Workers’ compensation is a benefit offered to most employees to pay for their expenses if they are hurt on the job.
Workers’ compensation is intended to benefit both the worker and the employer. For the worker, it’s no-fault insurance, which means you never need to prove negligence or fault (on anyone’s part), and workers’ compensation will cover your injuries even if it’s your own fault.
What’s in it for the employer?
Most employers are required by law to carry workers’ compensation coverage. It benefits them because if a worker is injured, the insurance automatically covers the costs. But the other benefit is that a worker is not allowed to sue the employer for liability for the injury. It protects the employer from legal action, while still ensuring that the worker’s benefits are paid.
When is an employee covered under workers’ compensation benefits?
Things get complicated when there’s a question about whether the employee is required to be covered under workers’ compensation.
State laws vary for workers’ compensation requirements. Usually, the requirement has to do with how many people work for the employer. Some states require that every employee is covered, others require coverage for employers who hire more than 1 or 2 people, for instance.
In most cases, though, your employment status will be an important factor for receiving workers’ compensation claims.
Put differently, anyone who has taxes deducted from their paycheck should be eligible for workers’ compensation benefits.
Exclusions usually include contractors, volunteers, and interns. In other words, people who work for the organization and don’t get paid, or those who pay their own income taxes and receive no benefits.
Most state laws indicate that there are exceptions for people employed to provide domestic services (housecleaning, yard work, etc.) or family members of the employer. Even within those exceptions, there are guidelines based on how many hours the person works per week or month, so you should check your state’s regulations to know for sure.
What’s an independent contractor?
Often, eligibility for workers’ compensation benefits comes down to whether the worker has independent contractor status. There are some situations when you might be an independent contractor for tax purposes according to the IRS, but you could still qualify for workers’ compensation benefits.
An independent contractor (sometimes called a freelancer) provides a service or performs work as a non-employee. A contractor is responsible for paying their own Social Security and Medicare taxes.
An independent contractor could be full- or part-time, but workers’ compensation depends on legal employment status and not the number of hours worked.
Sometimes, an employee is incorrectly classified as an independent contractor. Although different states have different sets of rules, there are some factors that would be examined to determine if an employee should have been covered under workers’ compensation:
- Personal labor test (also called “Right to Control”). An independent contractor should be responsible for directing their own work and choosing how tasks are completed. If the employer is directing how work is performed, it might be incorrect in classifying the person as a contractor.
- Specialized tools and equipment. An independent contractor is responsible for providing their own tools and equipment in order to complete a job. This could be ladders and construction tools, or laptops and other necessary devices. If the business provides equipment or materials to a contractor, it suggests an employer/employee relationship.
- Method and schedule of payment. An independent contractor could be paid hourly or on a project basis, but part of the evidence of an employer/employee relationship lies in whether the contractor is paid on a regular schedule, or on the basis of a contract or competitive bid. Most employees are paid hourly, daily, weekly, or monthly. A regular payment schedule often indicates that the person is an employee and not a contractor. Whether the person is paid by W2 or 1099 for tax purposes is unrelated to employment status for workers’ compensation.
- Right to hire or fire. An independent contractor essentially determines how and when the work will be accomplished. Certainly, the person must meet specifications in the contract, and the work might, by nature, require that the work is performed at certain locations. But the contractor should be able to “make their own rules” for completing the work as long as it’s done to the employer’s satisfaction.
- Type of work performed. The person must be performing work outside of the employer’s normal course of business, and the work must be related to the person’s established trade, occupation, or business.
In some situations, even an agreement that specifies you’re an independent contractor doesn’t mean you actually are.
No one factor can establish whether you’re an independent contractor. If you’re injured at work and suspect that you should be entitled to workers’ compensation benefits, a workers’ compensation law judge would determine your eligibility at a hearing.
Workers’ compensation for seasonal employees
If you’re a seasonal employee, you’re entitled to workers’ compensation. If you were hired through an employment agency for seasonal or temporary work, the agency is responsible for your workers’ compensation insurance.
Does the type of injury matter?
Any injury that requires medical treatment can be covered under workers’ compensation.
However, the injury has to have happened in the scope of employment. In other words, your workers’ compensation insurance kicks in when you’re doing your job. You can receive workers’ compensation for an injury that you sustained while doing tasks related to your job, even if you weren’t at your normal work location.
For example, if part of your job involves home visits to clients or customers of the business and you suffer an injury in a client’s home (or in a car accident to or from the location), it could still be covered under your workers’ compensation benefits.
When do you need a workers’ compensation lawyer?
If you were injured at work and your employer’s workers’ compensation insurance offered you a settlement that adequately covers your medical expenses and lost wages, you might not need additional assistance. If your treatment is complete and you’re back at work receiving your same wage as before the injury, you can likely accept the settlement and move on.
But if it’s not that simple, a workers’ compensation lawyer can help.
For instance, if your employer says you’re not covered under workers’ compensation because you’re a part-time employee, you’ll want a workers’ compensation lawyer to advocate for you. Your lawyer will know your state’s specific set of laws and how they’re applied.
In addition, if the settlement doesn’t cover your expenses or if your costs are continuing (in other words, if there’s more medical treatment ahead or you’re still out of work), it’s wise to consult an attorney who can make an accurate accounting of what your future costs will be. Your lawyer will work with actuaries, medical professionals, accountants, and other experts to determine what the value of your claim should be. The insurance company might offer you what sounds like a good settlement, but if you’re unsure how long you’ll be out of work or if you have additional medical expenses that might crop up, that money could dwindle fast.
Remember, the claims manager working on your file isn’t there for you. That person’s job is to close your claim at the lowest possible cost to the insurance company. In other words, they want to give you the smallest settlement that you’ll accept. They’re not motivated to make sure your needs are met. That’s what your lawyer is for.
Enjuris offers a variety of resources about workers’ compensation and workplace injuries. For starters, our free lawyer directory can help you to find a workers’ compensation lawyer near you who can assist with your claim and ensure that you receive the compensation you deserve.