Employee or Independent Contractor Under Louisiana Workers Compensation?

City Park, New Orleans, Louisiana

Typically, independent contractors are not usually eligible for workers compensation benefits in Louisiana.

But it can be very difficult at times to determine whether an injured individual was an employee or an independent contractor.

In fact, employers and their workers compensation insurers often attempt to disguise their employees as independent contractors, so that they do not have to pay for workers compensation benefits to these injured employees.

The Legal Definition of an “Independent Contractor” in Louisiana

Louisiana law specifically defines an independent contractor as follows:

"Independent contractor" means any person who renders service, other than manual labor, for a specified recompense for a specified result either as a unit or as a whole, under the control of his principal as to results of his work only, and not as to the means by which such result is accomplished, and are expressly excluded from the provisions of this Chapter unless a substantial part of the work time of an independent contractor is spent in manual labor by him in carrying out the terms of the contract, in which case the independent contractor is expressly covered by the provisions of this Chapter. The operation of a truck tractor or truck tractor trailer, including fueling, driving, connecting and disconnecting electrical lines and air hoses, hooking and unhooking trailers, and vehicle inspections are not manual labor within the meaning of this Chapter.

In other words, a person who may fit the definition of an independent contractor by other criteria may nonetheless be entitled to workers compensation if “a substantial part of the work time … is spent in manual labor by him” in carrying out the work.

In some instances, it will be clear that an individual is an independent contractor rather than an employee. But in other instances, a worker might be called an independent contractor, but nonetheless be entitled to workers compensation benefits because his or her work can fairly be considered manual labor.

However, this legal definition of an independent contractor does not create an employment relationship; it simply entitles the worker who falls within this definition to an employee's workers compensation benefits. The distinction between employee and independent contractor is no longer of any significance as far as these workers compensation benefits. But it is of significance in determining whether the worker needs to indemnify the principal for any compensation the principal pays to the contractor's employees. 

Bargaining Power

The difference between the independent contractor and the employee for workers compensation purposes lies mostly in the fact that a genuine independent contractor has bargaining power in negotiating with his principal.  The ordinary worker or employee simply does not possessed this bargaining power.

Therefore, the genuine independent contractor will regard the chance of injury to himself as a contingency to be provided for in advance and to be included along with the other risks of his work that are computed in fixing the contract price.

This inclusion of accident cost is possible for the contractor because of the bargaining processes that are typical in this sort of arrangement.

In fact, agreements between contractor and principal are usually for sizable undertakings outside the usual run of business for the principal, and the price is tailor-made to meet the occasion. 

This stands in sharp contrast with the situation of the ordinary worker or employee, whose employment is subject to a fairly standardized labor market, and who does not have the power, knowledge, resources, or bargaining prowess to force his employer to include the risk of injury in fixing his or her wage. 

The Assumption Against Being An Independent Contractor

As noted above, employees are eligible for Louisiana workers compensation benefits while independent contractors are generally not eligible for workers compensation benefits in Louisiana.  

Typically, it is assumed that workers begin with an assumption that they are employees, and not independent contractors, unless there is particular evidence which shows otherwise. 

However, this presumption of employment status can be rebutted by either:

  1. Establishing that the services were not pursuant to any trade, business, or occupation, such as construction of one's private residence; or
  2. Establishing that the individual was performing services but was doing so as an independent contractor.

So if it is asserted that the injured worker is an independent contractor not entitled to compensation, then the party asserting that bears the burden of overcoming this presumption.  And even proof that the claimant is an independent contractor will not matter if the injured worker spends a substantial part of the work time in manual labor in carrying out the terms of the contract.

This is why most of the disputes in this area are not about the presumption of employee status or the burden of proof, but rather about whether the injured worker was engaged in manual labor or not.

So Is the Injured Worker An Employee or An Independent Contractor?

To determine whether an injured worker is an employee or an independent contractor, a fact-specific determination will often be made based on the specific circumstances surrounding the nature of the working relationship.

Typically, an employee:

    • Receives a salary or a fixed hourly rate;
    • Performs work on an ongoing basis;
    • Has taxes taken out of his or her paycheck;
    • Receives employer-provided benefits such as health insurance or a retirement plan; 
    • Has an exclusive working relationship with a single business;
    • Is provided with the tools and supplies required to do the job;
    • Is provided with training on how to perform the job; and
    • Has a supervisor who decides the specifics of the work to be done. 

In comparison, typically, an independent contractor:

    • Is paid per completion of a particular project, or on commission;
    • Performs work that is temporary in nature;
    • Does not have taxes taken out of his or her paycheck;
    • Does not receive employer-provided benefits such as health insurance or a retirement plan;
    • Regularly works with more than one business at a time;
    • Provides his or her own tools and supplies;
    • Does not need training because he or she already has the necessary skills to do the work; and
    • Works with little or no supervision. 

