Misclassification of Employment Status

In recent years, employers have been using more independent contractors, primarily to reduce certain expenses. Since independent contractors are not technically employees of the company, companies are not responsible for providing health insurance, unemployment insurance, and Workers’ Compensation benefits. However, if an employer knowingly misclassifies an employee as an independent contractor, it can be financially devastating to the employee, particularly if he or she is injured on the job. In addition, the employer will likely face grave consequences, including steep fines and legal action.

It is important to understand the key differences between an employee and an independent contractor. The following provides an overview of each:

Employees

  • The work schedule and place of employment are dictated by the employer.
  • The employer establishes employee policies and oversees the work environment.
  • The employer sets a clear expectation regarding acceptable dress code and provides uniforms if they are to be worn.
  • The employer provides any tools necessary to complete the job.

Independent Contractors

  • Sets his or her own schedule.
  • Not required to follow a dress code.
  • Receives payment on a job-by-job basis.
  • Responsible for supplying any tools required for the job.
  • Decides on the work environment that meets his or her needs.

Documentation Required for All Independent Contractors

Employers are required to obtain the following documents for all independent contractors. These will be necessary if the employer is audited by the Workers’ Compensation insurance carrier:

  • Certificate of Insurance for General Liability Coverage. Keep the original on file. The limits should be equal to the amount on your company’s insurance program. In addition, the period of coverage should match the dates that the work was done.
  • Certificate of Insurance for Workers’ Compensation if the independent contractor has Workers’ Compensation insurance.
  • Copy of the independent contractor’s business license.
  • Written subcontract prepared for each job the independent contractor completes, as stated by Title 9-508 of the Maryland Workers’ Compensation Statute.
  • Sole Proprietor’s Status as a Covered Employee form that has the necessary signatures.

Why is Employee Classification So Important?

If an employee is injured on the job, some employers may try to claim that the worker is an independent contractor, rather than an employee. In some cases, this misclassification occurs by accident. However, a willful misclassification occurs when the employer attempts to cut corners and pockets more money. By hiring independent contractors, or misclassifying an employee as an independent contractor, the employer can avoid paying certain employment taxes and other labor costs. They also do not have to pay social security, unemployment insurance, or adhere to equal employment opportunity regulations.

If a worker suffers a job-related injury and proceeds to file a Workers’ Compensation claim, he or she may run into problems if the worker has been misclassified as an independent contractor. If a Workers’ Compensation claim is denied, the worker may be responsible for paying for their medical treatment, which can be a devastating financial burden. Therefore, it is highly recommended that all employees obtain written confirmation from their employer about their employment status so that they are not blindsided by unexpected medical expenses.

Baltimore Workers’ Compensation Lawyers at LeViness, Tolzman & Hamilton Help Injured Workers Obtain Benefits They Deserve

If you were injured on the job, and you have been misclassified as an independent contractor, it is in your best interest to contact the highly skilled Baltimore Workers’ Compensation lawyers at LeViness, Tolzman & Hamilton as soon as possible. Your Workers’ Compensation benefits depend on your employment status, so we will work tirelessly to ensure that you receive the full benefits you are entitled to as an employee. To schedule a free, confidential consultation, call us today at 844-556-4LAW (4529) or contact us online.