By registering with the WCB and paying for workers` compensation insurance, employers receive a number of benefits, including: Workers` compensation is mandatory in all states except Texas and New Jersey. But New Jersey, with all its caveats, is essentially mandatory; and even Texas coverage is mandatory for certain contractor classifications. Although requirements vary from state to state, each state law requires „employers” with a certain number of „employees” to provide workers` compensation benefits either through the purchase of a workers` compensation policy, as a qualified self-insurer, or out of pocket. General contractor relationships and legally created employer-employee relationships are the focus of the next commentary. In addition, the following commentary addresses the contractual obligation of lower-level contractors to provide workers` compensation. This contractual requirement should not be confused with the contractual transfer of risk, which will be the subject of a future article. · if the employer makes deductions for social security or unemployment; The purpose of these contracting statutes is twofold: first, to cover employees exposed to the company`s risks; and, secondly, to place the burden of payment of the allowance on the higher statutory employer who organises the undertaking. This ensures that employees are covered by workers` compensation when this would not otherwise be the case. [xvii] Some states exclude not-for-profit organizations from the definition of „employers,” even for their paid employees. The reasoning is that if the state grants charitable immunity – non-profit organizations cannot be sued under ordinary tort law – these organizations should also be exempt from workers` compensation claims, as these claims are often a substitute for compensation in a regular tort action. [xiv] Several types of workers are excluded from the definition of „worker”, including independent contractors.
In determining whether an employee is an independent contractor, courts consider many factors, including: In a workers` compensation case, neither party is found guilty. The amount received by a claimant is neither diminished by his recklessness nor increased by the fault of an employer. However, an employee loses his right to workers` compensation if the injury is solely due to his intoxication by drugs or alcohol or to the intention to harm himself or another person. „Employee” is generally defined as a person who is hired to perform certain services or tasks for a specified wage or salary under the control of another (the employer); or an employee who is hired for money or other remuneration to perform specific work that is usual and habitual to the employer`s business. „Independent contractors” (defined below) generally do not fall within the definition of „employee” unless the law requires classification as an employee or the person is designated as an independent contractor for tax purposes, but is in fact an employee within the meaning of the workers` compensation definitions. Remember, even if you think an injury is unlikely, imagine what the impact would be if only one injury occurred. Could your company cover the cost of medical bills or employee rehabilitation? What happens if an injured employee files a lawsuit? The WCB system helps protect employers by pooling risks and sharing costs. · Whether the employer can terminate the employee at will or whether the employee has the right to terminate the project he or she has started. [iv] „Employers” do not have to be covered by workers` compensation, but employers are required by law to provide workers` compensation benefits to their „employees”. Thus, the sole proprietor as employer of the „natural person” is excluded from the census; But the executive is included as an employee because he works for the company, a „legal person”.
In general, the degree of control is the determining factor in classifying an employee as an employee or independent contractor. The higher the level of control over the employee, the more likely they are to be considered an employee rather than an independent contractor. If the employer: (1) determines the hours and manner of performing the work; 2) provides tools and equipment; and/or 3) the higher the likelihood that the employee is an employee and not an independent contractor, the contractor`s only source of income. The employer-employee relationship can be complicated in situations such as a construction project where multiple parties contribute to the completion of the final project. In these cases, it is not uncommon for a project to have an owner, a general contractor, a subcontractor and a subcontractor. In addition, each party may have its own employees. In these situations, at least 42 states enforce contractor laws. [xv] Most States require any enterprise with one or more employees to provide workers` compensation; Only 13 states allow the employer to have more than one employee before coverage is required (these thresholds range from three to five workers). It sounds simple, except that this calculation is complicated by the definition of „worker” in each state; The definition depends on how the person is hired for the work and the legal structure of the employer. If you own a business in an industry that has traditionally hired contract workers, such as construction, trucks, oil or gas drilling, and you don`t pay workers above annual minimum wage, you may be considered a worker of any client who hires you.
A client is an employer who is responsible for paying for the employee`s coverage. The Workers` Compensation Act exists to compensate injured workers for lost wages and medical expenses related to workers` compensation. However, it only applies if the aggrieved employee can prove that an employer-employee relationship existed at the time the infringement occurred. [i] This means that the employee must be considered an „employee” and the employer as an „employer” within the meaning of the legal definition.