Can employment status affect worker comp eligibility after an injury?

The North Carolina Industrial Commission can still award workers’ compensation if an employer has inappropriately classified a worker as an independent contractor.

Workers’ compensation benefits are generally available following an on-the-job injury at a North Carolina workplace. Available benefits include medical costs as well as wage replacement or a death benefit. It is important to document that the injury “arose out of and in the course of employment.” Immediately reporting even a minor injury to an employer is the best way to do this.

For some workers an issue may arise with their employment status. Many employers in fields from construction to package delivery unlawfully misclassify their workers as independent contractors. An employer may argue that no workers’ compensation benefits are available, because you are an independent contractor.

Requirement to carry workers’ compensation insurance

Generally, all North Carolina businesses that regularly employ three or more employees must carry workers’ compensation insurance. The North Carolina Industrial Commission can fine employers who fail to obtain policies even when there are no workplace injuries.

In addition, if a workplace injury occurs the employer would be directly liable for medical costs and wage loss. The employee would have to file a negligence claim in civil court, but could also request damages related to pain and suffering.

Even though an employer calls a worker an independent contractor and issues a tax Form 1099, the Industrial Commission could still find the worker was in fact an employee.

Employer-employee relationship for workers’ compensation

The North Carolina Workers’ Compensation Act only applies when there was employer-employee relationship. The workers’ compensation commission reviews evidence when making an independent determination of an employment relationship.

The amount of control exercised by an employer is the real issue. Some of the factors reviewed in the analysis include:

• Is work completed on a quantitative basis ($30 per article) or at a fixed lump sum price ($2,000 for a flooring project)?
• Does the individual have an independent business?
• Is it important to have a specialized skill to complete the work?
• Can the individual hire and control assistants as needed?
• Who sets a schedule and controls how work is completed?

Courts use a totality of the circumstances standard instead of just looking at one or two of the factors when deciding whether there was the necessary independence to support a classification of independent contractor.

It is often helpful to look at the facts from an actual North Carolina case. In one case, a taxi cab driver suffered serious injury in a car crash while going through a green light. He sought workers’ compensation, but his employer argued he was an independent contractor. The North Carolina Court of Appeals upheld a decision of the Commission that he was an employee.

The facts showed that the level of control in the relationship was more akin to employee-employer. The company set the schedule for drivers, required advance notice for time off, provided the cars, did not allow drivers to use them for personal use, mandated service routes to follow and required drivers to pick up customers from a dispatch system.

If an employer questions whether you are entitled to workers’ compensation benefits after a workplace injury, speak with a Ganly & Ramer attorney. Much depends on your individual circumstances, but benefits may be available to cover your medical costs and offset your lost wages while recovering.

Keywords: Independent contractor, employee, workers’ compensation