The Virginia Workers’ Compensation Act requires employers with at least three employees to provide insurance that covers work-related injuries and illnesses for all employees. However, independent contractors are not eligible for coverage under the workers’ compensation policy for the company they are working for. Whether a worker is an employee or independent contractor sometimes is an important issue in a workers’ compensation claim.
The Act contains complex provisions relating to the meaning of the term employee for purposes of workers’ compensation eligibility. The basic definition in § 65.2-101 of the Virginia Code provides that an employee includes:
Every person, including aliens and minors, in the service of another under any contract of hire or apprenticeship, written or implied, whether lawfully or unlawfully employed, except (i) one whose employment is not in the usual course of the trade, business, occupation or profession of the employer or (ii) as otherwise provided in subdivision 2 of this definition.
Subsection 2 contains an extensive list of positions specifically excluded from the definition.
The definition requires an employment contract for the employer-employee relationship to exist. The contract may be written, spoken, or implied. If an employment contract does not exist or a worker falls within one of the stated exceptions, the worker may not be eligible for workers’ compensation benefits for work injury or illness.
Independent contractors are not eligible for workers’ comp coverage, because an employment contract and employment relationship do not exist. While there usually is a contract, it is of a completely different nature. An independent contractor provides services, but there is not an employment relationship.
Some employers may require an employee to sign an independent contractor agreement, even if they are actually an employee. This may be done to avoid having three or more “employees,” which would require them to have workers’ compensation insurance. So, how do you know if you are an independent contractor or employee?
Even if an employer designates a worker as an independent contractor or pays a worker using a 1099 tax form, those actions do not determine the worker’s legal status for workers’ compensation purposes. Determination of a worker’s status as an independent contractor or employee requires a legal analysis of the circumstances in which the work is performed.
The Virginia Workers’ Compensation Commission utilizes a four-part test to determine the status of an injured worker. Under the test, a worker is an employee for workers’ compensation purposes if: 1) the employer exercises control over the means and method of performing the work, 2) the worker earns pay or wages, 3) the employer hires the worker for the job, and 4) the worker can be terminated (fired or dismissed). Control over the performance of the work is the most significant criteria in the test.
If an employer’s insurance company tries to avoid workers’ comp coverage by claiming that an injured worker is an independent contractor, the Commission examines all the facts and circumstances surrounding the work relationship to determine the worker’s status. If the claimant can prove through testimony and written documentation that an employment relationship exists, the claimant is an employee entitled to benefits. If an employment relationship cannot be demonstrated, then the worker is an independent contractor not entitled to benefits.
As mentioned previously, the extent of the employer’s control over performance of the work is extremely important. Control can be demonstrated in many ways. If the employer provides worker tools and training, instructions on completing the job tasks, and equipment and other workers to assist in completing the work, those actions indicate control and are evidence of an employer-employee relationship. Established workdays and hours, regular wages or a salary, a long-term working relationship, and the ability to stop working without liability for unfinished work also indicate that the worker is an employee rather than an independent contractor.
In contrast, independent contractors typically use their own equipment and tools, hire their own subcontractors to assist, and set their own hours and schedule. They earn payment based on completion of the work instead of working for periodic wages or a salary, and usually perform the same type of work in other settings. If an independent contractor fails to complete the specified work, they may be liable for damages.
If you received a work injury, and the employer’s insurance company claims you are not entitled to workers’ compensation because you are an independent contractor, you should contact an experienced workers’ compensation lawyer immediately. The insurance company’s position is not a final determination of your status. Depending on the circumstances, a knowledgeable lawyer may be able to establish that you had an employment relationship and are entitled to workers’ compensation benefits.
In many situations involving workers’ compensation, talking with a lawyer is beneficial, even if you don’t encounter work status issues. You can learn more about how a lawyer can help with a claim in our article that discusses when you may need a workers’ comp lawyer and our frequently asked questions about workers’ compensation.
If you received work injuries and have not talked with a lawyer, you should do so at the soonest opportunity, especially if the employer is questioning your work status as an employee. Our Richmond workers’ compensation lawyers at Renfro & Renfro are here to help with your claim. We welcome you to contact us for a free consultation.