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Worker Classification

When workers are misclassified, everyone loses

Employee vs Contract

Worker Classification is important. It determines an employer's legal obligations for:

  • Unemployment Insurance
  • Worker's compensation
  • Wage Payments
  • Work Hours
  • Civil Rights Protections
  • Paying Social Security and Medicare Taxes

Worker misclassification occurs when an employer treats individuals as independent contractors when they are employees. Under the law, workers are presumed to be employees unless the employer proves that workers meet the legal criteria to be independent contractors.

EMPLOYEES who are misclassified as independent contractors:

  • May not be eligible for unemployment benefits
  • May not be covered under worker's compensation
  • May not be protected under wage and hour laws
  • May not be protected under civil rights laws
  • May not be protected under the Family and Medical Leave Act (FMLA)
  • Are paying both the employer and employee share of social security and Medicare taxes

EMPLOYERS who misclassify workers as independent contractors avoid:

  • Unemployment insurance taxes
  • Withholding state and federal income taxes
  • Worker's compensation coverage
  • Paying social security taxes and Medicare taxes

EMPLOYERS who misclassify workers as independent contractors gain an unfair competitive advantage against other employers

DWD vigorously investigates misclassification, and when it's found, employers can face:

  • Taxes
  • Interest Charges
  • Civil Penalties
  • Possible Criminal Prosecution when warranted

Employers are required by law to correctly classify each worker as either an "employee" or "independent contractor." View the Steps to Classify a Worker at the bottom of the page to determine if a worker is an employee or independent contractor.

Steps to Classify a Worker

The links below will guide you through Wisconsin’s worker classification laws. Select the appropriate law(s) to begin the process to evaluate how to correctly classify a worker as either an employee or independent contractor:

Report Suspected Worker Misclassification

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