Independent Contractor Eligibility for Workers’ Compensation Benefits
One of the most frequently litigated issues under the Pennsylvania workers’ compensation laws involves the question of whether an injured worker is an employee or an independent contractor. Not surprisingly, many would-be employers take the position that the injured worker was an independent contractor, and therefore not entitled to workers’ compensation benefits following an injury at work. Some of the more common situations we have handled involving a defense that an injured worker was an independent contractor include:
- Construction workers
- Truck drivers
- Personal caretakers
- Court reporters
- Maintenance workers
Are you an independent contractor or an employee?
This issue has been so prevalent that in 2011 Pennsylvania enacted the Construction Workplace Misclassification Act providing restrictions in the construction setting for when a construction worker may be classified as an independent contractor for workers’ compensation and unemployment purposes. Under the law, for a construction worker to be classified as an independent contractor, the following three criteria must be met:
- They must have a written contract to perform services
- They must be free from the hiring party’s control or direction when performing such services
- They must be customarily engaged in an independently established trade, occupation, profession, or business
Under the law, for a person to be “customarily engaged in an independently established trade, occupation, profession, or business,” they must:
- Possess the essential tools for the job
- Realize a profit or loss as a result of performing the services
- Perform the services through a business owned by the employee, at least in part
- Maintain an independent business location
- Either perform similar services for someone else while meeting the first four requirements or hold themselves out as able to perform similar services
- Maintain individual liability insurance during the term of the contract of at least $50,000
Each of these criteria must be met specifically in order to classify a construction worker as an independent contractor. As you can see, the law with regard to construction workers is heavily tilted in favor of a finding that a worker is an employee, and therefore entitled to workers’ compensation benefits if injured on the job. This is the case whether the employer classifies the worker as an independent contractor for tax purposes. In fact, such evidence is not to be considered at all by the judge deciding your case.
The law with regard to construction workers is heavily tilted in favor of a finding that a worker is an employee, and therefore entitled to workers’ compensation benefits if injured on the job.
Employees who get a 1099 may still be entitled to receive workers’ compensation benefits
While the 2011 law is of tremendous benefit to those who work in “construction,” which is defined as “erection, reconstruction, demolition, alteration, modification, custom fabrication, building, assembling, site preparation and repair work done on any real property or premises under contract,” the law does not address the other circumstances under which employers try to avoid responsibility for workers’ compensation benefits by misclassifying employees as independent contractors. In these cases, it is most important to remember that just because your boss or employer tells you that you are an independent contractor doesn’t mean it is true under the law. The courts have repeatedly held that when determining the existence of an employer-employee relationship under the Pennsylvania workers’ compensation laws, courts should lean in favor of finding the existence of such a relationship, as opposed to an independent contractor arrangement. In other words, the courts are to give workers every benefit of the doubt when determining whether they are an employee and entitled to workers’ compensation benefits following a work injury.
There is no hard and fast rule to determine whether a particular relationship is an employer-employee or owner-independent contractor. However, Pennsylvania courts have taken the following factors into consideration:
- Control of the manner in which the work is done
- Responsibility for result only
- Terms of the agreement between the parties
- Nature of the work
- Skill required for performance
- Whether one is engaged in a distinct occupation or business
- Which party supplies tools and equipment
- Whether payment is by time or by the job
- Whether work is part of the regular business of the employer
- The right to terminate employment
Of the above, the most important factor is control over the work to be completed and the manner in which it is to be performed. This aspect includes the ability to select the employee, the right and power to discharge the employee, and the power to direct the manner of performance.
Many of these cases tend to be fact specific. It is important that you contact a workers’ compensation attorney immediately if you are injured on the job, particularly where there is some dispute or discrepancy as to whether you are an independent contractor or an employee. If you have been hurt at work, contact one of the Philadelphia workers’ compensation attorneys at Zavodnick, Zavodnick & Lasky, LLC today or call (215) 875-7030 for your free consultation. Find out whether you qualify for benefits–don’t take your employer’s word for it!