Employers Beware—Claims by Independent Contractors are Rising

Are independent contractors entitled to Worker’s Compensation and other benefits for injuries due to an accident on the job?

In most states, employees are protected for claims for injuries and lost wages suffered as a result of an accident while working. Worker’s Compensation insurance, (“Worker’s Comp”) which employers with employees are required to pay into, is a fund that allows for the prompt payment of medical bills and lost wages of the injured employee.

The policy is based on the premise that workers who are hurt on the job and unable to work due to their injuries need immediate, unencumbered access to medical care and possibly long-term access to physical or occupational therapy, in order to maximize a fast recovery and return to the workplace. Plus these workers need reimbursement of all or a portion of their lost income while they are recovering, which compensation can take into account more than the lost income from the one job—it may compensate for lost income from multiple jobs depending on the claim. Unlike in a non-employee situation, medical claims are not submitted to the private medical insurance plan of the injured worker, but are processed through the Worker’s Comp fund.

As is often the case in matters of Employment and Labor Law, situations arise that present challenges to the so-called norm. For instance, what if the worker injured on the job is not classified as an employee, but rather as an independent contractor?

Some employers classify all or part of their workers as independent contractors, not employees. This relationship generally provides multiple financial incentives, savings, and benefits to employers, often at the expense of the worker. Employers must be careful when making such job classifications as they may be challenged in court.

Such is the case in taxi-like companies such as Uber where the drivers are classified as independent contractors and use their own personal vehicles. Drivers log-on to the ride-hailing app when they are available to accept riders and Uber will dispatch them to a nearby waiting fare. Riders order and pay for an Uber ride through their cell phone apps and no money is exchanged by hand. Lawsuits by drivers seeking employee classification, which would provide them certain benefit that independent contractors don’t have are becoming common, but so far, Uber has staved off the job reclassification through settlements, claiming the flexibility and independence of the arrangement is more in line with independent contractors, not employees.

Independent contractors who are hurt on the job are often surprised to learn that they are not entitled to Workers Comp benefits. Without the medical coverage they look to their private medical insurance, subject to any deductibles, co-pays, and limitations, if any. They can sometimes look to the other driver’s insurance. They also can’t recover for lost wages, which could spell financial ruin for independent contractors left unable to work for longer periods.

Uber is in the news again with a potential job classification challenge after one of its drivers got hurt in an accident while transporting passengers. What’s worse—the other driver was an Uber driver, too. While contesting his status as an employee and his claim he should be given access to Worker’s Comp, Uber’s insurance company has reportedly offered its injured driver– who still cannot work and is alleging continued pain months later– approximately $21,000 as a full settlement for all of his losses. His attorney feels $350,000 is more in line.

Although in many cases, the employee/employer relationship is clearer and easier to classify, the recent Uber cases should serve as warnings to employers that hire independent contractors to be mindful of the potential for litigation and possible liability if that classification is successfully challenged in court.

If you need an Employment and Labor Law attorney or need help with an Employment Litigation matter, Carico Johnson Toomey LLP is conveniently located right in the South Bay area of California and offers years of experience and expertise. Call (310) 545-0010.

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