No one expects to be injured on the job, but it happens to millions of Americans each year. According to recent statistics from the Bureau of Labor Statistics, private industry employers reported over 3 million nonfatal workplace injuries and illnesses in 2013.
You may know where you stand as a salaried or wage-earning employee in regards to worker’s compensation, but what if you happen to be an independent contractor? The following explains the eligibility complications surrounding independent contractors.
The Short Answer
Various state labor laws require employers to cover their salaried or wage-earning employees under worker’s compensation insurance. However, the same isn’t required of employers when it comes to independent contractors. In short, independent contractors aren’t eligible for worker’s compensation unless employers specifically request that they be covered under their worker’s comp insurance coverage.
Unlike salaried or wage-earning employees, independent contractors are not under the direct employ or even supervision of the companies they work for. Instead, independent contractors usually receive a lump-sum payment for their services upon completion of a project or a specific term of service. This status also means that the employers are not responsible for deducting state and federal taxes from any earnings received by independent contractors.
Since independent contractors aren’t directly employed by the companies they’re working with, they’re not able to benefit from the worker’s comp protections that salaried and wage-earning employees enjoy. In addition, many of the laws designed to protect employees’ rights may not extend to independent contractors unless specifically noted otherwise. Any disputes that arise between employers and independent contractors must be settled in court, as opposed to state labor agencies.
Exceptions to the Rule
One way that independent contractors can benefit from workers compensation is if they’re not really independent contractors at all. Such a situation can arise from an employer designating what really should be a salaried or wage-earning employee as an independent contractor in order to avoid taxes and other additional expenses.
There are strict guidelines that govern whether someone can be deemed an independent contractor:
- They provide services based on a written or unwritten contract, with the contractor paid per completed task.
- They fully control how services are rendered, free of any supervision or direction by the company they’re contracted with.
- They typically provide their own equipment in order to complete a specific job, and are also responsible for calculating and deducting their own state and local taxes. Independent contractors typically have their incomes reported by IRS form 1099, instead of form W-2 (for wage and salaried workers).
If none of the above applies to you, but your employer still designates you as an independent contractor, you may want to seek legal advice from an attorney specializing in workplace issues. You’ll also want to report the matter to your local labor board, as your employer could face civil penalties for purposefully denying fair wages. For more information about workers compensation, visit McMullen & Ochs PLLC.