{"id":759,"date":"2021-10-14T09:07:58","date_gmt":"2021-10-14T14:07:58","guid":{"rendered":"https:\/\/dev-marquette-law-clinic.pantheonsite.io\/?p=759"},"modified":"2021-10-14T11:56:58","modified_gmt":"2021-10-14T16:56:58","slug":"employees-contractors","status":"publish","type":"post","link":"https:\/\/law.marquette.edu\/build\/employees-contractors\/","title":{"rendered":"Employees &#038; Contractors"},"content":{"rendered":"<h2><strong>Hiring Workers as a Wisconsin Small Business<\/strong><\/h2>\n<p>It\u2019s an exciting time when a small business is growing and needs to hire its first workers. It\u2019s also a time for legal missteps.<\/p>\n<p>Businesses are required by law to correctly classify each worker they hire as either an &#8220;employee&#8221; (commonly called a W-2 employee) or an \u201cindependent contractor\u201d (commonly called a 1099 contractor). Worker classification determines if the employer has legal obligations with respect to \u00a0unemployment insurance, workers compensation, minimum wage and overtime, and civil rights protections, among other things.<\/p>\n<p>Generally, a worker is <em>presumed<\/em> to be an employee unless a business can show that the worker is an independent contractor under applicable law. Having a person sign an \u201cindependent contractor agreement\u201d is not, by itself, sufficient\u2014a governmental agency still might find that the person was an employee.<\/p>\n<p>The consequences of worker misclassification can be severe, including civil and criminal penalties, fines, and back taxes.<\/p>\n<h3><strong>Worker Classification Laws <\/strong><\/h3>\n<p>Multiple federal and state laws govern worker classification, and those laws are enforced by many agencies, including the <a href=\"https:\/\/www.dol.gov\/\">U.S. Department of Labor<\/a>, the <a href=\"https:\/\/www.irs.gov\/\">Internal Revenue Service<\/a>, and, for Wisconsin businesses, the <a href=\"https:\/\/dwd.wisconsin.gov\/\">Wisconsin Department of Workforce Development<\/a>. Those laws are beyond the scope of this article, but it\u2019s worth noting they <em>generally<\/em> look at three areas: behavioral control, financial control, and the type of relationship.<\/p>\n<h4><strong>1. Behavioral Control<\/strong><\/h4>\n<p>Does the business have the right to direct and control how the worker does the task? If yes, the worker is more likely an employee. Facts that show behavioral control include:<\/p>\n<ul>\n<li>If the employer directs the time, place, sequence, and\/or means of work<\/li>\n<li>If the employer\u2019s tools or equipment are used<\/li>\n<li>If the employer assigns specific duties<\/li>\n<li>If the employer gives specific instructions to the worker<\/li>\n<li>If the employer trains the worker<\/li>\n<\/ul>\n<h4><strong>2. Financial Control<\/strong><\/h4>\n<p>Does the business have the right to control the business aspects of the worker\u2019s job? If yes, the worker is more likely an employee. Facts that show financial control include:<\/p>\n<ul>\n<li>If the worker has little investment in facilities or tools used<\/li>\n<li>If the worker does not make his or her services available to the relevant market<\/li>\n<li>If the business pays the worker hourly wages<\/li>\n<li>If the worker does not realize profit or loss from his or her services<\/li>\n<\/ul>\n<h4><strong>3. Type of Relationship <\/strong><\/h4>\n<p>Additional facts can also show that a worker is more likely an employee:<\/p>\n<ul>\n<li>The worker has not signed a written independent contractor agreement<\/li>\n<li>The business provides benefits to the worker<\/li>\n<li>The relationship is ongoing (and not temporary)<\/li>\n<li>The worker is providing services that are a regular activity of the business.<\/li>\n<\/ul>\n<h3><strong>Steps for Wisconsin Small Businesses <\/strong><\/h3>\n<p>Properly classifying workers can seem daunting to small businesses, especially with so many laws and agencies involved. A \u201cshortcut\u201d is for a business to focus on the strictest law\u2014if the worker is an employee under that law, then the business needs to hire the worker as an employee and not as an independent contractor.<\/p>\n<p>In Wisconsin, the strictest worker classification laws\u2014and those most enforced against employers\u2014are regarding unemployment insurance and worker\u2019s compensation. The Wisconsin Department of Workforce Development\u2019s website has <a href=\"https:\/\/dwd.wisconsin.gov\/worker-classification\/\">step-by-step guides on worker classification<\/a>, including for purposes of unemployment and worker\u2019s compensation.<\/p>\n<p>If you have questions about worker classification, please consult with an employment attorney.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>It\u2019s an exciting time when a small business is growing and needs to hire its first workers. It\u2019s also a time for legal missteps. This article provides an overview of laws governing worker classification\u2014i.e., whether a worker is either an employee or an independent contractor under federal or state law.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":["post-759","post","type-post","status-publish","format-standard","hentry","category-employees-contractors"],"_links":{"self":[{"href":"https:\/\/law.marquette.edu\/build\/wp-json\/wp\/v2\/posts\/759","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/law.marquette.edu\/build\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/law.marquette.edu\/build\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/law.marquette.edu\/build\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/law.marquette.edu\/build\/wp-json\/wp\/v2\/comments?post=759"}],"version-history":[{"count":0,"href":"https:\/\/law.marquette.edu\/build\/wp-json\/wp\/v2\/posts\/759\/revisions"}],"wp:attachment":[{"href":"https:\/\/law.marquette.edu\/build\/wp-json\/wp\/v2\/media?parent=759"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/law.marquette.edu\/build\/wp-json\/wp\/v2\/categories?post=759"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/law.marquette.edu\/build\/wp-json\/wp\/v2\/tags?post=759"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}