Why Are Independent Contractors Not Covered Under Workers’ Compensation?

The workers’ compensation system is designed to protect workers who suffer injuries on the job. Workers’ compensation covers medical bills, lost wages, and rehabilitation costs. However, not all workers qualify for workers’ compensation benefits. Independent contractors, for example, are generally not entitled to workers’ compensation. It’s crucial to understand why these workers are not covered and what other options are available for any independent contractor dealing with a workplace injury.

Who Are Independent Contractors?

Independent contractors are self-employed individuals who offer services to a company under a written contract or verbal agreement. These individuals control their own work methods, hours, and tools. Independent contractors are basically their own bosses and can work for multiple clients. Examples of independent contractors include construction subcontractors, freelance writers, gig economy drivers, and consultants.

Independent contractors are not on the employer’s payroll, but are instead paid on a freelance basis. They don’t receive employee benefits and most importantly, as already mentioned, are not covered by the employer’s workers’ compensation insurance.

Why Are Independent Contractors Not Covered Under Workers’ Compensation?

Some people are surprised to learn that workers’ compensation does not cover independent contractors. But that is the law. And the reasoning behind this rule is that by legal definition, these workers are considered self-employed business owners, and not employees. The workers’ compensation system is designed to cover people who are under the direct control and supervision of an employer in an official employee-employer relationship. Workers’ compensation insurance premiums are meant to cover the risks associated with hiring employees. Independent contractors are in charge of managing their own business risks.

Differentiating Between Independent Contractors and Employees

Understanding how to differentiate between independent contractors and employees is crucial because sometimes employers label workers as independent contractors to avoid paying workers’ compensation premiums.

Several factors determine whether a worker is an employee or an independent contractor, including:

• Control over work: Whereas independent contractors control how they do their work, employees are closely directed and supervised by the employer.
• Payment structure: Employees receive a steady hourly wage or salary, whereas independent contractors are typically paid per project.
• Nature of the relationships: With employees, the relationship between them and the employer is continuous. On the other hand, with independent contractors, the relationship is project-based.

Some of the things that may strongly indicate that you are an employee and not an independent contractor include:

• Fixed schedule
• Constant supervision
• Employer provides tools or equipment
• Your work is an integral part of the business

If you believe you were misclassified, you may still be entitled to workers’ compensation and should consider legal guidance.

What Options Do Independent Contractors Have?

Without workers’ compensation coverage, independent contractors may face significant financial risk after an injury. However, even though workers’ compensation does not cover independent contractors, they are not without options. Independent contractors can protect themselves through several ways, including:

• Purchasing private insurance
• Filing a personal injury claim when an injury is caused by an employer’s negligence
• Defining liability in contracts

It is also a good idea to consult an attorney. An attorney can help determine if an independent contractor has been misclassified and may help pursue workers’ compensation if the classification is incorrect.

Contact Sluka Law Firm Today

If you’re an independent contact or suspect you’ve been misclassified, don’t wait until an injury happens. Contact our experienced Vermont workers’ compensation attorney at Sluka Law PLC for help reviewing your status and ensuring you have the protection you need.