On behalf of Godwin and Rubin posted in blog on Tuesday, January 2, 2018.
Businesses are always coming up with new schemes intended to increase their profits and decrease their expenses. As laws change and society evolves, companies become ever more creative to find ways to limit expenses, especially those related to employment.
Some businesses may refuse to offer anyone full-time work to avoid legal requirements for health insurance. Other companies try to make workers perform overtime labor without pay.
Improper classification is very common
One popular and common scheme is the intentional misclassification of employees as independent contractors. As a general rule, most employers in California have an obligation to carry workers’ compensation insurance.
Hiring someone as an independent contractor instead of an employee allows a business to side-step that requirement and cuts down on other tax obligations for your employer. However, when someone ends up hurt while working, that questionable hiring practice could end up being financially devastating for the employee who cannot receive workers’ compensation.
Not all independent contractors are actually contractors
Due to rampant abuse of independent contractor classification, many people who get treated like employees end up paying self-employment taxes. They also fall into a legal gray area when it comes to workers’ compensation coverage. California recognizes this misclassification as a common issue, and they have systems in place to protect workers injured on the job.
In cases where status is unclear but critical to the outcome of the situation, like a workers’ compensation claim, the state assumes that the worker is an employee, not a contractor. Your employer will have the opportunity to rebutt that presumption by presenting evidence.
Some of the factors that influence whether the state agrees about contractor classification include if your business is distinct from that of your principal or employer, whether the work is part of the regular business of your employer, who supplies the tools and equipment, the requirement of a special skill for the job, the duration of services, the degree of permanence to the working relationship, how payment gets processed and who controls the details of work, such as scheduling.
Improperly classified workers may receive workers’ compensation
If you have been filing taxes and getting paid as an independent contractor, it is still possible for you to qualify for workers’ compensation in some circumstances. If the Division of Labor Standards Enforcement finds you were improperly classified, you will receive workers’ compensation benefits for a work-related injury. Your employer may also face punitive actions from the state regarding misclassifying workers and failing to carry workers’ compensation insurance.
Those who work for a living should never face poverty as a result of a work injury. That’s the whole reason why workers’ compensation exists in the first place.