Covered Employees Under the Wisconsin
Worker's Compensation Act (Act)
You must carry a worker's compensation insurance policy if any of your business:
- Usually employs three or more full-time or part-time employees. You must get insurance immediately.
- Employs one or more full-time or part-time employees to whom you have paid combined gross wages of $500 or more in any calendar quarter for work done at one or more locations in Wisconsin. You must have insurance by the 10th day of the first month of the next calendar quarter.
Out-of-state employers must have worker's compensation insurance if they have employees working in Wisconsin. The policy must be with an insurance company licensed to write in Wisconsin and endorsed to name Wisconsin as a covered state in Section 3-A of your policy.
Family members are considered and counted as employees and covered by the Act. With the exception of farmers, an employee's relationship to the owner has no bearing on the requirement to carry worker's compensation insurance.
Minors are considered and counted as employees and covered by the Act.
Part-time employees are considered and counted as employees and covered by the Act. Whether an employee works part-time or full-time has no bearing on the requirement to carry worker's compensation insurance.
Partnership or Small Business
The employees of partnerships, sole proprietorships, limited liability companies and corporations are covered by the Act. Partners, sole proprietors, and members of limited liability companies are exempt but may opt for coverage on themselves.
All workers' compensation policies exclude the sole proprietor, partners, and members of limited liability companies unless specifically endorsed to include them. Sole proprietors, partners, and members of limited liability companies may voluntarily purchase worker's compensation insurance to cover their own work-related injuries and illnesses.
Employers who have an existing worker's compensation insurance policy may add themselves to that policy by notifying their agent and paying the additional premiums. It is necessary to have the policy endorsed to name the sole proprietor, partners, or members of limited liability companies for them to be covered.
A business that is neither a partnership nor a corporation but is owned by one person is called a "sole proprietorship." The owner of that business is "self-employed." The employees of a sole proprietorship are covered by the Act, but the sole proprietor (the person who owns the business) is "self-employed." He or she is not an employee of anyone and accordingly is not covered by the Act unless he or she chooses to be. A sole proprietor who has no employees, is not required to carry a worker's compensation insurance policy.
Corporate officers are considered and counted as employees and are covered by the Act. All workers' compensation insurance policies covering corporations include corporate officers. However, in a closely held corporation, defined as a corporation with not more than 10 stockholders, no more than two officers may exclude themselves from coverage. If the corporation has other employees, and/or officers, an insurance policy is required and the exclusion for officers must be made by an endorsement on the worker's compensation insurance policy. The name(s) of the officer(s) must be given. The exclusion will remain in effect for the policy period. Officers who are excluded will still be counted in determining whether the employer is subject to the Act under s. 102.04 (1) (b), Wis. Stat.
If a closely held corporation has no more than two corporate officers and has no other employees, a worker's compensation insurance policy is not required if both officers elect not to be subject to the Act by filing with the Worker's Compensation Division the Notice of Corporate Officer Option.
Please note: A corporation with more than two corporate officers or any other employee or employees is not eligible to file a Notice of Corporate Officer Option and must obtain and/or maintain a worker's compensation insurance policy.
If you have any questions regarding whether a corporation qualifies to file a Notice of Corporate Officer Option, please contact the Worker's Compensation Division, Bureau of Insurance Programs at (608) 266-1340.
If one company hires another company to come in and do some work for it, the second company is ordinarily an "independent contractor" and not an employee of the first company. Sometimes, however, a company hires one person to come in and perform a specific job and disputes arise as to whether or not that person is an employee or an independent contractor.
A person is not an independent contractor for worker's compensation purposes just because they say they are, or because the contractor over them says so, or they both say so, or even if other regulators say so. There are specific statutory conditions that must be met before a worker in the service of another person is considered not to be an employee. There are nine conditions that establish whether independent contractors are employees. Any owner/operator or independent contractor who does not meet and maintain all of the nine specific tests of independence in the Wisconsin law (and who is not an employer himself or herself) is an employee of any employer they are working under in Wisconsin.
