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Unemployment Insurance - Worker Classification
Prior to January 1, 2011
Under the old law that existed prior to January 1, 2011, there is a ten part test that general private employers or for profit businesses must utilize to determine if their workers are employees or independent contractors. The ten part test is found in Section 108.02(12) of the old law.
Seven of Ten Conditions
To be considered an independent contractor and not an employee, an individual must meet and maintain seven of ten of the following conditions:
- Condition One: The individual holds or has applied for an identification number with the federal Internal Revenue Service
- Condition Two: The individual has filed business or self-employment income tax returns with the federal Internal Revenue Service based on such services in the previous year or, in the case of a new business, in the year in which the services were first performed.
- Condition Three: The individual maintains a separate business with his or her own office, equipment materials or other facilities.
- Condition Four: The individual operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means and methods of performing services.
- Condition Five: The individual incurs the main expenses related to the services that he or she performs under contract.
- Condition Six: The individual is responsible for satisfactory completion of the services that he or she contracts to perform and is liable for a failure to satisfactorily complete the services.
- Condition Seven: The individual receives compensation for services performed under a contract on a commission or per-job basis and not on any other basis.
- Condition Eight: The individual may realize a profit or suffer a loss under contracts to perform such services.
- Condition Nine: The individual has recurring business liabilities or obligations.
- Condition Ten: The success or failure of the individual's business depends on the relationship of business receipts to expenditures.
To assist in the analysis of each of the conditions, the department has provided the following:
- An explanation of each of the conditions contained in the ten part test;
- Case studies relevant to each of the conditions based upon cases decided by the Labor and Industry Review Commission (LIRC), Wisconsin Circuit Courts and Wisconsin Appellate Courts;