Are Independent Contractors Covered By Workers Compensation in Louisiana?
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?
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 which 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 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
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 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.
GAME ON: The Crackdown on the Misclassification of Workers as Independent Contractors
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.