Under s. 102.07 (8), Wis. Stat., a person is required to meet a nine-part test before a person can be considered an independent contractor rather than an employee. To be considered an independent contractor and not an employee, an individual must meet and maintain all nine of the following requirements: 1) maintain a separate business; 2) holds or has applied for a federal employer identification number with the federal internal revenue service or has filed business or self-employment income tax returns with the federal internal revenue service based on that work or service in the previous year; [Note: When requesting a Federal Identification Number (FEIN) from the IRS, you must inform the IRS that you are required by Wisconsin Worker's Compensation law to obtain a FEIN. A social security number cannot be substituted for a FEIN and does not meet the legal burden of s. 102.07 (8), Wis. Stat.] 3) operate under specific contracts; 4) be responsible for operating expenses under the contracts; 5) be responsible for satisfactory performance of the work under the contracts; 6) be paid per contract, per job, by commission, or by competitive bid; 7) be subject to profit or loss in performing the work under the contracts; 8) have recurring business liabilities or obligations; and 9) be in a position to succeed or fail if business expense exceeds income.
Independent contractors who have no employees or who are not required to be insured may buy a policy to cover themselves.
Real Estate Agents
The Wisconsin Statutes relating to the practice of real estate, defines a real estate salesperson as "any person other than a broker who is employed by a broker to perform any act authorized by Chapter 452 to be performed by a broker." (s. 452.01(7), Wis. Stat.)
The statutes further provide that "each broker is responsible for the acts of any brokers, salesperson or time-share salesperson employed by the broker." (s. 452.12(3), Wis. Stat.)
All licensed real estate salespersons are required to work for a licensed broker. The broker/employer is required to: 1) supervise its salespersons and brokers; 2) provide operating procedures for all documents relating to transactions; and 3) be responsible for the preparation, custody, safety and corrections of entries to control the documents. These requirements demonstrate the right to control the details of the work, the key test of an employment relationship. Since the broker is responsible for the acts of the salesperson, the employer/employee relationship is clearly established.
Therefore, real estate salespersons licensed to work for licensed brokers are employees of the broker under the Wisconsin Worker's Compensation Act.
An employer becomes subject to the Wisconsin Worker's Compensation Act under s. 102.04 (1), Wis. Stat., and must carry a worker's compensation insurance policy when they:
- Usually employ three or more persons full or part-time for services performed in Wisconsin. (This employer needs insurance immediately); or
- Employ one or more full-time or part-time employees and has paid gross combined wages of $500 or more in any calendar quarter for work done in Wisconsin. This employer must have insurance by the tenth day of the first month of the next calendar quarter.
Domestic Servants & Home Care Providers
The Wisconsin Worker's Compensation Act does not provide worker's compensation coverage for domestic servants or any person whose employment is not in the course of a trade, business, profession or occupation of the employer. The term "employee" in s. 102.07 (4) (a), Wis. Stat., defines every person in the service of another under any contract of hire, express or implied, as an employee with two exceptions:
- domestic servants; and
- any person whose employment is not in the trade, business, profession or occupation of the employer, unless the employer opts to cover them.
Who is a domestic servant?
Although neither the statutes nor the case law provide a definition of "domestic servant" as it is used in s. 102.07 (4), Wis. Stat., the Department of Workforce Development (DWD) has consistently ruled that persons hired in a private home to perform general household services such as nanny, baby-sitting, cooking, cleaning, laundering, gardening, yard and maintenance work and other duties commonly associated with the meaning of domestic servant, meet the definition of domestic servant intended by the Act.
What is the definition of ". . . trade, business, profession or occupation of the employer . . ."?
Cornelius v. Industrial Commission, 242 Wis. 183, 185 (1943), defines a trade or business as an occupation or employment habitually engaged in for livelihood or gain. If a person's employment is in the trade, business, profession or occupation of the employer, he or she is an employee, no matter how casual or isolated the employer's trade, business, profession or occupation may be.
