Worker classification and its impact on CT workers’ comp coverage

Misclassification of employees as independent contractors to save money causes problems when a worker is injured while on the job. If injured while working as an independent contractor, an experienced injury attorney may be able to help you secure benefits.

Worker classification has been in the news lately as employers constantly look for ways to pare back employment costs. Savings can be substantial when an employer does not need to contribute to payroll tax or provide benefits such as medical insurance or a 401(k) plan for independent contractors. Additionally, employers do not always provide workers' compensation insurance for independent contractors.

Federal government agencies, however, have been cracking down on employers that improperly classify employees as independent contractors. The U.S. Department of Labor and IRS along with state agencies including Connecticut's Department of Labor have been sharing information to reduce misclassifications. Employers must pay attention to classification issues or face drawn out investigations and steep penalties.

Delivery drivers and construction workers

More and more delivery drivers work as independent contractors. Amazon, for example, uses third-party delivery companies that in turn use contractors to get packages to their destinations in blazing fast speeds. Amazon Prime generally guarantees delivery in two days. LaserShip, an Amazon's vendor, pays $1.50 per package delivered. A driver has to supply a vehicle, gasoline and pay self employment taxes. In neighboring, Massachusetts a judge recently found that the workers were wrongfully misclassified in order to save money and imposed an $800,000 fine.

The construction field is another that often uses independent contractors. A painter or roofer may have his own business. A sole proprietor generally provides his own tools, prepares bids or estimates for a job, controls when and how a job is completed and has his own insurance. On the other hand, a laborer instructed what to do and given a deadline is probably an employee.

These distinctions matter when an injury occurs. If a worker is misclassified as an independent contractor he or she might need to bring a personal injury lawsuit against the employer. What can then happen is the employer then argues the worker was in fact an employee and must go through workers' comp to avoid the lawsuit.

Guidelines to make sure workers are classified correctly

In Connecticut, the Workers' Compensation Act requires an employer to secure workers' compensation insurance for all its employees. The definition of "employee" is all-embracing and applies to "all contracts of employment" to achieve its humanitarian purposes.

The major distinction between employee and independent contractor is the right to control the means and methods of work. Even workers who are not on regular payroll may need workers compensation coverage when there is a sufficient right to control the worker.

Getting worker classifications right in the first place is best for everyone's sake. Employers limit their risk of a misclassification investigation and penalties. Workers receive the safety net of workers' compensation when injured while working. If injured and issues arise over your employment classification, contact an experienced workers' compensation attorney who can help you to obtain the benefits you deserve.

Keywords: worker misclassification, independent contractor, workers' compensation, personal injury, workplace accident