A worker must be an employee to be covered under workers compensation law. Many employers are trying to avoid paying workers compensation insurance, and other costs, by misclassifying employees as independent contractors.
Many factors are used to decide whether an individual is an employee under the Workers’ Compensation Law. If the worker hired does not meet the criteria for an independent contractor, or the services rendered are not specifically exempted as employment under the workers compensation law (WCL), then that business must obtain a workers’ compensation insurance policy.
The factors that are considered to determine whether a worker is an employee include:
Right to Control– The degree of direction and control a person or organization exercises over someone they contract with to perform a task is a central issue in determining an employer-employee relationship.
- Employee: A person or organization controls the manner in which the work is to be performed. Instead of just asking that a function be performed or a task be completed, an employer has control over the details of that work and how it will be done.
- Independent Contractor: The person doing the labor controls the time and manner in which the work is to be done. If an individual is truly independent, the individual generally works under his/her own operating permit, contract or authority.
Character of Work Is the Same as Employer-
- Employee: The work being done is consistent with the primary work performed by the hiring business (produce manager at a supermarket).
- Independent Contractor: Work done by a person that is different than the primary work of the hiring business (the person repairing the air conditioning at a supermarket).
Method of Payment-
- Employee: They tend to be paid wages on an hourly, daily, weekly or monthly basis. If the hiring business withholds taxes and/or provides other employee benefits the person is an employee. An employer cannot shield itself by just listing the worker as an independent contractor and using a 1099 Form for tax purposes. Whether it’s a 1099 or a W2 does not matter in determining if an employer/employee relationship exists for workers’ compensation purposes.
- Independent Contractor: Payment for a project once it is completed would indicate the work is being done by an independent contractor.
- Employee: A business providing the equipment and/or materials used to perform the work tends to indicate an employer-employee relationship.
- Independent Contractor: A worker who supplies his own tools and supplies is more likely an independent contractor.
Right to Hire/Fire-
- Employee: If a business retains the authority to hire and fire the individuals performing the work, an employee is probably performing the work.
- Independent Contractor: Retains a degree of control over the time when the work is to be accomplished and is not subject to be discharged by the hiring entity because of the method he chooses to use in performing the work. An independent contractor’s services may be terminated if the services rendered do not meet contractual requirements.
New York law requires employers to have workers’ compensation coverage for their employees, with some exceptions. Coverage must be maintained for all employees, even part-time employees and family members. If there is no coverage, an employer is liable for a penalty of $2,000 per 10-day period of noncompliance, plus the actual award (including both compensation and medical costs), plus any other penalties the Workers Compensation Board assesses for noncompliance.
If you or someone you know have been injured in a work place accident and need an experienced New York accident attorney to help you, call 718-993-9999 or send us an email to schedule a free consultation.