What about home-care providers?
Although neither the statutes nor the case law provide a definition of "home-care provider," the department has consistently ruled that persons hired in a private home to give primary-care to an individual such as help in walking, bathing, preparing meals and special diets, supervising use of medications and exercise therapy and other duties commonly associated with the meaning of primary-care giver, meet the definition of home-care provider. While a home-care provider may assist in preparation and clean up of the recipient's meals, such activities are considered incidental to the primary-care duties, rather than domestic servant duties.
The Labor and Industry Review Commission (LIRC) has held that home-care providers are not domestic servants. LIRC has consistently ruled that a person providing personal care to an individual is not a domestic servant. [Ambrose v. Harley Vandeveer Family Trust, WC claim no. 86-39393 (LIRC, February 28, 1989)]; and [Shirley A. Nickell v. County Kewaunee Other, WC Claim no. 94-064155 (LIRC, September 24, 1996). WKC-13089-P (N.04/2002)]
Since home-care providers are not domestic servants under the Act, are they employees?
No, LIRC has held that a person providing personal care to an individual does not perform services as part of the trade, business, occupation or profession of the recipient (i.e., the patient-home-owner client) of those services. A recipient arranging for personal care ordinarily is not engaging in a trade, business, profession, or occupation. Nor is arranging for a family member's home-care an occupation or employment. LIRC has held that providing or arranging home-care for oneself or one's relative is not part of a causal or random trade, occupation, business or profession and is not done for livelihood or gain, at least as those terms are commonly understood in a business sense. The result is there is no employer-employee relationship under the Act.
What if a home-care provider serves a client but is paid by a county social-service agency or a county fiscal-agent service?
Generally speaking, if this employer-employee relationship existed exclusively between the worker (the home-care provider) and the recipient of the service (client), and all the elements of direction, control and payment rested with the recipient, the recipient would clearly be the employer and the worker would clearly be an employee of the recipient. However, this employment would be considered not to be in the course of trade, business, profession or occupation of the employer (client). Therefore, worker's compensation insurance would be optional on the part of the employer (client).
However, if a county social-service agency is also involved with this employment arrangement and if a majority of the elements of direction, control, payment and normal employer rights and obligations shift to the county, the role of the employer for worker's compensation purposes most likely would also shift to the county.
Even if the recipient (client) retains some minimal direction and control, the fact the county has most of the control becomes a very strong indicator that the county is the employer. The fact that the work of the home-care provider contributes to the satisfactory performance of the duties of the county could be construed to be a substantial benefit to the county.
Consequently, if the county controls and pays the home-care provider, and benefits from the work even though the recipient (client) retains some control and receives benefits, the county is the employer for worker's compensation purposes.
Any claim filed by a home-care provider injured while performing services under these conditions is decided on a case-by-case basis according to the facts and circumstances at the time of injury.
What if a county social-service agency or a county fiscal-agent service pays a domestic servant to work in a client's home?
There are two possible outcomes: (1) the county is the employer; (2) the client receiving the services is the employer. If the client is the employer, the domestic servant exemption applies and coverage under the Act will be determined as outlined in the prior sections.
The statute that defines who is a state or municipal employee does not exempt domestic servants. Section 102.07 (1), Wis. Stat., defines "employee" to include any person in the service of the state or a municipality under an express or implied contract of hire. More generally, s. 102.07 (4), Wis. Stat., defines "employee" to include every person in the service of another under a contract of hire, whether the contract is express or implied. However, "domestic servants" are specifically excluded from the definition of "employee" for persons in the service of another under s. 102.07 (4) (b), Wis. Stat. No similar exclusion is found in s. 102.07 (1), Wis. Stat., dealing with persons in the service of the state or municipalities. LIRC has held that the domestic servant exemption does not apply if the county is the employer. [Shirley A. Nickell v. County Kewaunee Other, WC Claim no. 94-064155 (LIRC, September 24, 1996)]
In determining whether the county is the employer of the domestic servant, the primary test is the same as in any other worker's compensation case--who has the right to control the details of the work? Since, the facts will vary from case to case, so will the answer to the question. In most cases, the client receiving the services in his or her home will obviously have some control over how the details of any work is performed within the home. However, in many cases, especially where the county is paying the person's wages, the county's control over the details of the work will also be significant. Then, secondary tests come into play.
