Wisconsin A.B. 358/S.B. 276
Status: Assembly: Referred to Committee, September 2013; Senate: Referred to Committee, August 2013
Existing Exclusions from Workers Compensation Coverage
Under current law, for purposes of coverage under the worker’s compensation law, an independent contractor is not an employee of an employer for whom the independent contractor performs work if the independent contractor:
- Maintains a separate business with his or her own office, equipment, materials, and other facilities;
- Holds a federal employer identification number or has filed business or self−employment income tax returns based on that work;
- Operates under contracts to perform specific work for specific amounts of money and under which he or she controls the means of performing the work;
- Incurs the main expenses related to the work;
- Is responsible for the satisfactory completion of the work and is liable for a failure to complete the work;
- Receives compensation on a commission, per job, or competitive bid basis;
- May realize a profit or suffer a loss;
- Has continuing or recurring business liabilities or obligations; and
- Succeeds or fails depending on the relationship of business receipts to expenditures.
New Exclusion from Workers Compensation Coverage
In addition to the existing exclusion above, this bill would exclude from coverage under the worker’s compensation law an independent contractor who:
- Has signed, or an entity owned by the independent contractor has signed, a written agreement with the employer stating the independent contractor is performing the work as an independent contractor;
- Performs the work or services primarily at his or her own residence and primarily using his or her own tools and equipment; and
- Performs the work or services free from the control or direction of the employer, other than control or direction provided for purposes of initial training or quality control.
For purposes of applying the new exclusion, “primarily” means 75 percent or more.
Existing Unemployment Insurance Coverage Exception
Currently, under the unemployment insurance (UI) law, coverage for services performed by an individual is dependent in part upon whether the individual is an “employee,” which the UI law defines as any individual who is or has been performing services for pay for an employing unit, whether or not the individual is paid directly by the employing unit, subject to certain exceptions.
One such exception is that an individual performing services for an employing unit other than a government unit or nonprofit organization in a capacity other than as a logger or trucker is not considered an employee if the individual meets the following criteria:
- The services of the individual are performed free from control or direction by the employing unit over the performance of his or her services, as determined by considering various factors, including the following five non-exclusives factors:
- Whether the individual is required to comply with instructions concerning how to perform the services.
- Whether the individual receives training from the employing unit with respect to the services performed.
- Whether the individual is required to personally perform the services.
- Whether the services of the individual are required to be performed at times or in a particular order or sequence established by the employing unit.
- Whether the individual is required to make oral or written reports to the employing unit on a regular basis.
and
- The individual meets six or more of the following nine conditions related to the nature of his or her work:
- The individual advertises or otherwise affirmatively holds himself or herself out as being in business.
- The individual maintains his or her own office or performs most of the services in a facility or location chosen by the individual and uses his or her own equipment or materials in performing the services.
- The individual operates under multiple contracts with one or more employing units to perform specific services.
- The individual incurs the main expenses related to the services that he or she performs under contract.
- The individual is obligated to redo unsatisfactory work for no additional compensation or is subject to a monetary penalty for unsatisfactory work.
- The services performed by the individual do not directly relate to the employing unit retaining the services.
- The individual may realize a profit or suffer a loss under contracts to perform such services.
- The individual has recurring business liabilities or obligations.
- The individual is not economically dependent upon a particular employing unit with respect to the services being performed.
An employing unit is not required to pay UI contributions on wages earned by an individual not considered an employee under the UI law, and the such individual’s wages may not be counted as base period wages for purposes of determining eligibility for UI benefits.
New Exception from Unemployment Insurance Coverage
This bill would create another exception from the definition of employee under the UI law. The new exception applies excepts an individual performing services for an employing unit other than a government unit, nonprofit organization, or Indian tribe in a capacity other than as a logger or trucker from coverage under the UI law if all of the following apply to the individual:
- The individual performs the services pursuant to a written agreement with the employing unit under which the individual or an entity owned by the individual has agreed or represented that the services are being performed as an independent contractor;
- The individual performs the services primarily at the individual’s residence and primarily using the individual’s own tools and equipment; and
- The individual performs the services free from control or direction of the employing unit, other than initial training and quality control.
For purposes of applying the new exception, “primarily” means 75 percent or more.
In determining whether an individual meets the conditions specified in the new exception, the department is not to consider, and an appeal tribunal is not to take administrative notice of or admit into evidence, documents granting operating authority or licenses, or any state or federal laws or federal regulations granting such authority or licenses.
If an individual performing services for an employing unit other than a government unit or nonprofit organization in a capacity other than as a logger or trucker is not covered under the new exception created in the bill, such individual may still be covered under the exception in the current law if the factors set out in the paragraph devoted to the current law above are satisfied in contract and in fact.
Effective Date
The new exception to Unemployment Insurance coverage will apply to services performed beginning on the January 1 following the effective date of this bill.
