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How worker classification affects your workers’ comp eligibility

You recently took a new job working for a construction company. One day, you took a nasty tumble off a ladder, breaking your leg and causing serious back injuries. Now you’re on bed rest, unable to work. Worried about how you’re going to support your family, you file a workers’ compensation claim.

That’s when you make a shocking discovery. Your employer informs you that you’re not actually eligible for workers’ comp, because you’re only a contractor—not an employee. He shows you the work agreement you signed, which uses the word “contractor” in your job title. But is a label in a contract really enough to classify you?

Reasons for employee misclassification

Employee misclassification is common. Many employers inaccurately classify their workers as contractors, rather than employees, in an effort to avoid paying extra expenses—such as healthcare coverage, overtime pay and workers’ comp. The U.S. Department of Labor estimates that as much as 30% of all employers misclassify their workers in this way.

Contractor vs. employee

Worker classification is not a haphazard label assigned by the employer. Here’s how the law distinguishes between contractors and employees:

  • Permanence: Employees are generally considered permanent from their time of hire, while contractors are usually only used on a temporary, project basis.
  • Flexibility: Contractors often have greater freedom in their work location and working hours than employees.
  • Autonomy: Contractors typically operate with little oversight from management, while managers may dictate how employees should carry out their tasks.
  • Equipment: Contractors are often expected to supply their own equipment to do their job, while employers should supply any necessary work equipment to their employees.
  • Income: Since contractors tend to work on a project basis, they usually get paid in a lump sum per project. Employees, on the other hand, receive payment in regular installments—usually every week or two.

If you’re injured at work, you have the right to workers’ compensation if you’re an employee. If your employer falsely claims you’re a contractor, you have legal recourse to seek the compensation you deserve.

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