As an employer in California, you have the option to hire employees or independent contractors to help you carry out the operations of your business. While most people may not know the difference between employees or contractors, the reality is that the status of workers is crucial. Here, we want to talk about what happens if an independent contractor you hire sustains a work-related injury and subsequently claims that they are an employee and not a contractor. Are you responsible for covering their work-related injuries? What happens if you do not have workers’ compensation for that individual?
California has been through significant ups and downs when it comes to employee classifications over the last few years. Legislators in this state passed a law that effectively required most employers to convert independent contractors to employees, but this law was overturned in the last election with the passage of Proposition 22.
As a business operator, there are various benefits to hiring independent contractors, particularly when you need the contractor to handle work outside of the scope of your regular operating duties. When you do hire an independent contractor, you will generally not be required to provide them with various benefits, including workers’ compensation insurance. If an independent contractor is injured on the job, they are responsible for paying for their own injury expenses. Maybe they have their own workers’ compensation insurance. Perhaps they do not.
But what happens if an injured independent contractor claims that they are actually an employee of yours and you do not have workers’ compensation insurance? This can create significant headaches for you and your company.
When you work with an independent contractor, whether they are a freelancer, sole proprietor, or otherwise a non-employee, you should have a written contract that spells out their role. Specifically, the contract needs to state that both you and they understand that they are operating as an independent contractor and not as an employee of your operation. If you get such a contract signed with an independent contractor, this should clear up any confusion about whether or not they are an employee.
It is important to remember that an employer who fails to provide workers’ compensation insurance for their employees will be in violation of California law. This is a criminal offense that could result in the state issuing a “stop order” on your business as well as fines as high as $10,000 and up to one year in jail.
If you are a business owner or operator and are struggling to understand the requirements in place pertaining to workers’ compensation insurance for your operating environment, seek legal assistance as soon as possible. At Sacks Law Group, APC, our team has extensive experience helping clients in these situations. We understand how confusing California’s ever-changing work classification laws can be. Let us get to work analyzing your situation today. When you need a Los Angeles workers compensation defense attorney, you can contact us for a consultation of your case by clicking here or calling 310-216-7778.