Workers' Compensation for Independent Contractors and Gig Workers

The American economy is changing. Increasing numbers of workers are independent contractors or work in the gig economy. They perform tasks like offering rides, food delivery, or tasks for hire. Unlike most traditional employees, gig workers do not often have access to certain employer-provided benefits, including workers’ compensation insurance.

Understanding how workers’ compensation laws work is critical if you’re a gig worker or an independent contractor. That way, you can make plans to protect yourself.

We explore independent contractors’ and gig workers’ eligibility for workers’ compensation benefits and the challenges faced by gig workers in claiming workers’ compensation. We also discuss the legal definitions and legal protections of an employee vs. independent contractor as it relates to certain benefits. If you need legal advice, a local workers’ compensation lawyer can help.

Legal Definitions: Employee vs. Independent Contractor

In the traditional labor market, employers provide certain benefits to full-time workers. This can include health care or insurance coverage for employees under a workers’ compensation policy. Workers’ comp insurance is a program established under state law to cover an injured worker’s medical bills and lost wages if they’re injured on the job.

When you make a workers’ compensation claim, you forfeit the right to sue the company for any liability relating to the injury. Whether you can file a workers’ compensation claim depends on your work relationship with the company; specifically, whether you’re an employee or an independent contractor matters.

Independent Contractor

Self-employed workers and those who do gig work full-time are becoming increasingly common. These workers are typically considered independent contractors. The circumstances of each job determine if a worker is an independent contractor.

Basic questions can help you determine whether you’re an employee or an independent contractor. These questions include:

• Do you have control over how the work is performed?
• Do you set your schedule?
• Do you provide the tools for the job?
• Do you control the hours you perform the work?

Affirmative answers to these questions can signal that you are an independent contractor. California, for example, has a test called the ABC test to determine whether a worker is an employer or an independent contractor.

Food delivery drivers with DoorDash, subcontractors with Amazon, or rideshare drivers with Lyft or Uber have all been found to be independent contractors.

Misclassification

Some employers will misclassify workers as independent contractors to avoid obligations that come with employee status. Employer obligations include paying employees overtime, offering workers’ compensation insurance, and following a minimum wage.

If you believe an employer is misclassifying you, holding them accountable is easier than ever. The U.S. Department of Labor’s Wage and Hour Division has cracked down on misclassification.

Laws and Protections for Independent Contractors

Working as an independent contractor comes with autonomy and flexibility. Choosing to work as an independent contractor in the short term can seem beneficial. You will likely earn a higher wage. But in the long term, there are tradeoffs.

Generally, the legal protections for independent contractors are dramatically less than for “employees.” The protections available depend on your state and the platform or company you work for.

Independent Contractors Have Minimal Protections

The legal rights of independent contractors vary by state and tend to be minimal. But independent contractors are protected under federal laws like the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA).

Independent Contractors Are Not Usually Covered by Workers’ Compensation

Traditional workers benefit from the safety net of workers’ compensation. However, workers’ compensation doesn’t cover all workers. Independent contractors and gig workers are not usually eligible for workers’ compensation insurance coverage because they aren’t technically workers.

In California, ridesharing giants Uber and Lyft recently won a legal battle to overturn a state law that required them to classify their drivers as full-time employees. Such a classification would have cost the companies hundreds of millions in payroll taxes, workers’ compensation coverage, health care, and unemployment insurance. Worker classification is of critical importance to businesses. It also must be a concern to you as an independent contractor or gig worker.

How Independent Contractors Can Seek Compensation

Independent contractors must find alternative insurance solutions for work-related injuries. You should explore coverage options that will allow you to receive adequate compensation if you experience work-related injuries. Like most insurance, you must ensure coverage before the event.

If you’re injured while on the job, inform the company about what happened. Ask about any compensation available. Most companies want their gig workers to remain healthy and working. They may have a modified program that can help. Although such programs won’t likely be as robust as full workers’ comp, they may provide relief.

If you receive an unsatisfactory answer, ask for a legal opinion from a workers’ compensation attorney. They can determine whether any remedies are available through workers’ compensation insurance or other avenues, such as filing a personal injury lawsuit.

Tips for Protecting Yourself as a Gig Worker

As a gig worker or independent contractor, you must take steps to protect yourself through adequate insurance coverage. Before an injured worker is employed, independent contractors can explore getting a workers’ compensation insurance policy. Depending on the state, you may be able to buy insurance from an insurance company and pay the premiums or opt into a state-run program.

In addition to seeking out workers’ compensation insurance, you should make sure you have adequate coverage for the following:

• Health insurance
• Short-term disability insurance
• Professional liability insurance
• General liability insurance

Your insurance needs will depend on the type of work you do.

Get Legal Advice From a Workers’ Compensation Attorney

An experienced local workers’ compensation lawyer can address your particular legal needs. They can explain your legal rights relating to workers’ compensation. Take the first step now.