Independent contractors need to prove that they are…um…independent. There is a checklist to determine this and each state is a bit different. For example do they work under their SSN or do they have a FEIN? Do they use their own tools or do they use yours? Are they responsible for their profit/loss on each job?
Here is the Wisconsin rules:
The state of Wisconsin uses a strict nine-point test to determine whether a person is considered an independent contractor rather than an employee for purposes of workers’ compensation and unemployment compensation coverage. A person must meet and maintain all nine of the following requirements to be exempt from such coverage as an independent contractor (WI Gen. Stat. Sec. 102.07 and WI Gen. Stat. Sec. 108.02):
• Maintain a separate business.
• Obtain a Federal Employer Identification Number (FEIN) from the IRS or have filed business or self-employment income tax returns with the IRS based on work or service in the previous year. (A Social Security number cannot be substituted for an FEIN to meet this requirement.)
• Operate under specific contracts.
• Be responsible for operating expenses under the contracts.
• Be responsible for satisfactory performance of the work under the contracts.
• Be paid per contract, per job, by commission, or by competitive bid.
• Be subject to profit or loss in performing the work under the contracts.
• Have recurring business liabilities and obligations.
• Be in a position to succeed or fail if business expense exceeds income.
Here’s a little legal speak:
A covered employer can minimize its liability exposure now by analyzing whether it can meet its burden of establishing independent contractor status under the various legal tests that apply to it. The criteria used to determine whether an individual is an employee or a bona fide independent contractor differ depending upon the law under which the analysis is made. For example, an individual may be considered an independent contractor for tax purposes, but considered an employee for worker’s compensation, unemployment, wage and hour, or other purposes. Generally speaking, it is the employer’s burden to establish the existence of a bona fide independent contractor relationship. The label used by the parties is not determinative.
Rich Rubasch
Tilt Media Inc.
Video Production, Post, Studio Sound Stage
Founder/President/Editor/Designer/Animator
https://www.tiltmedia.com