Does Workers’ Compensation Cover Independent Contractors?
Since the early 1900s, every state has instituted some form of protection for its workers in the form of a workers’ compensation insurance program. This type of insurance is paid by the employer to provide compensation for medical expenses and lost wages for any employee injured on the job.
The keyword here is “employee.” Does workers’ compensation cover independent contractors?
The short answer is “no,” as stipulated by the Maryland Workers’ Compensation, an independent contractor is not entitled to receive benefits from workers’ compensation insurance. However, these potential claims can become complicated when the employer intentionally misidentifies their worker.
They could claim an employer is an independent contractor when, in reality, they would be considered an actual employee. These are the instances where the counsel from the attorneys at Belsky & Horowitz, LLC, can be a big help.
We are experienced workers’ compensation claim attorneys who have helped many clients receive the maximum benefits they are entitled to. If you have been injured on your job and run into problems with filing a claim, we want to hear from you. The following post provides some helpful information about who is considered an employee and what your options are if you’re an independent contractor.
Definition of an Employee versus an Independent Contractor
The U.S. Department of Labor has established the classifications of employees and independent contractors based on the Fair Labor Standards Act (FLSA). In order to be considered an employee, you have to meet the standards of the Economic Reality Test. The following are the elements to consider:
Opportunity For Profit or Loss Depending on Managerial Skill
Can you profit or suffer losses through your independent actions? In other words, do you negotiate your own pay? Do you hire workers? Do you purchase materials for the company? Those are the types of actions that only an employee would make on behalf of the company.
Investments By the Worker and the Employee
If you work at a job where the company provides software, computers, office space, and other supplies, they are investing in your skills, which qualifies you as an employee. On the other hand, if you worked from home, used your own computer, and marketed yourself, you would be an independent contractor.
Permanence of the Work Relationship
This element considers the nature and length of the work relationship. If the work is continuous without a fixed end date and is your only work relationship, you would be considered an employee. If you are hired for a single project with a definitive start and end date, that would be as an independent contractor.
Nature and Degree of Control
If you are working at a home where your employer controls the hiring, firing, scheduling, pay rates, and supervises your performance, you would be considered an employee. An independent contractor will set their own schedule and continue to market their services to other potential employers.
Whether the Work Performed is Integral to the Employer’s Business
If the work you perform is critical or central to your employer’s business, you would be considered an employee of that company. This is not about the value of an individual worker but instead focuses on the type of work.
For instance, a farm worker picking crops is essential to the farm’s business. However, an accountant who provides support for non-payroll issues like filing taxes would be considered an independent contractor of the farm.
Skill and Initiative
An employee and an independent contractor can both be skilled. However, if you use those skills in connection with business initiatives, you would be considered an independent contractor.
For example, you can be hired as a welder on a project and would bring those skills to the task.
But if you look to generate new business or work with multiple companies, you would be an independent contractor. For example, if you’re hired as a welder and are provided with materials and a schedule and don’t bid on other projects, you’re an employee.
What If the Employer Fails to Carry Workers’ Compensation?
What happens if you are an employee and get injured on the job, but the company you work for doesn’t have workers’ compensation insurance? The company’s obligations for carrying that policy are separate from your need for support.
A company can face a fine of up to $25,000 for not having the insurance in place. This might only become an issue when you go to file a claim, only to discover the company is not covered. In that situation, you might be able to file a claim through the Maryland Uninsured Employers’ Fund.
Your Options as an Independent Contractor
Your options as an independent contractor to file a claim are limited. However, attorneys at Belsky & Horowitz, LLC can help establish if you were misclassified and are entitled to file a claim.
If you are an employee and are injured, there is no guarantee that your claim will be approved. That is another area where we can be of assistance.
If your workers’ compensation claim is denied, we can help you file an appeal and represent you when you go before the commission. We understand the state labor laws and will always strive to provide you with the information you need to make the right decision.
Call to schedule a consultation to get your questions answered.
