Labor Standards

Is a Worker an "Employee" or an "Independent Contractor"?

Employers are required to correctly classify each worker as either an "employee" or an "independent contractor" for the purposes of the employer's obligations under the wage and hour laws.

The wage and hour laws contain definitions of "employee" to separate those individuals (employees) who have protections under the wage and hour laws from those individuals (independent contractors) who do not. These definitions of "employee" do not determine which individuals should or should not be paid under prevailing wage laws, Secs. 66.0903 and 103.49, Wis. Stats.

The statutes enforced by the Labor Standards Bureau contain three definitions of employee:

• Section 103.001 (5) of the Wisconsin employment regulations law defines an employee as any person who may be required or directed by any employer in consideration of direct or indirect gain or profit, to engage in any employment, or to go or work or be at any time in any place of employment.
• Section 104.01 (2) (a) of the Wisconsin minimum wage law defines an employee as every individual who is in receipt of or is entitled to any compensation for labor performed for any employer.
• Section 109.01 (1r) of the Wisconsin wage payments, claims and collections law defines an employee as any person employed by an employer, except that "employee" does not include an officer or director of a corporation, a member or manager of a limited liability company, a partner of a partnership or a joint venture, the owner of a sole proprietorship, an independent contractor, or a person employed in a managerial, executive, or commissioned sales capacity or in a capacity in which the person is privy to confidential matters involving the employer-employee relationship.

The Labor Standards Bureau presumes that a worker is an employee unless the worker meets one of the exceptions listed in sections 104.01 (2) (b) and 109.01 (1r) of the Wisconsin Statutes.

Note: The Labor Standards Bureau also follows interpretations of the U.S. Department of Labor's Wage and Hour Division in this regard.

See U.S. Department of Labor Guidance - Wage and Hour Division.

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 wage and hour laws continue to the worker classification tests to begin the process: