Generally, workers who are injured on the job are able to file a claim to receive workers’ compensation benefits. However, independent contractors are not covered by the workers’ compensation system. There is often confusion and disputes over who exactly is considered an independent contractor. The company certainly wants to make you on if there is any doubt, so they can lower their own costs of doing business.
If you learn from the insurance company that your claim has been denied because you are an independent contractor, you may be able to take legal action. Contact the attorneys at Rosenfeld Injury Lawyers to learn more about your legal rights and whether you can file an appeal.
Are Independent Contractors Covered by Workers Comp?
The general answer is that an independent contractor is not covered by workers comp insurance. Under the Illinois Workers’ Compensation Act [1], the employer is only obligated to purchase workers’ compensation insurance for employees. There is an arms-length relationship between the company and the independent contractor which means that they are not an employee of the company.
In practice, many companies aggressively classify those performing work for them as independent contractors, so they can avoid having to pay for workers’ compensation coverage.
Illinois Does Not Require Workers’ Compensation for 1099 Independent Contractors in the State
The rules about independent contractors and workers’ compensation benefits are the same in every state. Each state will define what an employee is for purposes of their workers’ compensation laws. The definition will not include an independent contractor.
Illinois law does not necessarily define the term “employee.” It does specifically include some in the law’s coverage while excluding others, but it never explicitly says who is an employee. This leaves courts to fill the gap, especially when your legal rights to financial compensation are at stake.
The Gig Economy Is Making Coverage Questions More Complex
When state laws were enacted many years ago, lawmakers could not have anticipated how the gig economy would impact workers’ compensation policy. They certainly intended for those who were injured on the job to receive benefits that could include medical costs and lost wages.
However, they may have underestimated the cleverness of companies like Uber and Doordash that make large profits but leave workers on their own when they suffer a work-related injury.
Do You Need Workers’ Comp If You Are Self-Employed?
If you work for yourself, Illinois law would not require you to purchase workers’ compensation insurance for yourself. However, there is a very important distinction at work here. You may work for yourself, but you have other people who are working for you.
If you are an employer in Illinois, you must purchase workers comp coverage if you have one or more part-time or full-time employees working for you.
Some States Require Sole Proprietors to Have Coverage
There are some states that may require sole proprietors to have workers comp insurance coverage. Sole proprietors may exempt themselves from the requirement to provide coverage in Illinois. However, they may also opt into the workers’ compensation system, which is generally a smart idea.
Nonetheless, some small business owners will find it difficult to land contracts if they do not have some type of coverage. Certainly, general liability coverage is a requirement in some contracts. In addition, omissions insurance is often a prerequisite for professional services contracts.
How Do I Know If I Am an Independent Contractor or an Employee?
The line between an independent contractor and an employee who is entitled to receive workers’ compensation benefits is a fine one. Even if your agreement says “independent contractor,” it is not the end of the story.
Illinois courts apply the ABC Test to determine whether someone is an independent contractor. The three factors of the test are:
- The worker is free from the control of the company as to how they perform the tasks
- The worker provides services that are outside of the company’s normal line of business
- The worker normally provides this type of work as an independent business
The company is the one that has the burden of proving that you are an independent contractor under the ABC test. They may be able to point to a written contract, but it is not the end of the story.
Some Companies Misclassify Workers as Independent Contractors
In some instances, a worker legitimately meets the ABC test, and the company does not need to provide workers comp coverage. However, there are many economic motivations for a company to restrict who is considered an employee on their payroll.
They could save money by not paying overtime or meeting minimum wage requirements. There are companies who aggressively misclassify employees [2] to protect their bottom line at your expense.
“Independent Contractors” Have Been Fighting Back
Companies that fail to provide workers’ compensation on the ground that someone is not an employee have increasingly been called to defend themselves.
In one recent Illinois case, a group of truckers who were treated as independent contractors filed a lawsuit under the Illinois Wage Payment and Collection Act when they had deductions taken from their paychecks for business expenses. The court applied the ABC test and found that the truckers were not independent contractors because their business was substantially the same as the companies’.
If you believe that you are an employee, and you should be receiving workers’ compensation benefits, contact us today. You should be prepared with details about your relationship with the company that would make you an employee and subject to coverage under the Illinois Workers Compensation Act.
Contact an Attorney to Learn More About Workers’ Compensation Coverage
If the insurance company has denied your workers’ compensation claim, it is not the end of the story. You can contact the Illinois workers’ compensation attorneys at Rosenfeld Injury Lawyers to learn whether you can file an appeal. Just because the insurance company is telling you that you are an independent contractor does not mean that you actually are one under the law. Call us today at (888) 424-5757 or send us a message online to discuss your case.
Resources: [1] Illinois General Assembly, [2] IDES
