Is an Independent Contractor Covered by Workers' Comp?
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Independent contractors are not eligible for workers' compensation coverage; employers are not required by state law to purchase coverage for independent contractors. However, some employers misclassify employees as independent contractors to avoid paying payroll taxes and workers' comp premiums for them. Especially when a worker is injured, an employer may try to deny that the worker was an employee. However, whether or not a worker is an employee is not controlled by what name the employer uses for the worker, but by the circumstances surrounding the employee's work.
Lack of Direction and Control
Independent contractors provide a service pursuant to a contract (whether written or unwritten) without the direction of the person paying the bill (the employer). An independent contractor controls how the service is provided, who provides it, and the method of accomplishing it. The key is that the independent contractor acts independently, free of direction and control of the hiring company (employer).
Hiring and Pay
To be an employee, the worker does not need to be interviewed and formally hired. Independent contractors typically receive payment by the job; on the other hand, employees receive wages on an hourly or salaried basis.
Another factor in distinguishing an independent contractor from an employee is who provides the equipment. An independent contractor typically provides the equipment necessary to complete the job, whereas an employer typically provides the equipment for the employee to complete the job.
Character of Work and Training
Another way to distinguish an independent contractor from an employee is to consider the character of the work involved. If the work is highly skilled, and the worker only performs a single job, the worker is likely an independent contractor. Independent contractors almost always work for more than one company. Alternatively, if the worker is trained by and receives regular work from the same company, the worker is more likely to be considered an employee.
Even agreements stating the worker is an “independent contractor” are insufficient to qualify the worker as an independent contractor.
The state worker's comp board will consider all of the above factors regarding the workers' employment situation to determine whether the worker was an independent contractor or an employee.