Independent Contractors are Not Eligible for Workers’ Compensation

Posted on behalf of Henness & Haight on Apr 04, 2017 in Workers' Compensation News

contractual agreement

The modern workforce is shifting from the traditional employer-employee relationship as more companies are hiring independent contractors for specific jobs or periods of employment.

Although working as an independent contractor has its advantages, contractors are not entitled to the benefits and protections of regular employees, such as workers’ compensation. 

Consulting with a workmans comp lawyer in Last Vegas will help clarify your employment status as an independent contractor or a regular employee. When consulting a lawyer to confirm your employment status be sure to choose a law firm that has a reputation for integrity and determination.

Classifying an Independent Contractor

According to NRS 608.0155, a fine line has been established in Nevada that identifies the difference between an independent contractor and an employee.

A worker is considered an independent contractor if he or she is working in the U.S. legally and possesses or has applied for an employer identification number, a Social Security number, or filed an income tax return for a business or self-employment with the IRS in the last year.

The worker must also maintain a state or local business or occupational license, insurance, or bonding to perform his or her work.

Independent contractors must also fulfil three of the following conditions:

  • He or she holds control over the means and method of performance of the work and the results of the work. This must be the main condition negotiated between the contractor and the employer.
  • He or she has full control over determining the process of his or her work and when that work is performed.
  • He or she is not required to work for a single business (some exceptions apply).
  • He or she is allowed to hire his or her own employees to assist with the assignment and labor.
  • He or she has heavily invested in his or her business by purchasing or leasing tools, materials, equipment, obtaining licenses or securing access to a work space.

There are also certain standards that must be clearly established in the relationship between the worker and the hiring company. This includes:

Behavioral Control

Behavioral control refers to the independent contractor’s right to direct or control how the work is performed.

The business that hired the independent contractor has no right to direct or control the manner in which the service is performed.

Financial Control

Independent contractors have complete financial control over the task they have been hired to perform. This means the contractor is responsible for determining the cost of a job and how that cost should be met. The hiring company does not interfere with the economic aspects of the independent contractor’s job.

Type of Relationship

There must be a clear business-to-business relationship established between the independent contractor and the hiring company.

This relationship is only that of hiring an outside source to perform a specific job or work for an agreed upon period of time.

If there is any interference or initiation of control by the hiring company, the worker may then be considered an employee.

Independent Contractors and Workers’ Compensation

Workers’ compensation is a no-fault insurance program most employers in Nevada are legally required to carry if they have one or more employees. It provides benefits for employees who have suffered a workplace injury or illness.

An employer’s workers’ compensation insurance pays for all medical expenses related to the workplace injury or illness and provides partial lost wages for the time an employee has been unable to work.

However, workers’ compensation benefits are only provided to employees. An independent contractor works as a separate entity from the company that has hired him or her.

Therefore, an employer is not obligated to compensate an independent contractor if he or she acquires a workplace injury or illness.

Protection for Independent Contractors

An independent contractor that acquires a workplace injury or illness must provide his or her own means of financial compensation for medical treatment and lost income.

Independent contractors will have to pay for their own medical bills and cannot recover any lost wages that resulted from loss of income due to the injury or illness.

However, there are several options available for an independent contractor in the event that he or she acquires a workplace injury or illness.

Workers’ Compensation Insurance for Independent Contractors

Independent contractors have the option to obtain their own workers’ compensation insurance.

Workers’ compensation insurance policies can be purchased from a private insurer authorized by the Nevada Division of Insurance (DOI).

Independent contractors will need to find an insurer approved by the DOI and meet the requirements of a self-employed individual or small business to obtain his or her own workers’ compensation insurance.

Lawsuit against Hiring Company

Another option available for an independent contractor is to file a lawsuit against the company that hired him or her.

In this scenario, the lawsuit would be similar to a personal injury claim, which requires the company acted negligently and created a hazardous working environment that caused your injury.

However, this option may not be appropriate in every situation. It is strongly advised that you consult with  one of our workers’ compensation attorneys for more information.

Misclassification

Employee misclassification occurs when an employer wrongly declares a worker as an independent contractor rather than an employee.

When workers are misclassified as independent contractors, they are no longer entitled to the benefits and fair pay provided for employees under the Fair Labor Standards Act (FLSA), such as:

  • Overtime compensation
  • Healthcare insurance
  • Paid leave
  • Workers’ compensation
  • Retirement/pension plans
  • Minimum wage

Employers have an incentive to misclassify employees as independent contractors because it saves approximately 30 percent of their labor costs, according to the National Conference of State Legislatures.

If a company has misclassified you as an independent contractor, you should speak with your employer to correct the situation and reclassify you as an employee.

If that does not work, you should consider consulting with an attorney who can help you file a workers’ compensation claim with the Nevada Department of Industrial Relations.

Another option you can pursue is filing for unemployment with the Nevada Department of Employment, Training and Rehabilitation.

Both of these agencies can investigate the terms of your employment status and determine if you have been wrongly misclassified as an independent contractor by your employer.

Experienced Las Vegas Workers’ Compensation Attorneys

Although working as an independent contractor presents the opportunity for more freedom and higher earnings, it eliminates traditional protections enjoyed by employees.

If you were hired as an independent contractor and were injured in a workplace accident, we may be able to help.

Contact Henness & Haight for a free consultation of your claim. We can review your employment status and determine if you have been misclassified or if your claim allows you to pursue a personal injury lawsuit.

All of our work is provided on a contingency fee basis, and you will not be charged any fees unless we recover the compensation you deserve.

Call 844.613.6275 or complete our Free Case Evaluation form to get started now.