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Unemployment Insurance - Worker Classification
There is a two part test that not for profit organizations must utilize to determine if their workers are employees or independent contractors. The two part test is found in Wis. Stats. § 108.02(12)(c)1 and 108.02(12)(c)2.
Part 1: Direction and Control
The first part of the two part test concerns "direction and control". The worker must be free of the employer's direction and control to be considered an independent contractor.
- If the worker is found to be under the direction and control of the employer, the worker is an employee.
- If the worker is free from the direction and control of the employer, the second part of the test is applied to the worker.
Part 2: Independent Business - Five 'Keeler' Factors
The second part of the two part test concerns whether the services of the worker are performed in an independently established trade, business or profession in which the worker is customarily engaged.
The worker must meet the conditions of both parts of the two part test to be classified as an independent contractor. If the worker meets the conditions of one part but not the other, the worker is an employee.
Every employment situation is unique. The employer must carefully analyze the services provided by the worker and the relationship between the employer and the worker. The employer must then compare them against all of the conditions in the two part test.
To assist in the analysis, the department has provided the following:
- An explanation of each part of the two part test;
- Case studies relevant to each of the parts based upon cases decided by the Labor and Industry Review Commission (LIRC), Wisconsin Circuit Courts and Wisconsin Appellate Courts;
- Links to the LIRC Decision Digest in each part of the two part test containing additional cases for review.