Are Independent Contractors Covered by Workers’ Comp?

Workers’ compensation is a type of insurance that provides no-fault coverage for injuries and illnesses suffered by employees while on the job or as a result of their work. In New Jersey and the majority of other states, employers are required to purchase workers’ compensation coverage for their employees. So what happens is you are not technically an employee and are hurt while performing work for a company?

In today’s economy, more people than ever before are classified as “independent contractors” rather than employees. This is partially due to the nature of “gig” work, but may also be related to employers’ desire to cut their own costs by misclassifying employees as independent contractors. Whatever the case may be, if you are an independent contractor, whether you are entitled to workers’ compensation will depend on how you are classified.

A skilled Cherry Hill workers’ compensation attorney can advocate for you by first arguing that you are an employee — not an independent contractor. From there, your lawyer can make a strong case for benefits. Read on to learn more about workers’ compensation coverage for independent contractors and how you can potentially qualify for benefits.

The Distinction Between Independent Contractors and Employees

There is a significant difference between whether a person is considered an independent contractor or an employee. Generally, employees have far more protections than independent contractors, with laws that govern wages, overtime, breaks, paid vacation, and taxes. Independent contractors receive 1099 tax forms, while employees receive W-2 forms.

In addition, under New Jersey law, employers are required to carry workers’ compensation and unemployment insurance to cover employees. Employers are not required to carry this type of insurance for non-employees, including independent contractors.

Because employees are entitled to greater benefits and protections than independent contractors, employers may be tempted to misclassify employees as independent contractors. However, it isn’t up to the employer to make the ultimate decision about whether someone is an employee or an independent contractor — it is a question of state law.

In New Jersey, the ABC test is used to determine whether a worker is truly an independent contractor:

1. The person was and will continue to operate without the employer’s control or direction over how they do their job.
2. The service performed by the worker is not part of the company’s usual course of business.
3. The worker is normally engaged in an independent business or occupation.

If all three standards are met, then the person is considered an independent contractor. Otherwise, they are an employee. Under the ABC test, which was derived from the New Jersey Unemployment Compensation Act, a person is presumed to be an employee unless the employer can prove otherwise.   

If a person is found to be misclassified as an independent contractor, then the employer may face penalties from the state. In addition, he or she will then be eligible for benefits — including workers’ compensation for any injuries or illnesses that they may have suffered as a result of their job.

Are You Entitled to Workers’ Comp as an Independent Contractor?

If you are an independent contractor in New Jersey, you may still qualify for workers’ compensation — even though your employer does not have a policy that covers non-employees. The reason why is straightforward: the law favors employees, rather than independent contractors, status. If you can demonstrate that you are an employee instead of an independent contractor, then you can prove that you qualify for workers’ compensation.

When starting your position as an independent contractor, you likely signed a document agreeing that you are an independent contractor. While an employer and/or workers’ compensation insurance company will likely use this agreement as a reason to deny benefits, remember that state law defines who is or is not an employee. A contract alone cannot decide whether or not you are an employee.

This is important because employers and employees do not have equal bargaining power. Employers have an incentive to have employees sign agreements stating that they are independent contractors — after all, it can save them a substantial amount of money. A judge will make the decision, using the ABC test, about your employment status.

A judge will consider a number of factors in making this determination, such as whether your job is an essential part of your employer’s business (Standard B), whether you work full-time or part-time (Standard C), whether you depend on the company for income (Standard C), and whether the company controls the way that you perform your job (Standard A). If the judge finds that you are an employee, then you will be entitled to full workers’ compensation benefits. This may include payment for medical treatment, lost time at work, and disability benefits.

For example, if you delivered food for a local restaurant, you may have been classified as an independent contractor. While delivering a meal one evening, you were in a bad accident, resulting in significant injuries. The restaurant refuses to pay workers’ compensation because you are an independent contractor.

However, a judge may find that you are an employee for the following reasons:

• You operated with the direction and control of the restaurant, taking orders from the owner and delivering meals in the way prescribed by him;  
• You wore a uniform and had a restaurant logo on your car;
• Your job is an essential part of the restaurant’s business, as delivery orders make up 40% of their sales;
• Your job is part-time, but you work for the restaurant 30 hours a week and depend on it for your income.

In this situation, you would be entitled to workers’ compensation for your on-the-job injuries from the car accident because you were misclassified as an independent contractor. 

Questions? Call Us Today.

If you are an independent contractor who has been hurt or become ill at work, you don’t have to resign yourself to not getting workers’ compensation benefits for your injury or illness. You may have been misclassified under New Jersey law — and if so, you could be entitled to medical expenses, lost wages and disability benefits. A Cherry Hill workers’ compensation attorney can work with you to help you get the money that you deserve.
At Bross & Frankel, we are dedicated to helping individuals in your situation — and all workers who have experienced injustice. For more than 20 years, we have helped people get workers’ compensation benefits in both New Jersey and Pennsylvania. Contact us today at 856-795-8880 or online to schedule a free initial consultation.