You might have heard the term “independent contractor” when you’ve been brought on for a job, or maybe it’s what you call yourself. The term should not be used lightly, however.
The difference between an independent contractor and an employee could be the difference between not receiving and receiving workers’ compensation benefits should you become injured on the job.
Workers’ compensation attorney Dean Dominick shares what being an independent contractor really means, and what you should know about the classification.
How do you know if you are an independent contractor?
It’s really as simple as determining who maintains the element of control over the manner in which the work is performed. The more independence and control you have over how you perform your job, the more likely it is that you are an independent contractor.
Say you’re a painter and you are contacted by a homeowner to paint her house. You provide an estimate, the homeowner hires you, and you can now complete the job on your own terms — take a break when you want to, come and go as you please (within reason), choose the type of rollers, brushes and paint that you use, etc. You are most likely an independent contractor, as you have significant control over the manner in which you do your job.
Now, say you’re a painter who is asked by the above painter to help paint that house. You are to be paid $10 an hour, are expected to work from 8 a.m. to 5 p.m. with a one-hour lunch to be taken from noon to 1 p.m. every day until the job is completed, are instructed that you will be doing all of the trim painting and have no choice in the rollers, brushes and paint that are used. You now have very little control over the manner in which you do your job and will most likely be classified as an employee. This is still the case even if the painter that hires you tells you that you are an “independent contractor,” pays you your gross of $10 an hour without any payroll deductions, and sends you a 1099 instead of a W-2 for you taxes.
So why does it matter whether you are an independent contractor or an employee? Because employees are covered by the Pennsylvania Workers’ Compensation Act (PA WCA), but independent contractors are not.
Why would an employer attempt to classify a worker as an independent contractor if he or she is not?
All employers who have employees are required by law to have workers’ compensation insurance coverage for their employees; however, since independent contractors are not covered by the PA WCA, workers’ compensation insurance coverage does not have to be purchased for them. As a result, some employers will try to classify their employees as “independent contractors” in order to avoid having to purchase workers’ compensation insurance. While this can result in an obvious cost savings to employers who choose to do this; it comes at a significant risk as, if a worker is injured and it’s found that said worker is not a true independent contractor, the employer can be fined, face criminal charges which can result in jail time, and face personal liability.
What happens in the event that an employee is injured on the job, and then finds out he/she was never covered under workers’ compensation?
In Pennsylvania, there is an Uninsured Employer Guaranty Fund (UEGF), which was set up in 2006 as a safety net for injured workers. Essentially if you are injured and you are or should be classified as an employee but your employer never carried workers’ compensation insurance for you, you can pursue a claim against the UEGF for the wage loss and medical expenses resulting from the injury. Claims against the UEGF, however, are often more difficult to pursue, and some of the damages otherwise available under the PA WCA are limited.
Workers oftentimes assume they have workers’ compensation coverage only to find out when they are injured, that since the employer has classified them as an independent contractor, their workers’ compensation claim is denied and the issue of whether they are truly an independent contractor or an employee must be litigated. That’s why it’s so important to know the difference yourself and to question your employer if you’re unsure.
What happens in the event that you’re injured on the job as a true independent contractor?
Hopefully, you were aware of your independent contractor classification and you have your own workers’ compensation insurance so that your wage loss and medical expenses are covered. In the alternative you should make sure that you have good health insurance, short-term disability and long-term disability insurance coverage that will cover you in the event you are injured on the job.
If you’ve been injured due to someone else’s negligence, contact a KBG attorney to review your options. We’re here to get you the Results You Deserve®.
The personal injury attorneys at KBG Injury Law are all experienced litigators. Almost all of them represented insurance companies prior to becoming advocates for injured people, which provides them with a unique perspective and insight into how these companies operate. They also offer extensive courtroom experience if going to trial is the best legal alternative for the client.