Independent contractors have a great deal of freedom in how they perform their jobs, and for whom they will work for. Yet, these freedoms come at a high price. For a some people, it means they can’t file workers’ compensation claims.
What Qualifies an Individual as an Independent Contractor?
Many companies pay individuals as 1099 employees. This eliminates the company’s need to pay insurance, pension, and workers’ compensation benefits. An independent contractor may be hired based on a contract or verbal agreement. Independent contractors may work part-time for an employer, or on a per project basis.
The Supreme Court Gets Involved
Starting in the 1990’s, company’s began reclassifying employees as independent contractors. They did this to shift the tax burden to their employees and strengthen their bottom line. To counter this trend, the Supreme Court issued the following guidelines. These clarifications help protect employees from these actions. Specifically, these guidelines outline the “right to control.” The greater the right to control, the more likely the court is to view an individual as an independent contractor.
- Performance of significant services that are integral to the employer’s business. These can be enough to classify an individual as an employee.
- The more established the business relationship, the more likely the individual will be considered an employee and not an independent contractor.
- The greater the potential for profit/loss, the more likely the individual will be classified as an independent contractor.
- The greater the level of initiative, discretionary judgment, and/or foresight, the more likely the individual will be considered an independent contractor.
Under the Employee Classification Act in Illinois, other variables may be considered. These are used to determine whether an individual is an employee or an independent contractor. These include the method of payment, and the ability of the individual to work for other companies. Factors such as requiring a uniform, the level of skill required, and the right of the employer to discharge the worker may also come into play.
Making the Decision
In Illinois, the Illinois Workers’ Compensation Commission will consider these and other factors when determining the eligibility of a workers’ compensation claim. Thus, even if an individual has been labeled an independent contractor by a company, it does not mean the IWCC will accept this classification.
As such, any individual who is injured on the job, regardless of whether they are a truck driver, construction worker, security guard, etc., should file a workers’ compensation claim. Should the company dispute the claim, the individual will have an opportunity to appeal to the IWCC. If the individual is able to show substantive proof that their work related responsibilities should classify them as an employee, the IWCC will often grant them that distinction.
The Fine Print
Many insurance carriers will require employers to list their independent contractors. They require them to verify that these contractors have their own workers’ compensation insurance. Known as a Certificate of Insurance, this document serves as valid proof that the employer is not liable for an individual’s injuries. If an employer has not filed this documentation on behalf of the independent contractor(s) they have hired, the IWCC may consider that sufficient evidence that the company considers the individual to be an employee.
Coverage for Owner Operators
The 2007 Roberson v. Industrial Commission ruling made by the Illinois Supreme Court determined that owner-operators may be considered employees under the Illinois Workers’ Compensation Act. The case revolved around whether truck drivers who are independent contractors working on behalf of trucking companies qualified for workers’ compensation benefits.The Supreme Court determined that owner operators are employees if they are routinely working for the benefit of another company.
As the economy evolves, more companies are adopting the “Uber model.” The model assumes all employees are independent contractors. However, state legislatures across the country are challenging this. Drivers in California have filed a class-action lawsuit that argues they should be treated as employees. If they win the lawsuit, it will mean the company will be required to collect payroll taxes and cover the employees through the state workers’ compensation system. Presently, the company is banned from operating in Oregon and Nevada because they do not do this. For similar reasons, they are also banned from operating in Belgium, Germany, and The Netherlands.
When Injuries Occur
When individuals are injured on the job, they should seek immediate medical care and treatment for their injuries. This can help protect their health and speed their road to recovery. They should also file a workers’ compensation claim and meet with an Chicago workers’ compensation lawyer. Obtaining immediate legal advice can help build a solid defense that shows an individual is an employee and not an independent contractor.