Workers Compensation – Employee or an Independent Contractor?

One of the biggest dilemma’s concerning workers compensation insurance coverage is whether a given individual is an employee or an independent contractor. It applies to pretty much any industry. Recently, I had a discussion with a janitorial services business which uses a specialist to do floor waxing when needed. The owner told me this individual is an independent contractor. I explained to the owner that individual might be considered an employee in the eyes of an insurance carrier.

The reality is there is no definitive test to determine Employee or an Independent Contractor! It’s not a black and white issue. In many cases, it is the court of law who decides.  California Workers Compensation laws are construed liberally; in other words, in favor of the claimant. There is a presumption of employment unless the employer can prove otherwise.

There are certain basic questions which might help determine the status, however. The following circumstances can help determine the relationship between and employee versus an independent contractor:

Employee Independent Contractor
Has the right to control the manner and means of accomplishing the result desired Responsible only for the result of the work performed
Has a specific title and/or position Engaged in a distinct occupation or business
Works under the direction of a boss Is a specialist, does actual work without supervision
Uses company tools and/or equipment Supplies their own
Working hours are set by the company Has no set hours, may come and go at will
Is paid salary or by the hour Paid on a per-job basis
The person assumes they are an employee The person believes they are an independent contractor and usually has a certificate of insurance

These are just a handful of circumstances. If you have additional insight to share, please comment below!

-JK

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About Jim Kinmartin - CA Small Business Insurance Agent/Broker

Jim is a California licensed Property & Casualty AND Accident & Health insurance agent working at the ISU - Olson Duncan Insurance brokerage in Torrance, CA. He grew up in Fullerton, CA and graduated from Servite High School in Anaheim and Loyola Marymount University in Los Angeles and currently lives in Long Beach, CA. Have questions? Just ask! Or, follow Jim on Twitter at @JimKinmartin

3 responses to “Workers Compensation – Employee or an Independent Contractor?”

  1. Jose says :

    Outstanding!!!!! This should be read by all those who think that by paying employees with a 1099, they’re off the hook.

    Keep it coming Jim.

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