and the piece cutter or skidding operator is found to be free of the employer's direction and control, the piece cutter or skidding operator an independent contractor and not an employee.


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