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If you are an independent contractor, you are ineligible for worker's compensation if you suffer a workplace injury. Employers are not required by law to provide compensation for these types of workers.
However, it is common for employers to deliberately misclassify workers as independent contractors. They may do so to avoid having to pay payroll taxes and worker's compensation premiums. The employer may, when an employee is injured, argue that the worker was an independent contractor and not eligible for benefits. But whether the worker is an employee or not is not defined by a title, but by the type of work that person does.
Company owners should note that they risk extensive fines and penalties from the state if ‘independent contractors' are found later to be employees.
If a person is injured on the job and there is a dispute about whether he is an employee or independent contractor, that state's worker's compensation board will typically review the following factors to determine his or her work status. This determination will decide whether the worker is entitled to compensation for workplace injuries.
Lack of Direction and Control
Independent contractors offer a service that is related to a written or unwritten contract, without the direction of the individual paying the bill (the company). The contractor controls the way the service is provided and how it is done. The key factor in a legal sense is that the independent contractor is doing his work free of direction, independently and not under the control of the hiring company.
Equipment
Another key issue in the worker/independent contractor determination is who is providing any necessary work equipment. The independent contractor usually provides any equipment necessary to do his job. On the other hand, an employer would usually provide equipment for doing the work.
Nature of Work and Training Involved
What is the character of the work being provided? If the work requires a high skill level and the person performs only a single job, it is likely the worker is an independent contractor. Most independent contractors work for several companies. But if the worker has been trained and gets work from one company, it is more likely he is an employee.
Written Agreements
Some employers rely on a written agreement with the worker to establish that he is an independent contractor. But this may not be sufficient to define the worker as such.
Recent Example of Improper Worker Classification
There are more large companies today using independent contractors to fill jobs that may have been held by full-time workers in the past. This can save the company time and money, but not if it is done improperly. FedEx found this out the hard way in 2014 when a federal appeals court found that thousands of delivery drivers that were called independent contractors were really employees. Even though the workers had their own trucks, rented FedEx uniforms and scanners, and carried commercial insurance, the court found they were FedEx employees.
The result: FedEx was on the hook for $250 million at minimum in back expense reimbursement to the workers.
While this case was about overtime pay and not workplace injury, the problem arose for the same reason: FedEx designated drivers as independent contractors but treated them as full-time workers. As noted earlier, just calling the worker a contractor does not make him one.
If you have been injured at work and think you are a full-time employee and not an independent contractor, you should have your case reviewed soon by an experienced worker's compensation attorney.