Can an Independent Contractor Get Workers’ Compensation?

Workers’ compensation provides medical care, wage replacement, and other benefits to employees who are injured or become ill while on the job. While workers’ compensation is typically associated with employees, there are certain cases where independent contractors may be eligible for this type of coverage.

Misclassification of workers happens. A survey by the Economic Policy Institute estimated that around 10–20% of employers misclassify their employees as independent contractors. Some employers do so to avoid workers’ compensation obligations. Those who are excluded from workers’ compensation must understand their rights.

For independent contractors, dealing with the complexities of workers’ compensation can be challenging. According to Canlas Law Group, in California, independent contractors are generally not eligible for workers’ compensation, and they are considered self-employed. You can read more about who can be excluded from workers’ compensation by heading to this page: https://www.canlaslaw.com/blog/who-can-be-excluded-from-workers-compensation-in-california/

Let’s go over the factors that determine workers’ compensation eligibility for independent contractors first:

Definition of an Independent Contractor

You must first understand the distinction between an employee and a self-employed individual to better grasp the concept of an independent contractor. An employee typically works for a company under an employment contract, receives a regular salary or wages, and has taxes withheld from their paycheck. They’re subject to the company’s control and direction, and their work is closely supervised.

A self-employed individual, or independent contractor, operates their own business and provides services to multiple clients. They’ve got more autonomy and control over their work. Independent contractors are responsible for their own taxes and typically invoice their clients for the services rendered.They aren’t entitled to benefits that employees receive, such as health insurance or workers’ compensation. 

Please note that the distinction between an employee and an independent contractor isn’t always clear-cut and can vary depending on the specific circumstances and applicable laws.

Factors That Determine Workers’ Comp Eligibility

While employees generally qualify for workers’ compensation benefits, the situation is more complex for independent contractors. The key factors that determine your eligibility as an independent contractor include your level of control, the nature of your work, and your relationship with the company.

• The level of control you have over your work: If the company you work for has significant control over how and when you perform your tasks, you may be considered an employee and thus eligible for workers’ compensation. If you have more autonomy and control over your work, you’re more likely to be considered an independent contractor and not eligible for workers compensation.
• The nature of your work: Independent contractors typically provide specialized skills or services to a company on a contract basis. If your work is integral to the company’s operations and you perform tasks that are similar to those of an employee, you may be deemed eligible for workers’ compensation.
• Your relationship with the company: If you have a written contract that clearly states you’re an independent contractor, it can help establish your ineligibility for workers compensation. That said, if your relationship with the company resembles that of an employee, such as being provided with tools or equipment, receiving training, or having a long-term arrangement, you may still be eligible for workers compensation.

Challenges in Obtaining Workers’ Comp as an Independent Contractor

Getting a workers’ comp as an independent contractor can present significant challenges. Since independent contractors aren’t considered employees, they’re typically not covered by workers’ compensation insurance. This means that if you suffer an injury or illness while on the job, you may not be eligible for the same benefits and protections that employees receive.

One of the main challenges independent contractors face when trying to obtain workers’ comp is proving their status as an employee. Insurance companies and employers may argue that you aren’t an employee, but rather a self-employed individual responsible for your own safety and well-being. This can make it difficult to establish that you should be covered under workers’ compensation.

Another challenge is the lack of legal requirements for employers to provide workers’ compensation coverage to independent contractors. While employers are required by law to provide workers’ compensation for their employees, there’s no such obligation for independent contractors. Many employers may choose not to provide coverage for independent contractors, leaving them vulnerable in case of an accident or injury.

The classification of workers as independent contractors or employees can vary depending on state laws and regulations. This inconsistency can further complicate the process of obtaining workers’ compensation as an independent contractor.

Steps to Protect Yourself as an Independent Contractor

As an independent contractor facing the challenges of obtaining workers’ compensation coverage, you can take proactive steps to protect yourself and secure your well-being on the job. Here are some key measures you can work on:

1. Understand your classification: Familiarize yourself with the criteria that differentiate an independent contractor from an employee. Knowing your classification can provide clarity on your rights and responsibilities regarding workers’ compensation.
2. Obtain liability insurance: Consider purchasing liability insurance to protect yourself from potential lawsuits. This coverage can safeguard you against claims arising from accidents or injuries that occur while performing your work.
3. Draft clear contracts: Establishing well-defined contracts with your clients can help clarify your relationship and responsibilities. Clearly outline the scope of work, payment terms, and any insurance requirements to ensure everyone is on the same page.
4. Maintain detailed records: Keep thorough documentation of all your projects, including contracts, invoices, and correspondence. These records can be instrumental in substantiating your work, should you need to prove your status as an independent contractor or file a workers’ compensation claim.
5. Practice workplace safety: Take proactive steps to maintain a safe work environment. Follow industry safety guidelines, use appropriate protective equipment, and report any potential hazards to your client or relevant authorities.

Alternatives to Workers’ Compensation for Independent Contractors

Consider exploring alternative options for insurance coverage as an independent contractor, rather than solely relying on traditional workers’ compensation. While workers’ compensation provides valuable benefits for employees, it may not be available to independent contractors and it doesn’t mean you have to go without any form of coverage in case of work-related injuries or accidents.

• General Liability Insurance: This type of insurance provides coverage for bodily injury and property damage that may occur during the course of your work. It can protect you from potential liability claims and help cover medical expenses or legal fees if you’re sued.
• Professional Liability Insurance: Also known as errors and omissions insurance. This type of coverage is particularly relevant if you provide professional services, such as consulting or advising. It can protect you from claims of negligence or errors in your work that result in financial loss for your clients.
• Disability Insurance: It can provide income replacement if you’re unable to work due to a disability or injury. This type of coverage can help alleviate financial strain during recovery periods.

It’s important to carefully evaluate your insurance needs and consider the specific risks associated with your line of work. There are alternative insurance options available to provide you with some level of coverage and peace of mind.

Conclusion

As an independent contractor, obtaining workers’ compensation can be challenging due to the nature of your employment, but there are steps you can take to protect yourself, such as having proper insurance and documenting your work-related injuries.

Exploring alternative options to workers’ compensation, such as personal injury lawsuits or disability insurance, may be beneficial to you. Know your rights and seek legal advice to be adequately protected in case of any work-related accidents or injuries.