Are Gig Workers Eligible for Workers’ Compensation? 

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At the onset of the COVID-19 pandemic, millions of American workers left their respective offices and began working from home or became unemployed altogether as financial uncertainty hit the nation. Many of these employees left full-time work behind for good, opting to join the gig economy. 

Although independent contractors enjoy more flexibility and independence, they should know the limitations of short-term work. In Maryland, independent contractors are not eligible for Workers’ Compensation if they get hurt on the job. 

Gig workers who want Workers’ Compensation insurance can purchase a policy to guard against medical bills and provide peace of mind, but those costs are out of pocket. This discussion explains your rights and responsibilities as an independent contractor working in Maryland. 

What Is a Gig Worker?

A gig worker is a temporary employee, contract worker, or freelancer who completes work on a temporary basis, an hourly basis, or a project-by-project basis. Instead of working for a single employer, they typically work with multiple clients or companies simultaneously. 

You probably know an independent contractor or may be one yourself. Some examples of gig economy workers include: 

  • Someone who works for a temp agency 
  • Someone who sells products or services on websites such as Guru, TaskRabbit, or Fiverr
  • Rideshare drivers, including Lyft, Uber, and Sidecar workers
  • Freelance photographers, artists, and writers 
  • Independent consultants hired to provide expert guidance for an individual or organization 

Advantages of Being a Gig Worker

Gig work definitely has its perks, as the 57 million Americans who joined the gig economy during the first year of the pandemic have discovered. Independent contractors have the freedom to choose their projects and make their own hours. Although they are accountable to their clients, they do not necessarily report to a boss. 

Because they continually work with new projects and clients, freelance or gig work tends to offer more variety than a traditional full-time role. With gig work, there is always potential for professional and financial growth. The only thing stopping an independent worker from taking on more clients and projects is the number of hours in a day. 

Disadvantages of Being a Gig Worker

There are disadvantages of being employed in the gig economy. First, unless they work for a temp agency or a company such as Uber or Lyft, most gig workers must find their own work. That can be a time-consuming and stressful process. And unlike traditional, full-time employment, income for a gig worker can fluctuate from month to month. 

Independent contractors do not have the legal protections against harassment and discrimination that employees receive. They are not entitled to vital benefits including paid sick days, paid vacation, health insurance, retirement benefits, and unemployment benefits. 

Finally, if a gig worker becomes injured during the course of their job, they have no recourse to collect compensation for medical bills, lost income, and other costs. Workers’ Compensation benefits are not available for workers who do not meet the criteria of an employee in Maryland and other states. 

Anyone considering a move to gig work should consider the implications of this important distinction. Imagine a freelance photographer who falls on the sidewalk during a photo shoot and fractures their arm. They have to pay for a hospital visit, tests, medication, and physical therapy with their health insurance and out of pocket, while losing income while they are unable to work. 

Taxes and the Gig Worker

Another important distinction between employees and independent contractors is how they pay taxes. Employees receive W-2 forms from their employers. Those employers are required to deduct payroll taxes. 

Gig workers receive a 1099 Form for jobs that pay more than $600. 1099-NEC, Nonemployee Compensation, documents payments from one individual or business to another party. Gig workers are responsible to pay their own taxes, usually quarterly. 

Workers’ Compensation in Maryland

With few exceptions, every employer in Maryland with one or more full- or part-time workers is required to have Workers’ Compensation insurance and provide coverage for eligible employees as needed. 

The Maryland Guide to Wage Payment and Employment Standards offers specific guidelines to determine if a worker is an employee or an independent contractor. The state guide advises that: 

  • An employee is subject to the will and control of the employer regarding how and what work is to be done. 
  • The employer provides a place to work and tools and materials for the employee. 
  • The employer has the right to discharge an employee. In a gig situation, the power to sever the working relationship is mutual. 
  • Independent contractors are often in a position to experience economic loss rather than a guaranteed wage. 
  • Independent contractors work for themselves and typically perform work that is different than the business of the company for which they are temporarily hired to work. 

In short, the difference between an employee and a gig worker, in a legal context, is primarily determined by how much control the employer has over the worker. 

What Happens if My Employer Misclassifies Me?

Beyond the many benefits of gig work for independent-minded folks, employers have plenty of incentives to hire independent contractors. 

First, an employer can avoid paying federal taxes such as Medicare and Social Security, state unemployment insurance compensation, and Workers’ Compensation when they hire a freelancer. They do not have to contribute for health insurance or 401k plans either. Those savings are a leading reason so many large companies are opting to work with freelancers more and more. 

However, this preference for hiring short-term employees opens the door for employers to misclassify their workers. Employees who are incorrectly hired as independent contractors miss out on important protections, including Workers’ Compensation. 

Every worker in Maryland and the nation should understand how their employment status impacts their rights, protections, and benefits. 

What Should I Do if I Am Misclassified?

Proper classification is incredibly important for every worker. If you believe you have been misclassified, start by speaking with your employer. Ask them to review your status and reclassify you as an employee. Even if they deny your request, they should provide some explanation for your classification.

If you believe you should be classified as an employee based on state guidelines, you can also contact the IRS and ask them to determine your status for tax purposes. You can find IRS Form SS-8,  Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, online. There is no cost to file this form. A lawyer with experience representing Maryland workers can guide you through the process. 

Can I Purchase Workers’ Compensation Insurance as a Gig Worker?

Many insurance companies offer Workers’ Compensation policies for independent contractors. Like traditional plans, Workers’ Compensation insurance for gig workers covers medical costs and helps replace lost income after a work injury. Policies vary from company to company. Contact your preferred insurance provider for more information. 

Being an independent contractor can be liberating. However, it also comes with practical concerns. What if you get hurt while working? Who is going to pay your medical bills or cover the income you miss while you are out of work? Ultimately, the choice to work as an employee or be self-employed is a personal one and depends on your own individual needs and goals. 

 Baltimore Workers’ Compensation Lawyers at LeViness, Tolzman & Hamilton Represent Injured Workers in Maryland 

If you are an employee of a company with one or more workers, you are probably eligible for Workers’ Compensation benefits if you get hurt at work. If you have questions about the claim process or your employer denied your claim, reach out to the experienced Baltimore Workers’ Compensation lawyers at LeViness, Tolzman & Hamilton. We will investigate the cause of the accident and press claims for benefits. To schedule a free, confidential consultation, call us today at 844-556-4LAW (4529) or contact us online

Located in Baltimore, we serve clients throughout Maryland.