Independent Contractors Are Entitled to Louisiana Workers Compensation Benefits Under the “Manual Labor” Exception
Independent contractors are not usually eligible for workers compensation benefits in Louisiana.
This is because the Louisiana workers compensation system exists for the purpose of compensating employees for injuries resulting from their employment. Workers compensation is therefore limited to those who are actually employees of the enterprise in question, or whose functions are those of employees.
Unfortunately, this means that independent contractors are not usually eligible for workers compensation benefits in Louisiana.
In other words, if a genuine independent contractor suffers an injury while carrying out the contracted task, his own company should bear the loss caused by his injury, since compensation against the employer’s enterprise is limited to his employees. In fact, many independent contractors are self-employed small business owners who do work for several or many businesses at the same time.
Of course, distinctions between the employee and the independent contractor are seldom as easy as might be thought.
THE DISTINCTION BETWEEN EMPLOYEES AND INDEPENDENT CONTRACTORS
The distinction between employee and independent contractor status, for the purpose of workers compensation benefits, is a factual determination to be decided on a case-by-case basis.
There are instances where subcontractors and some independent contractors can be found to be employees when they are involved in the pursuit of the employer’s trade, business or occupation or when their job is found to include the performance of substantial manual labor.
So it really does matter how an employee is classified – as either an employee or an independent contractor – and sadly, employers often attempt to misclassify the worker in order to escape workers compensation liability.
Is the Injured Worker an Employee or An Independent Contractor in Louisiana Workers Compensation?
As noted above, employees are eligible for Louisiana workers compensation, while independent contractors are not usually 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 that shows otherwise.
However, this presumption of employment status can be rebutted by either:
- Establishing that the services were not pursuant to any trade, business, or occupation, such as the construction of one’s private residence; or
- Establishing that the individual was performing services but was doing so as an independent contractor.
So who decides if you are an employee or an independent contractor? Surprisingly, the employer cannot determine on its own if a worker is an employee or an independent contractor.
Instead, this classification is a legal determination, which will most likely be determined by a workers compensation Judge unless all the parties are in full agreement.
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:
- If there is a valid contract between the parties;
- If the work being done is of an independent nature such that the contractor may employ non-exclusive means in accomplishing it;
- 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;
- If there is a specific price for the overall undertaking; and
- 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.
How to Prove Misclassification of A Worker as An Independent Contractor in Louisiana Workers Compensation
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 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 essential 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.
Game On: The Crackdown on The Misclassification of Workers as Independent Contractors in Louisiana Workers Compensation
In 2017, the Louisiana Department of Revenue, the Louisiana Workforce Commission, and the Louisiana Office of Workers Compensation joined together to create the GAME ON (Government Against Misclassified Employees Operational Network) Task Force in order to combat illegal employee misclassification and the related failure to withhold payroll taxes.
Under the GAME ON Task Force, employers who willfully misclassify workers can be fined $1,000 per offense and be required to provide misclassified workers with their required benefits.
The GAME ON Task Force can also seek to collect the tax from the employer, whose failure to withhold payroll taxes in accordance with the law renders the employer responsible for those taxes. The GAME ON Task Force can collect interest, delinquent payment penalties, and delinquent withholding penalties.
The GAME ON Task Force can even imprison employers who misclassify large numbers of employees.
Under Louisiana’s “manual labor exception,” an independent contractor may be entitled to workers compensation benefits if he or she demonstrates that:
- A substantial part of his or her work time is spent in manual labor in carrying out the terms of the contract with the principal; and
- The manual work performed is part of the principal’s trade business or occupation.
So, even if an independent contractor relationship exists between the parties, an injured worker may be entitled to workers compensation benefits under this manual labor exception.
Of course, this manual labor exception begs the questions:
- What is manual labor?
- What is a substantial part of the work time?
- Must the independent contractor be engaged in the trade, business or occupation of the principal?
Louisiana workers compensation courts have observed:
The true legal meaning of the term “manual labor” is to denote work in which the physical element predominates over the mental. … For purposes of determining compensation coverage, the distinguishing feature is whether the workman participates physically himself rather than—so to speak—aloofly directs in clean Sunday clothes.
