Worker's Compensation - Worker Classification
Is a Worker an "Employee" or an "Independent Contractor"?
Employers are required by law to correctly classify each worker as either an
"employee" or "independent contractor" for purposes of the employer's obligations under the law for worker's compensation insurance.
The worker's compensation insurance law uses a definition of "employee" (with exceptions) to separate those individuals (workers) whose employer is obligated to provide worker's compensation benefits (employees) from those whose employer is not obligated to provide worker's compensation benefits (independent contractors).
The Wisconsin Worker's Compensation Act (Act) defines an employee as "every person in the service of another under any contract of hire, express or implied,
all helpers and assistants of employees, whether paid by the employer or
employee, if employed with the knowledge, actual or constructive, of the
employer, including minors, who shall have the same power of contracting as
adult employees" but not including (1) domestic servants, (2) any person whose
employment is not in the trade, business, profession or occupation of the
employer unless the employer elects to cover them."
It is important that you carefully read the definition
of "employee" and the exceptions in the worker's compensation law:
Wis. Stats. 102.07(4)(a) and
Steps to Classify a Worker
If you are an employer or a worker and want to determine how to properly
classify a worker as either an employee or an independent contractor for
worker's compensation insurance, continue to the worker classification test to begin the process:
Begin the Process
- Any Contract of Hire
- A contract of hire means that the person performs
services for which he or she is compensated. Compensation is something of value
and may be cash or in-kind.
- Domestic Servant
- Although neither the statutes nor case law provide a
definition of "domestic servant" as it is used in s. 102.07(4) of the Act, the
department has consistently ruled that persons hired in a private home to
perform general household services such as nanny, baby-sitting, cooking,
cleaning, laundering, gardening, yard and maintenance work and other duties
commonly associated with the meaning of domestic servant, meet the definition of
domestic servant intended by the Act.
- Trade, business, profession or occupation of the employer
- Cornelius v.
Industrial Commission, 242 Wis. 183, 185 (1943) defines a trade or business as
an occupation or employment habitually engaged in for livelihood or gain. If a
person's employment is in the trade, business, profession or occupation of the
employer, he or she is an employee, no matter how casual or isolated the
employer's trade, business, profession or occupation may be. For example,
typically a home-owner who hires someone to mow his or her lawn is not an
employer subject to the Act because being a home-owner is not associated with a
trade, business, profession or occupation.