Worker's Compensation - Worker Classification

Nine Requirements Test - Independent Contractor

Requirement Six: Receive Compensation Under a Contract on a Commission, Per Job, or Competitive Bid Basis (Case Studies)

The individual receives compensation for work or service performed under a contract on a commission or per job or competitive bid basis and not on any other basis.

Case Studies Relevant to Requirement Six

Wis. LIRC WC Decision: Floerchinger - August 15, 2001

Donald Floerchinger, the applicant, was the owner/operator of a Kenworth semi-tractor. He began hauling freight for Nestle Transportation Company in September of 1995. At that time, he signed a "Contractor Operating Agreement" with Nestle agreeing to provide his personal driving services and the exclusive use of his tractor to Nestle. This contract included a stipulation that the applicant perform his services under Nestle's Federal Motor Carrier operating authority, which required him to prominently affix Nestle's name to his tractor. The agreement further provided Nestle with exclusive possession and control of the applicant's tractor during its term, and the applicant was not free to haul freight for any other entity. The agreement was subject to immediate termination by either party, with or without cause, upon receipt by the other party of written notice of termination, either sent through the mail or delivered in person.

The agreement contemplated that the applicant would provide his services as an independent contractor who would be "free . . . to determine the means and methods of performance of all transportation services undertaken . . . ." In practice, the applicant was free to refuse to haul loads offered to him; however, when he did so Nestle would place his name at the bottom of the dispatch list, or on occasion offer him shorter, less desirable trips for his next dispatch. Nevertheless, the reasonable inference from the applicant's testimony is that he refused loads for various reasons, and that Nestle regularly offered him trips of sufficient distance to satisfy his economic needs and motivate him to continue his contractual relationship with Nestle.

Nestle paid the applicant 85 cents per mile for all except infrequent short hauls paid on a different basis. The 85 cents per mile was based on the most direct route as calculated by Nestle, leaving the applicant to sustain the loss should he for some reason choose or be required to take a different route. From this 85 cents per mile, the applicant was responsible for his tractor financing payments, fuel, highway use taxes, maintenance and repairs, insurance, meals and lodging, and license fees.

One of the requirements that Nestle had to satisfy to demonstrate that the applicant was an independent contractor was that the applicant was compensated for work or services performed under a contract on a commission or per job or competitive bid basis and not on any other basis.

The commission determined that Floerchinger received compensation from Nestle on a per job basis, in accordance with the number of miles the particular hauling job entailed. Each hauling job was independently offered by Nestle and accepted by the applicant, on the basis of compensation which the applicant could accept or reject by accepting or rejecting the load, or by giving unilateral notice of termination of the Contractor Operating Agreement.

The commission found that Requirement Six was satisfied.

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 was compensated for work or services performed under a contract on a commission or per job or competitive bid basis and not on any other basis.

The commission held that the Overturf was not paid on a commission or a competitive bid basis. The Respondent argued that Overturf was paid on a per job basis, because he charged $25 per hour for each "job" that he did. However, Overturf was not hired for a specific carpentry job; he was hired to do whatever carpentry work the foreman would ask him to do on any particular day. This does not qualify as "per job" compensation.

The commission found that Requirement Six was not satisfied.

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