In other words, manual labor is defined at work where the individual actually does the work (instead of supervising), and the work is more physical than it is mental.
The issue of manual labor is a factual one on which the claimant bears the burden of proof in a suit for workers compensation.
So if an injured worker wants to be covered by workers compensation under the manual labor exception, then the injured worker (or his or her attorney) needs to prove that he or she is a manual laborer.
Many times, neither party will dispute that an injured worker is a manual laborer; other times, the workers compensation Judge will need to decide.
Often times, if a party is disputing the manual labor exception, the party will claim that the worker was not a manual laborer, but instead a skilled craftsman. Such disputes will need to be resolved on a case by case basis, based on the facts of each case.
Important factors may include whether the injured worker was assisted by other employees, or carried out all the physical work by himself or herself.
EXAMPLES OF INDEPENDENT CONTRACTORS ENTITLED TO WORKERS COMPENSATION BENEFITS
Louisiana workers compensation courts have awarded workers compensation benefits to the following types of “working independent contractor” individuals:
- A truck driver engaged in long-distance deliveries of merchandise;
- A farmer hauling cotton to a local gin for other farmers;
- A painter;
- A plasterer/carpenter injured while repairing a roof;
- A carpenter engaged in securing additional materials from a lumber yard;
- A welder;
- A person engaged in erecting transmission power lines;
- A service station operator who reconditioned repossessed automobiles for a bank;
- A jockey working part-time as an exercise boy;
- An oil rig worker who had been on direct payroll status but was shifted to “contract worker” status;
- A car dealership employee picking up a vehicle out of town, a person loading a heavy “rearer” into a truck; and
- A person providing cleaning services at a factory.
It is very common for Louisiana workers compensation courts to conclude that the work of an independent contractor is “manual labor” in order to satisfy the definition and award workers compensation benefits.
TRACTOR TRAILER TRUCK DRIVERS ARE NOT MANUAL LABORERS
Louisiana workers compensation law specifically defines as “not manual labor” 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. …”
Louisiana workers compensation law also defines an “owner-operator” as a person who provides “trucking transportation services under written contract” to a common carrier, even though there may be a lease of equipment or a driver to the common carrier in question.
Therefore, such persons are declared not be employees if there is a written contract stating that the owner-operator is an “independent contractor.”
However, such an owner-operator “does not include an individual driver who purchases his equipment from the carrier or hauler, and then directly leases the equipment back to the carrier or hauler with the purchasing driver.”
In order to receive workers compensation benefits, the independent contractor must prove that a “substantial part” of the work time was spent in manual labor in carrying out the terms of the contract.
Well, how much exactly is a substantial part?
Louisiana workers compensation courts have ruled that “a substantial part” is not a mathematically precise amount and may very well be an amount less than 50%.
Louisiana courts have also ruled that “a substantial part” simply means the opposite of “insubstantial” or “immaterial.”
An independent contractor spending a substantial part of the work time in manual labor carrying out the contract is not an employee of the principal but is to be treated as if he were for compensation purposes.
This injured worker is thus required to demonstrate that he is performing services “arising out of and incidental to his employment in the course of his employer’s trade, business or occupation,” as an employee would have to do.
This because Louisiana law requires that the work done by the contractor must be part of the business of the principal before the contractor’s employee is entitled to workers compensation benefits.
In other words, the question to be asked is simply whether the injured worker was “performing services arising out of and incidental to his employment in the course of” the defendant’s trade, business or occupation.
THE LOUISIANA STATUTES ON INDEPENDENT CONTRACTORS IN LOUISIANA WORKERS COMPENSATION
The primary Louisiana statutes on independent contractors are La. R.S. 23:1021, La. R.S. 23:1044, La. R.S. 23:1061, La. R.S. 23:1062, and La. R.S. 23:1063, which read as follows:
§1021. Terms defined
As used in this Chapter, unless the context clearly indicates otherwise, the following terms shall be given the meaning ascribed to them in this Section:
(1) “Accident” means an unexpected or unforeseen actual, identifiable, precipitous event happening suddenly or violently, with or without human fault, and directly producing at the time objective findings of an injury which is more than simply a gradual deterioration or progressive degeneration.
(2) “Brother” and “sister” includes step-brothers and step-sisters, and brothers and sisters by adoption.