Also, in a workers' compensation claim, determining whether the worker is an employee or an independent contractor, Louisiana courts consider the following factors:

    1. If there is a valid contract between the parties;
    2. If the work being done is of an independent nature such that the contractor may employ non-exclusive means in accomplishing it;
    3. If the contract calls for specific piecework as a unit to be done according to the independent contractor's own methods without being subject to the control and direction of the principal, except as to the result of the services to be rendered;
    4. If there is a specific price for the overall undertaking; and
    5. If a specific time or duration is agreed upon and not subject to termination at the will of either side without liability for breach.

Last, the ability of a workers' compensation claimant to hire helpers and assistants is characteristic of an independent contractor.

Misclassification of A Worker As An Independent Contractor

If an employer is wrongly classifying a worker as an independent contractor instead of an employee, which would eliminate the worker's right to workers compensation benefits in Louisiana, the worker will need to submit evidence that he is in fact an employee.  

It is almost always best to have an experienced Louisiana workers compensation attorney submit this evidence of employment, because it will likely end up in front of a workers compensation judge in court.

This evidence of employee status, usually either in the form of documents or testimony, should be used to establish three important elements regarding the employment relationship:

    • Financial control;
    • Behavioral control; and 
    • Nature of the work relationship.

Regarding financial control, the employer in an employee arrangement maintains control over how the employee is paid, and control over how the related supplies and tools are purchased. 

Regarding behavioral control, the employer in an employee arrangement maintains control over when the employee works, where the employee works, and how the employee does the job.

Regarding the nature of the work relationship, in an employee arrangement, the work relationship is ongoing, and not temporary.

Evidence relating to financial control, behavioral control, and the nature of your relationship is looked at as a whole. No one factor is considered more important than the others in determining if you are an employee or an independent contractor.

A person who ordinarily would be regarded as an independent contractor may, at the request of his principal, perform additional duties not called for by the contract.  These additional duties may be different in kind and performed under such circumstances that would indicate that he is no longer an independent contractor, but an employee.

In other words, sometimes a work can start out as an independent contractor, but transition to (or end up as) an employee.

However, such a shift in the relationship is not so easily proven.  And an injured worker should not and can not just presume that it has occurred.

The principal/employer will simply argue that there were just slight modifications of or additions to the job originally undertaken, and that these modifications or additions are just informal adjustments of the contract, and that thus there was no change in the basic relationship between the parties.

For these reasons, any injured employee who started out working as an independent contractor really does need an experienced Louisiana workers compensation attorney to handle his or her claim.

Summary Judgments and Exceptions of No Cause of Action

The issue of whether an injured worker was an employee or an independent contractor can seldom be resolved on an exception of no cause of action, or decided on a motion for summary judgment.

That means that if this is the dispute - whether an injured worker was an employee or an independent contractor - then the case will not likely be dismissed before trial.

And it means that the determination of this issue cannot be made until the detailed evidence is gathered and the workers' compensation judge is prepared to review it together with all its implications.

Of course this does not entirely preclude the use of the exception of no cause of action, or a motion for summary judgment, in compensation proceedings where it clearly appears from the pleasings or the undisputed evidence, that recovery could not be allowed.

Evidence: Contract Terminology

Sometimes the employer will expressly designate in the pre-injury contract of the parties that the injured worker is to be considered an independent contractor.

Such contract terminology (or terms) would make it impossible for the employee for receive workers compensation benefits, if the employers could argue for the use of such appropriately worded agreements.

However, the working relationship - whether an injured worker was an employee or an independent contractor - is to be gathered from the facts and circumstances of each situation, rather than what a contract says.

In fact, Louisiana workers compensation courts have long held that contract terminology is not controlling and that evidence of the entire picture of their operation is admissible.

So the bottom line is that the contract agreement is not to be ignored, but only to be considered along with all the other pertinent circumstances.

Evidence: Payroll, Taxes, and Social Security

Just like contract terminology, the working relationship - whether an injured worker was an employee or an independent contractor - is to be gathered from the facts and circumstances of each situation, rather than whether or not the injured worker's name is on the employer's payroll.

This factor - whether or not the injured worker's name is on the employer's payroll - is not conclusive, although it may be evidence that the workers compensation court considers.

In fact, an employee does not even need to be a part of the employers regular organization in order to receive workers compensation benefits.

And payrolls are not necessarily compiled with the purpose of determining the legal status of all the persons listed on the payroll.

Evidence: Workers Compensation Insurance

The fact that complainant's name was included in the employer's list of insured employees, or even that compensation insurance was taken out for his or her protection, does not 100% prove that the injured worker was an employee.

Again, just like contract terminology and payrolls, the working relationship - whether an injured worker was an employee or an independent contractor - is to be gathered from the facts and circumstances of each situation, rather than whether or not the injured worker's name is included in the employer's list of insured employees.

This is because the working relationship cannot always be accurately predicted in advance, and employers can secure insurance based on just the fear that legal action will be taken against them.

Also, Louisiana law holds that the actual payment of compensation shall not constitute an admission of liability. 

But on the flip side, that fact that a worker procures insurance for himself or herself does not necessarily mean that the worker is an independent contractor (or is not an employee).  It simply depends on the total facts and circumstances of the case.

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