The secondary tests for determining an employer are: (1) Who pays for the service? (2) Who has the right to hire and fire the person? (3) Who provides tools or equipment to the person to do the job? Again, since the answers to these questions will vary, the decisions will vary from case to case. Still, where the right to direct and control the details of the work is arguably shared, the fact that the county pays for the domestic service becomes a very strong indicator that the county is the employer. However, pay arrangements can vary. For example, where the county reimburses the client, the payment test is arguably less definitive in determining the answer. Similarly, where the county reimburses only a portion of the costs, other tests may play a larger role in determining whether the county is the employer.
Any claim filed by a domestic servant injured while performing services under these conditions is decided on a case by case basis according to the facts and circumstances at the time of injury.
What happens if a domestic servant or a home-care provider is injured and there is a dispute as to whether or not the person is an employee covered by the Act?
Generally, if there is a dispute regarding insurance coverage, remuneration and/or benefits, it is adjudicated on a case-by-case basis according to the facts and circumstances at the time of injury. If an employer has a worker's compensation policy in this situation, the policy will cover any person working under the employer if he or she is found to be an employee at the time of injury.
An employer who does not have a worker's compensation insurance policy when he or she is subject to the Act, is subject to monetary penalties. The penalty for failure to carry worker's compensation insurance when required is twice the amount of premium not paid during an uninsured time period or $750, whichever is greater. In addition, if an employee is injured while working for an illegally uninsured employer, the uninsured employer is personally liable for reimbursement to the Uninsured Employers Fund for benefit payments made by the Fund to the injured employee (or the employee's dependents). The penalties and reimbursements to the Fund are mandatory and non-negotiable.
Employers who are not subject to the Act and do not carry worker's compensation insurance may be sued in a civil action for damages by an employee who is injured while at work.
Temporary Help Agencies and Employee Leasing Companies
Both a temporary help agency and an employee leasing company is the employer for worker's compensation purposes of any employee whom it places, loans or leases to another employer. Section 102.01 (2) (f), Wis. Stat., defines "temporary help agency" as an employer who places its employee with or leases its employees to another employer who controls the employee's work activities and compensates the first employer for the employee's services, regardless of the duration of the services.
Under s. 102.04 (2m), Wis. Stat., a temporary help agency is the employer of an employee whom the temporary help agency has placed with or leased to another employer that compensates the temporary help agency for the employee's services. A temporary help agency is liable for all compensation payable under the Act to that employee.
Employee leasing companies that lease employees to other employers are responsible for worker's compensation benefits in the same way that temporary help agencies are.
If a temporary help agency or an employee leasing company places, loans or leases an employee to provide home-care or domestic servant services, either directly to a recipient (client) or on behalf of a county, the temporary help agency or employee leasing company is the employer for worker's compensation purposes.
Can an employer voluntarily obtain worker's compensation insurance?
Yes, all employers, including those that employ domestic servants and home-care providers, may voluntarily elect coverage for their employees. In the event of a work-injury, the employees are eligible for all medical, indemnity and other worker's compensation benefits, without regard to who was at fault in causing the injury. The voluntary purchase of a worker's compensation policy also protects the employer from most civil tort actions by employees related to the work-injury. With few exceptions, where the employer has the worker's compensation insurance coverage in place, an injured worker is limited to the benefits to which he or she is legally entitled under the Act.