(3) “Child” or “children” covers only children born of marriage, step-children, posthumous children, adopted children, and children born outside of marriage who have been acknowledged under the provisions of the Civil Code.
(4) “Dependent” means the person or persons to whom, under the provisions of Part II of this Chapter, compensation shall be paid upon the death of the injured employee.
(5) “Assistant secretary” means the assistant secretary of the office of workers compensation administration.
(6) “Health care provider” means a hospital, a person, corporation, facility, or institution licensed by the state to provide health care or professional services as a physician, hospital, dentist, registered or licensed practical nurse, pharmacist, optometrist, podiatrist, chiropractor, physical therapist, occupational therapist, psychologist, graduate social worker or licensed clinical social worker, psychiatrist, or licensed professional counselor, and any officer, employee, or agent thereby acting in the course and scope of his employment.
(7) “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.
(8)(a) “Injury” and “personal injuries” include only injuries by violence to the physical structure of the body and such disease or infections as naturally result therefrom. These terms shall in no case be construed to include any other form of disease or derangement, however caused or contracted.
(b) Mental injury caused by mental stress. Mental injury or illness resulting from work-related stress shall not be considered a personal injury by accident arising out of and in the course of employment and is not compensable pursuant to this Chapter, unless the mental injury was the result of a sudden, unexpected, and extraordinary stress related to the employment and is demonstrated by clear and convincing evidence.
(c) Mental injury caused by physical injury. A mental injury or illness caused by a physical injury to the employee’s body shall not be considered a personal injury by accident arising out of and in the course of employment and is not compensable pursuant to this Chapter unless it is demonstrated by clear and convincing evidence.
(d) No mental injury or illness shall be compensable under either Subparagraph (b) or (c) unless the mental injury or illness is diagnosed by a licensed psychiatrist or psychologist and the diagnosis of the condition meets the criteria as established in the most current issue of the Diagnostic and Statistical Manual of Mental Disorders presented by the American Psychiatric Association.
(e) Heart-related or perivascular injuries. A heart-related or perivascular injury, illness, or death shall not be considered a personal injury by accident arising out of and in the course of employment and is not compensable pursuant to this Chapter unless it is demonstrated by clear and convincing evidence that:
(i) The physical work stress was extraordinary and unusual in comparison to the stress or exertion experienced by the average employee in that occupation, and
(ii) The physical work stress or exertion, and not some other source of stress or preexisting condition, was the predominant and major cause of the heart-related or perivascular injury, illness, or death.
(9) “Office” means the office of workers compensation administration established pursuant to R.S. 23:1291.
(10) “Owner operator” means a person who provides trucking transportation services under written contract to a common carrier, contract carrier, or exempt haulers which transportation services include the lease of equipment or a driver to the common carrier, contract carrier, or exempt hauler. An owner operator, and the drivers provided by an owner operator, are not employees of any such common carrier or exempt hauler for the purposes of this Chapter if the owner operator has entered into a written agreement with the carrier or hauler that evidences a relationship in which the owner operator identifies itself as an independent contractor. For purposes of this Chapter, owner operator does not include an individual driver who purchases his equipment from the carrier or hauler, and then directly leases the equipment back to the carrier or hauler with the purchasing driver.
(11) “Part-time employee” means an employee who as a condition of his hiring knowingly accepts employment that (a) customarily provides for less than forty hours per work week, and (b) that is classified by the employer as a part-time position.
(12) “Payor” means the entity responsible, whether by law or contract, for the payment of benefits incurred by a claimant as a result of a work related injury.
(13) “Wages” means average weekly wage at the time of the accident. The average weekly wage shall be determined as follows:
(a) Hourly wages.
(i) If the employee is paid on an hourly basis and the employee is employed for forty hours or more, his hourly wage rate multiplied by the average actual hours worked in the four full weeks preceding the date of the accident or forty hours, whichever is greater; or
(ii) If the employee is paid on an hourly basis and the employee was offered employment for forty hours or more but regularly, and at his own discretion, works less than forty hours per week for whatever reason, then, the average of his total earnings per week for the four full weeks preceding the date of the accident; or
(iii) If the employee is paid on an hourly basis and the employee is a part-time employee, his hourly wage rate multiplied by the average actual hours worked in the four full weeks preceding the date of the injury.
