Worker's Compensation - Worker Classification

Nine Requirements Test - Independent Contractor

Requirement Eight - Recurring Business Liabilities or Obligations (Case Studies)

The individual has continuing or recurring business liabilities or obligations

Case Studies Relevant to Requirement Eight

Wis. LIRC WC Decision: Overturf - March 15, 2010

Delane Overturf, the applicant, operated a sole proprietorship named DLO Enterprises, through which he performed carpentry work for different customers. One of DLO's customers was Forward Management, a company that managed rental and commercial properties, and also performed construction remodeling, repair, and painting services. On June 7, 2006, the applicant was performing carpentry work on Forward Management's president's (Dan Schmidt's) house, when he fell more than 20 feet off scaffolding and sustained serious injuries. The issue is whether at the time of injury the applicant was performing his services as a covered employee, or as an independent contractor.

One of the requirements that DLO Enterprises had to satisfy to demonstrate that the applicant was an independent contractor was that the applicant had continuing or recurring business liabilities or obligations

The commission concluded that Overturf did have recurring business liabilities which arose from operating DLO. The commission found that Overturf had vehicle, tools, phone, and advertising expenses.  These expenses were found on Overturf's Schedule C tax returns.  The commission found that Requirement Eight was satisfied.

Wis. LIRC Decision: James - July 28, 2000

The applicant, Stanley James, was a drywall hanger. He occasionally did carpentry or remodeling work; in early 1999 he did some remodeling work for a tavern. His primary source of income, however, was from drywall hanging, which he did for several businesses or individuals over the last several years.

The applicant was injured when he fell into a basement on a construction site on September 1, 1999. At the time, he was hanging drywall for B & P Drywall, a business owned by Bruce Pecore. Pecore, in turn, had gotten the job from Verhagen Drywall (hereafter Verhagen). Verhagen did drywall subcontracting and employed his own drywall finishers and tapers, but hired out the drywall hanging.

The applicant supplied his own hammers, T-squares, drywall knife, power cords, tape measure, and screw gun. He claimed he could fit get all of his tools in single five gallon bucket. Sometimes he bought drywall screws for a job, though the applicant testified that Pecore normally supplied the nails. The applicant did not supply the drywall. According to Pecore, Verhagen or the general contractor supplied the drywall.

The hangers would also use ladders and scaffolding to hang drywall; often they would just find this lying around the jobsite left by the general contractor or other workers. The applicant himself did not supply ladders or scaffolding at a job site. The applicant testified that Pecore would supply scaffolding and, on rare occasions, a drywall lift. Pecore denied supplying them, however.

The applicant did not have a home office, a room in his home he used for business purposes, a business phone line, a business card, or any kind of contact list. He had no office equipment like a fax machine or computer. He had no regular business expenses such as utility or lease expense. He never dealt directly with general contractors. He did have some kind of insurance for part of 1999, but indicated that he got this at Pecore's behest and Pecore's company, B & P Drywall, is named in some capacity on the form.

Requirement Eight of the independent contractor test requires that the worker have continuing or recurring business liabilities or obligations. The applicant had no office expenses. The commission found that the cost of maintaining tools did not rise to a "continuing business liability or obligation." The commission found that Requirement Eight was not satisfied.

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