Working as an independent contractor can have many perks. More flexible hours, self-determined pay rate, certain tax deductions, and more can make the self-employment lifestyle attractive and effective for many people. As with most things in life, however, it is not without some detractions. One key detriment is the lack of workers’ compensation benefits. Typically, independent contractors in Iowa are not viewed as employees under the law, and employers are not required to provide them with the same medical care and wage replacement benefits afforded to other employees who suffer on-the-job injuries.
For many independent contractors, an injury can have devastating effects on their personal, employment, and financial lives. The medical bills and lost wages can create both physical pain and financial burdens. The benefits provided by workers’ compensation can be critical in maintaining health and stability. Fortunately, independent contractors do have rights that can be protected, regardless of what an employer or their insurance company may claim.
Employee vs. Independent Contractor
Determining whether a worker is an independent contractor by law can be confusing. There are some basic guidelines, though, that can be helpful in defining this status. The Internal Revenue Service (IRS) offers these questions to consider:
- Who controls how and when the worker does his job?
- How are the business elements of the job handled?—how the worker is paid, if expenses are reimbursed, whose tools and supplies are used.
- Do the worker and employer have a written contract?
- Is the worker offered company benefits?
- Will the relationship between the worker and the employer be ongoing?
The answers to these questions can be very helpful in determining what type of worker you are. However, the IRS states that there is no “magic” formula; every case is unique, and each decision should be based on the specific circumstances of the relationship in question.
Additionally, in some cases, a worker and employer may have signed a contract stating that the worker is an independent contractor. The simple existence of such a document, though, does not automatically mean this is true. It is possible to be legally considered an employee in spite of such a contract if the other elements all indicate otherwise. The IRS says “the keys are to look at the entire relationship, and consider the degree or extent of the right to direct and control.”
Employee Misclassification Can Benefit Iowa Employers
Iowa’s office workforce development notes that misclassifying workers is a growing problem in the state. Employers can reap a number of benefits and save a significant amount of money by labeling a worker as an independent contractor, rather than an employee. Doing this aids employers by helping to:
- Avoid paying certain taxes
- Avoid paying workers’ compensation benefits
- Ignore some wage and labor laws
- Underbid competitors who consider all workers employees
It is illegal, however, to misclassify a worker, and employers who do so can be held accountable. They can face fines, interest on back taxes, and even criminal charges in certain cases. Importantly, they can be compelled to provide standard employee benefits, including workers’ compensation to employees incorrectly labeled independent contractors.
Disputing Your Employment Status After a Work-Related Injury
If you have suffered a work-related injury, you may be concerned about your eligibility for workers’ compensation benefits, especially if the company paying for your work claims you are an independent contractor. Fortunately, it is possible to dispute your status. Iowa Workforce Development operates a misclassification unit that investigates these cases. It can be possible to obtain medical care and wage replacement benefits successfully.
The experienced attorneys at Pothitakis Law Firm have helped many injured workers fight for the compensation they deserved, and they may be able to help you, too. Learn more about who we are and how we may be able to help by calling our Iowa office. You will speak with a member of our legal team and schedule a free, no-obligation consultation.