(iv) A part-time employee, as defined in R.S. 23:1021(9) and who is employed by two or more different employers in two or more successive employments, shall be entitled to receive benefits as follows:
(aa) If an employee is employed by two or more different employers in two or more successive employments and the employee incurs a compensable injury under the provisions of this Chapter in one of the employments, the employer in whose service the employee was injured shall pay the benefits due the employee as provided in this Chapter.
(bb) If the employee is a part-time employee in one of the successive employments, is injured in that employment, but as a result of the injury also incurs loss of income from other successive employments, that employee shall be entitled to benefits computed by determining wages under the provisions of this Subsection using his hourly rate in employment at the time of injury and using the total hours worked for all employers of the part-time employee, but not to exceed his average, actual weekly hours worked or forty hours weekly, whichever is less.
(v) For an employee in seasonal employment, his annual income divided by fifty-two.
(aa) For purposes of this Subparagraph, seasonal employment shall be any employment customarily operating only during regularly recurring periods of less than forty-four weeks annually.
(bb) If the employee was not engaged in the seasonal employment more than one year prior to the accident, his annual income shall be the average annual income of other employees of the same or most similar class working in the same or most similar employment for the same employer or, in the event that the employee was the only individual engaged in that specific employment, then his annual income shall be the average annual income of other employees of the same or most similar class working for a neighboring employer engaged in the same or similar employment.
(b) Monthly wages. If the employee is paid on a monthly basis, his monthly salary multiplied by twelve then divided by fifty-two.
(c) Annual wages. If the employee is employed at an annual salary, his annual salary divided by fifty-two.
(d) Other wages. If the employee is employed on a unit, piecework, commission, or other basis, his gross earnings from the employer for the twenty-six week period immediately preceding the accident divided by the number of days the employee actually worked for the employer during said twenty-six week period and multiplied by the average number of days worked per week; however, if such an employee has worked for the employer for less than a twenty-six week period immediately preceding the accident, his gross earnings from the employer for the period immediately preceding the accident divided by the number of days the employee actually worked for the employer during said period and multiplied by the average number of days worked per week.
(e) Exceptions. For municipal police officers, additional compensation paid by the state pursuant to R.S. 40:1667.3 shall not be included in the calculation and computation of total salary or average weekly wage to the extent such officer continues to receive such additional compensation during the period of his disability.
(f) Income tax. In the determination of “wages” and the average weekly wage at the time of the accident, no amount shall be included for any benefit or form of compensation which is not taxable to an employee for federal income tax purposes; however, any amount withheld by the employer to fund any nontaxable or tax-deferred benefit provided by the employer and which was elected by the employee in lieu of taxable earnings shall be included in the calculation of the employee’s wage and average weekly wage including but not limited to any amount withheld by the employer to fund any health insurance benefit provided by the employer and which was elected by the employee in lieu of taxable earnings shall be included in the calculation of the employee’s wage and average weekly wage.
(g) Date of accident. In occupational disease claims the date of the accident for purposes of determining the employee’s average weekly wage shall be the date of the employee’s last employment with the employer from whom benefits are claimed or the date of his last injurious exposure to conditions in his employment, whichever date occurs later.
Amended by Acts 1968, Ex. Sess., No. 25, §1; Acts 1975, No. 583, §1, eff. Sept. 1, 1975; Acts 1983, 1st Ex. Sess., No. 1, §§1, 6; eff. July 1, 1983; Acts 1987, No. 396, §1; Acts 1987, No. 494, §1; Acts 1988, No. 938, §1, eff. Jan. 1, 1989, and July 1, 1989; Acts 1989, No. 260, §1, eff. Jan. 1, 1990; Acts 1989, No. 454, §1, eff. Jan. 1, 1990; Acts 1991, No. 468, §1; Acts 1991, No. 565, §1; Acts 1993, No. 928, §2, eff. June 25, 1993; Acts 1995, No. 1137, §1, eff. June 29, 1995; Acts 1997, No. 423, §1; Acts 1997, No. 536, §1; Acts 1997, No. 1172, §4, eff. June 30, 1997; Acts 1999, No. 751, §1; Acts 1999, No. 1309, §5, eff. Jan. 1, 2000; Acts 2001, No. 288, §2; Acts 2001, No. 486, §2, eff. June 21, 2001; Acts 2001, No. 546, §1; Acts 2001, No. 1014, §§1 and 2, eff. June 27, 2001; Acts 2004, No. 26, §10; Acts 2004, No. 188, §1, eff. June 10, 2004; Acts 2004, No. 561, §1; Acts 2013, No. 337, §1; Acts 2014, No. 158, §§3 and 7.
