These days, more and more injured workers are questioning whether they are employees, and if so, who is their real employer? The increase in the number of so called “independent contractors” and the rise of the gig economy has resulted in both confusion and litigation. There are plenty of unscrupulous employers out there whose business plan consists of designating everybody as an independent contractor. They may even go so far as to have their workers sign “independent contractor agreements” that would never hold up at the Commission or in a court of law.
There is no question that “an employment relationship is a prerequisite for an award of benefits under the Act, and the question of whether a person is an employee remains ‘one of the most vexatious in the law of compensation.’” The courts have made it clear that the definition of an “employee” for purposes of the Illinois Workers’ Compensation Act should be broadly construed.The mere existence of an “independent contractor agreement” does not mean that the Commission or a court won’t find an employment relationship. No rigid rule of law exists regarding whether a worker is an employee or an independent contractor. When deciding whether a worker is an employee for the purposes of an Illinois Workers’ Compensation Claim, the Commission will look at several factors. No single factor is determinative, and the significance of these factors can change depending on the work involved. However, the single most important factor is whether the purported employer has a right to control the actions of the employee. Also, of great significance is the nature of the work performed by the employee in relation to the general business of the employer.
Here are the factors that the Commission will look at in order to determine whether an injured worker is an employee:
- Does the employer have the right to control the work?
- The right to control the manner of work is often called the most important consideration in determining whether an injured worker is an employee or an independent contractor. The courts have provided us with some examples of actions by employers that can be used to show that the worker was in fact supervised, directed and controlled by the employer. For example, if the worker is required to wear a uniform, this would tend to show that the worker was an employee as opposed to an independent contractor.
- If the injured worker was a truck driver, and the company required that driver to take certain routes, this would tend to show an employer-employee relationship.
- If the company tells the worker how he or she must maintain equipment, that the worker must notify the company of any accidents, or if the company logo is displayed on the worker’s vehicle or other equipment, these would be factors favoring an employment relationship.
- Remember that you only need to show that the employer has the right to control your work, you don’t have to show that the employer actually exercised that right. However, if the employer DOES exercise that right to control your work, then it is going to be even more difficult for an employer to argue that you are an independent contractor as opposed to an employee.
- What is the nature of your work?
- Because the theory of workers’ compensation legislation is that the cost of industrial accidents should be borne by the consumer as part of the cost of the product, the courts have held that a worker whose services form a regular part of the cost of the product, and whose work does not constitute a separate business which allows a distinct channel through which the cost of an accident may flow, is presumptively within the area of intended protection of the Act.
- For example, if you are operating an ice cream cart and working for an ice cream distributor whose sole method of distribution is through those same ice cream carts, you are likely to be designated an employee.
- On the other hand, if you are doing roofing work for a company that does landscaping work, that would tend to show that you are an independent contractor.
- What skills are required to perform the work?
- When a worker possess a level of skill and expertise in a specialized field, and is hired to complete a particular job based on that skill and experience this will tend to show that the worker is an independent contractor and not an employee.
- But if the job duties are easily performed, and don’t require much skill, then this would weigh in favor of an employer-employee relationship.
- Who owns the equipment?
- If the equipment being used is owned by the employer, or even partly owned by the employer, this favors an employment relationship and not an independent contractor agreement.
- The courts have instructed us that “control may be realistically inferred even when the employer owns only a part of the equipment, if that part is of considerable size and value.”
- What is the method of payment? Are taxes withheld?
- When a worker is paid a percentage of gross revenue, or when the claimant pays his own income taxes and social security, this tends to show that the worker is an independent contractor and not an employee.
- An hourly rate of pay tends to show that the worker is an employee.
- If an employer is deducting taxes and social security, this weighs heavily in favor of an employer-employee relationship as opposed to an independent contractor agreement.
- Does the employer have the right to discharge?
- Here in Illinois we have what is known as “employment at will.” This generally means that you can be terminated for any reason, good cause or not, or no cause at all. In other words, you can be fired at any time (if that firing is non-discriminatory) and you can quit anytime you wish.
- The lack of a right to discharge is an indication that the worker is an independent contractor and not an employee.
- The easier it is for your employer to fire you, the more likely the Commission and the courts will classify you as an employee as opposed to an independent contractor.
- What are the terms of the agreement?
- Although a contractual agreement is a factor that the Commission will consider, it does not determine your employment status.
- The terms of the agreement are a minor consideration when determining whether an injured worker is an employee or an independent contractor when deciding whether you are entitled to workers’ compensation benefits if you are injured in the course and scope of your employment.
They might call you an independent contractor. They might even call that paper you signed an independent contractor agreement. But that doesn’t mean that the Illinois Workers’ Compensation Commission won’t find that you are an employee entitled to workers’ compensation benefits if you are injured in the course and scope of your employment. If you are injured at work, and you are denied benefits because you are alleged to be an independent contractor, don’t abandon hope. Give me a call, and we will thoroughly review your employment arrangement and see if you are entitled to workers’ compensation benefits.