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Employee or Independent Contractor: Important Question for VT Workers’ Comp

Have you ever had an employer tell you you’re not an “employee,” but rather an “independent contractor”? More importantly, do you know that independent contractors generally aren’t entitled to workers’ compensation benefits if they’re injured at work? Well, the Vermont Department of Labor does, which is why misclassification of employees as independent contractors has been a hot button topic over the past few years.

Employers must pay workers’ compensation insurance for their employees but employers do not have to pay workers’ compensation insurance for independent contractors. Over the years, the Vermont Department of Labor has identified some employers who try to save on buying mandatory workers’ compensation insurance by claiming that their workers are not employees but are independent contractors.

The Vermont Department of Labor and the Vermont courts take a dim view of this. The Department of Labor recommends that if employers are in doubt, workers’ compensation should be purchased.

In order to be eligible for workers’ compensation benefits an employee-employer relationship must exist at the time of the injury. In Vermont, how do we tell if this relationship exists?

First, we look at the “right to control”. Does the employer have the right to direct the result, the means and the methods by which the work is performed? If yes, an employer-employee relationship exists and the employer must provide workers’ compensation coverage. If no, the situation involves an independent contractor and workers’ compensation is not required.

Next, we look at the “nature of the business.” The “nature of the business” test looks at:

1) Whether the work being performed is the type of work that normally is done by an employee of the business? and

2) Whether the work being performed is an integral part of the employer’s regular business?

This test is designed to prevent business owners from avoiding workers’ compensation liability by misclassifying workers who carry out some phase of their business as independent contractors instead of regular employees.

Over the last several decades, The Vermont Supreme Court has addressed the question of whether an injured worker is an employee or an independent contractor. In fact, the Court looked at this question as far back as 1917 and, to this day, it continues to use the “right to control” test and the “nature of the business test.

The Court has looked at cases involving:

Loggers

Trucking Companies

Construction Companies

Real Estate Development Companies

Workers Hired through Temporary Agencies.

The Vermont Department of Labor website lists some questions that may help an injured worker answer  the question of whether he or she is an employee or independent contractor.

Remember that even if your employer calls you an “independent contractor”, if you are injured at work,  you may in fact be their “employee” and entitled to workers’ compensation benefits.  More importantly, if you do suffer a work injury, don’t just accept your employer’s word that you are an independent contractor and not an employee. You may wish to contact an workers’ compensation attorney to discuss the facts of your employment.

You just might find out that you are entitled to workers’ compensation benefits even if you have been misclassified.

For more information see: Vermont Department of Labor

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