Out-of-state employers with employees working in Wisconsin must have a worker's compensation insurance policy with an insurance company licensed to write worker's compensation insurance in Wisconsin.
Section 102.28 (2), Wis. Stat., requires that an employer subject to the Act with employees working in Wisconsin must have a worker's compensation insurance policy with an insurance company licensed to write worker's compensation insurance in Wisconsin. The policy must be endorsed to name Wisconsin as a covered state in section 3-A of the policy. If an out-of-state employer has a worker's compensation insurance policy with an insurance company licensed to write worker's compensation in Wisconsin, they may simply add Wisconsin coverage by name to section 3-A of the policy endorsement.
If an out-of-state employer has a worker's compensation insurance policy with an insurance company not licensed to write in Wisconsin, they must obtain a policy from a Wisconsin-licensed insurance company to cover their Wisconsin exposure. The insurance company must file the properly endorsed policy with the Wisconsin Compensation Rating Bureau.
For more information on out-of-state employers contact:
The Wisconsin Compensation Rating Bureau
20700 Swenson Drive, Suite 100
Waukesha, WI 53186
Worker's Compensation Rating Bureau
P.O. Box 3080
Milwaukee, WI 53201-3080
(262) 796-4540 Phone
(262) 796-4400 Fax
Volunteer Workers and Worker's Compensation in Wisconsin
The Wisconsin Worker's Compensation Insurance Act does not provide for worker's compensation coverage for volunteers, including volunteers of nonprofit organizations that receive money or other things of value totaling not more than $10.00 per week. [s. 102.07 (11) and (11m), Wis. Stat.]
Volunteers cannot be covered under a worker's compensation policy and cannot collect worker's compensation benefits if they incur an injury or illness during the course of their voluntary service. The worker's compensation law has no jurisdiction over any other form of relief that may be available to a volunteer.
A volunteer for a nonprofit organization that is exempt or eligible for exemption from Federal income taxation under the Federal Internal Revenue Code, who receives nominal payments of money or other things of value totaling not more than $10.00 per week is not considered to be an employee under the Worker's Compensation Law, unless the nonprofit organization elects to cover the volunteer under its policy.
Although the statute is clear that volunteers are not covered by the Worker's Compensation Act, questions often arise regarding coverage for volunteers. The two central questions regarding volunteer workers are:
- What is the definition of a volunteer?
- When, how and if volunteers evolve into employees?
A volunteer is a person who provides services of his or her own free will to or on behalf of an organization or entity who neither receives nor expects to receive any kind of pay or compensation for his or her services.
A popular element of consideration in pondering when, how and if volunteers evolve into employees is "does the worker receive or expect to receive compensation (almost anything of value including discounts, certificates, credits, vouchers, etc.) in exchange for his or her services?" If not, the worker is probably a volunteer. If the answer is yes, they are most likely an employee.
The situation gets murky when the volunteer worker is a member of an organization that receives compensation for providing the services of the volunteer worker. A general "rule of thumb" is if nothing of value changes hands from the recipient of services to the worker (the provider or performer of services), this is probably a volunteer situation. However, if something of value is received, accepted or expected by the worker (the provider or performer of the services) or the organization in exchange for the work performed, an employee/employer relationship may exist. Any claim filed by a worker (the provider or performer of services) injured while performing services under these conditions would be decided according to the facts at the time of injury. There is no way to predict whether the claim would result in a finding that the worker was a volunteer or that there was an employee/employer relationship.
If you have questions regarding volunteer workers and the Wisconsin Worker's Compensation Act, call or write the Worker's Compensation Division, Bureau of Insurance Programs. The Worker's Compensation Division is located in the GEF 1 State Office Building, Room C100, 201 East Washington Avenue, Madison. The mailing address is P.O. Box 7901, Madison, WI 53707-7901. The telephone number is (608) 266-1340, 866-265-3142 TTY or you can reach them by fax at (608) 266-6827.