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Businesses Using "Independent Contractors" to Avoid Workers' Comp Obligations

One of the central issues that has arisen for the workers’ compensation industry lately is what actually defines an “employee.” In recent years, businesses have begun to hire fewer traditional “employees” and gone with far more “independent contractors.”

The biggest reason for this trend, particularly with small businesses, is the immense financial burden employees can place on a company. Once you consider wages, payroll tax burdens, and workers’ compensation insurance (which businesses are all required to carry for their workers), the expenditure for the labor potentially becomes cost-prohibitive despite a possible need.

One of the ways that businesses have started to make this more palatable is to start hiring “independent contractors” for different positions. However, in many cases these people are found to be performing the duties of a traditional employee, but employers are not carrying workers’ comp insurance for them.

One of the biggest abusers of this system is the transportation and trucking industry. In many cases, drivers are hired on as independent contractors to move cargo for companies, but they get hurt in accidents while on the job. Upon investigation, it is discovered that the drivers were functioning in the role of employees, only without the title of “employee” and their employer believed they were not responsible for carrying workers’ comp insurance for them.

Am I an Employee or Independent Contractor?

There are a few important factors that differentiate employees from independent contractors. As an independent contractor:

  • You set your own hours, or you set your hours according to a contract which you initially signed
  • Your employer may not terminate your relationship until the contract is finished
  • Your employer cannot set or change the details of your work without amending your contract
  • You are paid according to the contract price, and in installments indicated by your contract
  • You must furnish your own tools and/or materials

The biggest thing here: you must have a signed contract. Unbelievably, there are some companies who bring on “independent contractors” without having them actually sign a contract. If you do not sign a contract or your employer does any of the things listed above, you are technically an employee; this is also known as payroll fraud. This also means your employer should be carrying workers’ compensation insurance to cover you.

If you have been injured on the job, particularly through no fault of your own, contact a skilled Central Valley workers’ compensation attorney as soon as possible. At Berry, Smith & Bartell, a Professional Law Corporation, our team has assisted numerous California workers with obtaining compensation for their injuries. We have dedicated our practice to putting the law on your side and protecting you from injuries that occur in circumstances out of your control.

For a free case evaluation with Berry, Smith & Bartell, a Professional Law Corporation call 1-800-848-6288 today!

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