Independent Contractors Who Are Covered by Louisiana Workers Compensation
Injured workers, who appear not to be employees and yet spend a substantial amount of their time in manual labor carrying out a contract, very often are not running a business organization separate and independent from that of the person with whom they have contracted.
If an injured worker (who appears to be an independent contractor and arguably is not covered) is, in fact, running an enterprise separate from that run by his principal, then this worker will not be covered by the workers compensation insurance company of the principal/employer. This worker will need to provide his or her own insurance.
But if an injured worker (who appears to be an independent contractor) is clearly NOT running a business enterprise separate from that run by his principal, then this worker will be covered by the principal’s workers compensation insurance.
Louisiana courts look to certain factors in situations like these in order to identify an independent business enterprise and thus award workers compensation benefits.
Specifically, when examining an independent business enterprise, Louisiana courts look at:
- The performance of a specified piece of work as a whole or as a unit for a specified price for the whole or for any unit of the service;
- The extent of control of the person performing the service over the means and methods by which the work is performed so as to accomplish the work as a unit or as a whole;
- The right of the person rendering the service to employ helpers and assistants, fix their pay, hire and discharge them at will and control their work;
- The furnishing of material and equipment for doing the work and paying the costs and expenses of its operation and maintenance;
- The independent nature of the business or occupation of the person performing the services, i.e., whether this business is one in which he generally renders services for others for a fixed remuneration;
- Whether or not the person rendering the service is carried on the payroll as an employee;
- Whether or not the employee could quit or be discharged at any time; and
- The extent of personal service or labor going into the work as compared to the profit or remuneration resulting to the person rendering the service because of the use of his equipment and material and the profit on the job accruing to him because of the work done by others whom he employs and pays.
Under these factors, certain “independent contractors” in appearance, not engaged in manual labor, may nonetheless be entitled to workers compensation benefits for their injuries.
However, it is usually fairly difficult to succeed in workers compensation court under this “independent business” approach. For this reason, any supposed independent contractors looking to succeed under this approach really needs an experienced Louisiana workers compensation attorney to argue this case to the workers compensation judge.
Exclusive and Recurring Basis
Nonetheless, it is possible for the independent contractor to be award workers compensation benefits, particularly if the workers are working exclusively for one employer, and on a recurring basis.
Examples of independent contractors that have been award workers compensation benefits include: welders, window-washers, and other workers who may work “by the job” but do so almost exclusively for one employer, and on a recurring basis.
This is because a job which recurs frequently and without which a business could not function efficiently is probably one which is more often performed by employees or employee-like persons.
So also an important element here in detecting the presence of an independent enterprise is whether the work being performed by the independent contractor is a part of the alleged employer’s business.
Services on A Lump Sum Basis in Louisiana Workers Compensation
Lump-sum contracts are characteristically negotiated between equals, where each party represents a distinct independent business enterprise.
For this reason, a person performing work under a lump sum basis agreement will almost always be considered an independent contractor, and therefore be unable to receive workers compensation benefits from the principal/employer.
But, if the lump sum agreement does not accurately represent in reality the actual bargaining that led up to the contract, then it is fairly likely that the court will (to some extent) disregard the contract and find that the injured worker is actually an employee and thus entitled to workers compensation benefits.
For example, a builder who agrees to erect a structure according to specifications for a fixed sum may not be entitled to workers compensation, but a laborer who undertakes to cut down a tree or mow a lawn for a flat price may very well be considered employee and thus entitled to workers compensation benefits.
The Effect of Employing Helpers in Louisiana Workers Compensation
Typically, the fact that an injured worker employs helpers to assist with his or her work indicates that the injured worker is an independent contractor, and therefore unable to receive workers compensation benefits from the principal/employer.
This is because usually, an independent enterpriser will combine the labor of others, the furnishing of equipment, monetary capital, and overall know-how in performing his contractual service. And these actions are tell-tale signs that a separate business enterprise is present.
However, there are instances where an injured worker who employs helpers is actually considered an employee and thus entitled to workers compensation benefits.
Typically, these cases are situations involving the hauling of lumber and other commodities. In these cases, the injured worker is almost always without appreciable capital (apart from the truck and some tools which he usually owns), and the rate of pay for this work is fairly well standardized. Also, the hauler’s job is integrated into the principal/employer’s enterprise on a fairly stable basis, and thus the worker cannot really set a price that will cover the risk of injury.
So even though haulers frequently hire helpers and pay them from the per-unit price he receives, Louisiana courts almost always classify haulers as employees or as independent contractors engaged in manual labor, and thus entitled to compensation.
The Effect of Supplying Equipment in Louisiana Workers Compensation
The fact that an injured worker supplies his or her own equipment (apart from the regular tools customarily provided by all manual laborers) is a factor indicating that he was operating a separate business enterprise, and thus will likely be regarded as an independent contractor, and therefore will not likely be able to recover workers compensation benefits from the principal/employer.
But again, there are instances where an injured worker who supplies his or her own equipment is actually considered an employee and thus entitled to workers compensation benefits. And again, these cases typically involve hauler.
But the issue of whether an injured work supplies his or her own equipment is not going to fully decide whether workers compensation benefits will be awarded. Instead, Louisiana courts typically just consider this as one of many factors in cases in which the entire picture indicates that a separate business enterprise is present.
Specialized Work or An Independent Calling in Louisiana Workers Compensation
If an injured worker performs work that is of a specialized nature outside the general operations of the principal/employer, then this injured worker will likely be regarded as an independent contractor and will not likely be able to recover workers compensation benefits from the principal/employer.
This is because specialists – because of their particular training and special skills – have a bargaining power that an ordinary worker simply does not have.
Typically, a specialist will capitalize on his skill by conducting his own enterprise. Often, a specialist will negotiate on a per-job basis, will assume the risks of the job, and will provide his own helpers, equipment, and materials.
And work given to specialists is usually not the type of work that is part of the regular business of the principal/employer.
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.