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State-specific laws What state-specific laws govern the employment relationship? Chapters 102 to 104, 106, 108 to 109, and 111 of the Wisconsin Statutes. Chapters 60, 65, 68, 75, 80, 81, 100 to 103, 105, 107, 110, 111, 113, 115, 120, 123, 126 to 130, 132, 133, 135, 136, 140, 142, 147, 149, 150, 218, 220, 221, 223, 224, 225, 270 to 275, 277, 279, 290, 293 to 296, 301, 310, and 801 of the Wisconsin Administrative Code relating to the Department of Workforce Development.
Who do these cover, including categories of workers? These laws cover employees, independent contractors, and apprentices, depending on the law.
Misclassification Are there state-specific rules regarding employee/contractor misclassification? An individual is considered an independent contractor under Wisconsin's Workers' Compensation Law if he or she:
- maintains a separate business;
- obtains a Federal Employer Identification (FEIN) number or has filed business or self-employment income tax returns based on his or her work or service in the previous year. When applying for the FEIN, the individual must inform the Internal Revenue Service that Wisconsin’s Workers’ Compensation Law requires him or her to obtain a FEIN. A social security number does not meet the legal burden of the requirement for a FEIN;
- operates under specific contracts for which he or she is responsible for operating expenses and satisfactorily performing the work as well as being subject to a profit or loss for performing the work;
- is paid per contract, per job, by commission or by competitive bid;
- has recurring business liabilities and obligations; and
- is in a position to succeed or fail if business expense exceeds income (Wis. Stats. § 102.07(8)).
Whether an individual is considered an independent contractor under Wisconsin's Unemployment Compensation Law depends on the industry in which he or she works.
An individual working as a logger or trucker or providing services to a government unit or non-profit organization will be considered an independent contractor only under the following circumstances:
The individual must be free from the employing unit’s direction and control. The terms of a contract alone are not sufficient, as the person must be free from direction and control in the day-to-day performance of such services, including when, where, and how services are performed and in determining how to accomplish the end result of the services. The services must be performed in an independently established trade, business, or profession in which the individual is customarily engaged.
Chapter 105 and 107 of the Department of Workforce Development contain more information about the factors that will be examined to determine whether a logger or trucker operates free from direction and control. These include owning equipment and supplies, being responsible for the maintenance of equipment, and the ability to refuse work. If certain factors in the regulations are present, the individual will be considered an independent contractor. If not all are present, then the department will consider additional factors listed in the regulations (Wis. Stats. § 108.02(12)(c)).
With regard to other industries, for services performed after December 31 2010, an individual will be considered an independent contractor if the department is satisfied that he or she – by contract and in reality – performs services free from control or direction by the employing unit. In making this determination, the following nonexclusive factors may be considered:
- 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 personally to 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; and
- whether the individual is required to make oral or written reports to the employing unit on a regular basis.
In addition to providing services free from direction and control, the individual must meet six or more of the following conditions:
- The individual advertises or otherwise affirmatively holds himself or herself 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 to perform services.
- The individual operates under multiple contracts with one or more employing unit 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 activities conducted by 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 on a particular employing unit with respect to the services being performed (Wis. Stats. § 108.2(12)(bm)).
Contracts Must an employment contract be in writing? No, unless by its terms it cannot be performed within one year. If the contract cannot be performed within one year and it is not in writing, it is void. A contract for hire for an indefinite term need not be in writing (Kirkpatrick v. Jackson, 256 Wis. 208, 212 (1949)).
Are any terms implied into employment contracts? Wisconsin courts are wary of inserting terms into contracts that the parties themselves have failed to insert, but will do so if essential to the parties' rights and duties. If a contract is for a definite term of service, unless the contract provides otherwise, a just cause standard for termination of employment will be implied and a party will be in breach of the agreement for unilaterally terminating it, unless it can show just or reasonable cause attributable to the other party.
While in the employment at-will context there is no "duty to terminate in good faith," the requirement that parties act in good faith inheres in every contract; therefore, an employer must comply in good faith with its contractual obligations (Phillips v. U.S. Bank, N.A., 2010 WI APP 35).
Are mandatory arbitration agreements enforceable? Wisconsin's arbitration statute generally does not apply to agreements between employees and employers. However, Wisconsin courts will enforce an agreement between an employer and an employee to submit a dispute to arbitration, provided that the agreement is not unconscionable (Engedal v. Menard, Inc., 345 Wis.2d 847, 826 N.W.2d 123 (Wis. Ct. App. 2012)).
How can employers make changes to existing employment agreements? Changes may be made orally, unless the agreement cannot be performed within one year, or in writing.
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