§1044. Presumption of employee status
A person rendering service for another in any trades, businesses or occupations covered by this Chapter is presumed to be an employee under this Chapter.
Every executive officer elected or appointed and empowered in accordance with the charter and by-laws of a corporation, other than a charitable, religious, educational or other non-profit corporation or an official of the state or other political subdivision thereof or of any incorporated public board or commission, shall be an employee of such corporation under this Chapter.
Amended by Acts 1958, No. 306, §1.
§1061. Principal contractors; liability
A.(1) Subject to the provisions of Paragraphs (2) and (3) of this Subsection, when any “principal” as defined in R.S. 23:1032(A)(2), undertakes to execute any work, which is a part of his trade, business, or occupation and contracts with any person, in this Section referred to as the “contractor”, for the execution by or under the contractor of the whole or any part of the work undertaken by the principal, the principal, as a statutory employer, shall be granted the exclusive remedy protections of R.S. 23:1032 and shall be liable to pay to any employee employed in the execution of the work or to his dependent, any compensation under this Chapter which he would have been liable to pay if the employee had been immediately employed by him; and where compensation is claimed from, or proceedings are taken against, the principal, then, in the application of this Chapter reference to the principal shall be substituted for reference to the employer, except that the amount of compensation shall be calculated with reference to the earnings of the employee under the employer by whom he is immediately employed. For purposes of this Section, work shall be considered part of the principal’s trade, business, or occupation if it is an integral part of or essential to the ability of the principal to generate that individual principal’s goods, products, or services.
(2) A statutory employer relationship shall exist whenever the services or work provided by the immediate employer is contemplated by or included in a contract between the principal and any person or entity other than the employee’s immediate employer.
(3) Except in those instances covered by Paragraph (2) of this Subsection, a statutory employer relationship shall not exist between the principal and the contractor’s employees, whether they are direct employees or statutory employees, unless there is a written contract between the principal and a contractor which is the employee’s immediate employer or his statutory employer, which recognizes the principal as a statutory employer. When the contract recognizes a statutory employer relationship, there shall be a rebuttable presumption of a statutory employer relationship between the principal and the contractor’s employees, whether direct or statutory employees. This presumption may be overcome only by showing that the work is not an integral part of or essential to the ability of the principal to generate that individual principal’s goods, products, or services.
B. When the principal is liable to pay compensation under this Section, he shall be entitled to indemnity from any person who independently of this Section would have been liable to pay compensation to the employee or his dependent, and shall have a cause of action therefor.
Acts 1989, No. 454, §3, eff. Jan. 1, 1990; Acts 1997, No. 315, §1, eff. June 17, 1997.
§1062. Sub-contractors; liability
Nothing in R.S. 23:1061 shall be construed as preventing an employee or his dependent from recovering compensation under this Chapter from the contractor instead of from the principal.
§1063. Suits against principal contractors; subcontractors as co-defendants
A. A principal contractor, when sued by an employee of a subcontractor or his dependent, may call that contractor, or any intermediate contractor or contractors, as a co-defendant, and the principal contractor shall be entitled to indemnity from his subcontractor for compensation payments paid by the principal contractor on account of an accidental injury to the employee of the subcontractor.
B. A principal contractor, when sued pursuant to the provisions of R.S. 23:1021(6)* by an independent contractor who is a sole proprietor and who has elected by written agreement not to be covered by the provisions of this Chapter in accordance with R.S. 23:1035 or his dependent, may call such independent contractor as a co-defendant, and the principal contractor shall be entitled to indemnity from his independent contractor for compensation payments paid by the principal contractor on account of an accidental injury to the independent contractor.
Acts 2001, No. 1014, §1, eff. June 27, 2001.