Check Your Label

bananasWho do you work for?

This can be an important question to know the answer to in the event of an injury on the job. If you are an independent contractor you may not be covered by workers’ comp. Misclassification of workers either by accident or on purpose can blur the lines and lead to a lot of confusion. There are certain things to look for to determine if a worker is an employee or an independent contractor.

–          Who controls this worker? Independent contractors can control their day pretty much independent of any supervision whereas an employee is likely subject to directions from their employer.

–          How are they getting paid? Independent contractors typically get paid by the job and employees are salaried or paid hourly.

–          Who gives them the tool of the trade? Independent contractors usually operate with a BYOG (Bring Your Own Gear) mentality while employees expect to be provided with equipment.

–          What do they do? Specialized jobs are usually independent contractors, since they can do this one job for multiple companies who might not employ a full-time worker who is highly skilled in that one particular area. But if they start to do more regular work for one of their companies they might be considered an employee.

–          Did they sign on the dotted line? Sometimes if a worker signs an agreement that designates them an independent contractor, that still might not be enough to convince the court that they are. There are many other factors the work comp boards look at to determine a workers’ status.

The distinction between independent contractor and employee is often ill-defined and it is sometimes the root of many problems in injury cases. Since workers’ comp laws are different in every state it can be tricky to have a general handle on how employers should approach these kinds of workers. But generally the rules of thumb above are applicable to most instances.

There is a lot of interest in the terms used to define employment status- and not just on the part of the worker. If someone is not an employee, their employer does not have to pay taxes or other fees associated with the label so it might be cheaper for them to call workers independent contractors. But the government would push back on the other side and want more employees rather than independent contractors since they could get payroll tax dollars. Whether employees deem their workers independent by accident or by choice, misclassification of workers can be a big problem.

Workers’ comp laws can be murky and it is a good idea for employers to have a handle on who is who, otherwise it might end up in a lawsuit or fines. Check your state’s regulations to make sure you have the information you need on classifying workers.

What's your take? Continue the discussion with others over at the WCInsights LinkedIn Group.
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