When it comes to worker benefits, not all workers are created equal. Your designation—either as an employee or an independent contractor—determines the benefits you’re entitled to. A contractor is typically exempt from workers’ compensation—in addition to other benefits, such as overtime pay, employer-sponsored healthcare and paid time off.
However, the distinction between an employee and an independent contractor is not always cut and dried. Many employers misclassify workers who are actually employees as independent contractors—thus denying them important benefits. Some estimates indicate that in the U.S., as much as 30 percent of employers misclassify their workers in this way.
While there can be some overlap between employees’ and contractors’ roles and responsibilities, there are general indicators that can help you determine your appropriate worker classification. Here are some key points to consider:
- Training: Employers often require employees to attend periodic company trainings. By contrast, contractors typically join a project for their specialized skill set—and they will not need to undergo regular trainings.
- Equipment: Employers usually expect independent contractors to provide all of the equipment necessary for them to carry out their work. However, they will typically provide work-related equipment to their employees.
- Supervision: An employer may be more hands-off with a contractor—allowing them to decide the manner in which they tackle their work. However, an employer may more closely monitor how an employee carries out their work.
- Flexibility: Contractors often have more freedom in terms of where and when they conduct their work. They may work outside of the company, at hours that suit them. Employees typically do not have this level of flexibility.
- Job permanence: Contractors are usually hired for project-based work—and their engagement with the company is expected to be temporary. When a company hires an employee, however, it is usually with the expectation that their engagement with the company will be long-term.
- Pay: Because contractors work by project, they tend to get paid by project as well—in a lump sum upon project completion. Employees, on the other hand, receive payment in regular increments.
Worker misclassification is a common problem in the U.S.—and it can cut workers out of important benefits. If you have suffered injury on the job, and your boss claims you are not eligible for workers’ compensation, it’s worthwhile to discuss your case with an experienced workers’ compensation attorney. You may have legal recourse to claim the benefits you deserve.