Independent Contractors and Workers Compensation

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Not all workers are employees. It is increasingly common to see contract workers on job sites and in offices. While most people associate contractors with construction jobs, independent contractors are also hired to perform IT, professional services and other tasks.

Independent contractors sometimes get hurt on the job. Depending on state law and the terms of your employment, an independent contractor may be entitled to workers’ compensation benefits, including payment of your medical bills and compensation for wage loss.

What is an Independent Contractor?

An independent contractor is not under the control of an employer. Instead, you are hired to perform specific tasks (sometimes for a set period of time). People become independent contractors for a variety of reasons. Some enjoy the flexibility that freelance work allows. Others want to be their own bosses.

While many independent contractors sign a written contract, the relationship can be based on a verbal agreement. Typically, income taxes are not withheld from an independent contractor’s pay.  An independent contractor is not covered by a company’s health insurance plan or other employee benefit plans. 

Can Independent Contractors Receive Workers’ Compensation?

Most of the time, an independent contractor is ineligible for workers’ compensation benefits from a general contractor or business owner. However, there are some exceptions to this rule. Do not assume that you cannot receive workers’ compensation. Instead, speak with a lawyer about your entitlement to benefits.

Can an Employer Classify a Worker as an Independent Contractor to Avoid Paying Benefits?

Sometimes, employers misclassify their workers to avoid paying taxes and insurance premiums. Workers’ compensation laws protect workers from this practice.

Most states consider a series of factors when classifying a worker. You may be considered an employee under workers’ compensation law if:

Other factors may come into play, and every state’s laws are different. If you believe your employer misclassified you as an independent contractor, contact an experienced workers’ comp lawyer immediately.

Additionally, it is illegal to misclassify employees to avoid paying taxes, minimum wage and other obligations. If your employer intentionally misclassified you as an independent contractor, you can file complaints with the IRS and Department of Labor. Your employer may be responsible for paying your back wages and other benefits.

How Can Independent Contractors Protect Themselves?

Some states require general contractors to cover uninsured subcontractors. In these states (including New York, Minnesota and Michigan), an uninsured subcontractor can file a workers’ compensation claim with the general contractors’ insurance carrier and receive benefits.

If you are truly an independent contractor, consider buying workers’ compensation insurance. If you are insured at the time of your injury, you can file a claim for workers’ compensation benefits.

You also may have the right to file a personal injury lawsuit against a negligent party. Workers’ compensation is the exclusive remedy for employees—meaning that an employee cannot sue his or her employer for negligence. Since independent contractors are not employees, exclusive remedy provisions do not apply.

There are some risks and benefits to filing a negligence lawsuit. Workers’ compensation is a no-fault system. In exchange for a limited range of benefits, employees do not have to prove that their employer was at-fault or negligent. However, an employee’s pain and suffering is not compensable in a workers’ compensation claim.

In a personal injury lawsuit, you must prove that the other party was negligent.  Additionally, principles of comparative negligence may come into play. But, if you are successful, you may receive compensation for your lost wages, medical expenses, and pain and suffering.

When Should I Speak with a Workers’ Comp Lawyer?

If your workers’ compensation benefits were denied, you should contact an employment lawyer. Workers’ compensation laws are complicated and you may be entitled to benefits. Alternatively, you may have a personal injury claim against a negligent party. An attorney can evaluate your claim and help you understand whether you qualify for benefits.

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Last Modified: 07-25-2016 04:51 PM PDT

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