The Dynamex case established a three-part test to determine whether a worker is an independent contractor or an employee in California. A business must satisfy all three parts of the test to classify a worker as an independent contractor.

Part A: Free from Control

• Test: Does the hiring entity control or have the right to control the worker’s performance of the work, both under the contract and in practice? This includes aspects like setting work hours, providing equipment, or dictating how the work is completed.
• Real-Life Example: A freelance writer sets their own hours, uses their own computer, and has complete control over their writing style. This suggests they might be an independent contractor.
• Hypothetical Example: A delivery driver for a company is required to wear a specific uniform, follow a designated route, and use a company-issued vehicle. This leans towards the driver being classified as an employee.

Part B: Outside the Usual Course of Business

• Test: Does the worker perform work that is outside the usual course of business of the hiring entity? For instance, a construction company hiring a plumber would likely be considered within the usual course of business.
• Real-Life Example: A bakery hires a graphic designer to create a new logo. Since graphic design isn’t core to the bakery’s business, this could be considered outside the usual course of business.
• Hypothetical Example: A restaurant hires a cleaning service to clean its kitchen nightly. Cleaning is directly related to the restaurant’s core business, suggesting the cleaners might be employees.

Part C: Independent Business

• Test: Does the worker have an independently established business that performs the same type of work for other clients? This looks at whether the worker has their own business entity and actively seeks out clients.
• Real-Life Example: A carpenter has their own business license, tools, and works for various clients on different projects. This indicates they might be an independent contractor.
• Hypothetical Example: A social media assistant only works for the company that hired them and doesn’t have their own business set up. This suggests an employee classification is more likely.

Legal Protections for Employees vs. Independent Contractors

• Employees:
  • Minimum wage and overtime pay
  • Unemployment benefits
  • Workers’ compensation insurance
  • Family and medical leave rights
  • Protection from discrimination and harassment
• Independent Contractors:
  • Generally not entitled to the above benefits or protections
  • Responsible for their own taxes (self-employed)
  • More control over their work schedule

Benefits of Independent Contractor Status

• Employer Benefits:
  • Reduced payroll taxes and overhead costs
  • More flexibility in managing the workforce
  • Not responsible for providing benefits
• Worker Benefits:
  • Greater control over work schedule and workload
  • Potential for higher earnings
  • Tax deductions for business expenses

Independent Contractor Laws in Wisconsin

Wisconsin uses a similar “ABC test” to California, though not identical. Here’s a summary:

• Part A: Similar to California’s test, focusing on control over the work.
• Part B: Similar to California, considering if the work falls outside the hiring entity’s usual course of business.
• Part C: Differs slightly. Wisconsin considers whether the worker is “customarily engaged” in the same kind of work for others, with a focus on the worker’s regularity and independence in this specific type of work.