New DOL Rule May Affect Workers' Comp for Independent Contractors
In January of this year, the Department of Labor – still under the Trump administration – announced a final rule under the Fair Labor Standards Act (FLSA) clarifying the standard for determining whether a worker is an employee versus an independent contractor. The standard that was created by this rule gave a significant amount of control to employers to classify workers as independent contractors, making it difficult for those employees to qualify for workers’ compensation benefits and other benefits the federal government requires under the FLSA. That rule went into effect on March 6, 2021.
With a new administration comes new standards, and the Department of Labor – now under President Biden – recently announced that rule is being withdrawn in order to protect employees and give them the benefits they are entitled to. The effective date of withdrawal was May 6, 2021.
The Independent Contractor Rule
Under the final rule, which was fully supported by the national business community, there were two factors that determined if a worker was an employee or an independent contractor. These were:
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The level of control the person had over their own work
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The opportunity the person had for profit or loss due to their own personal investment
If a determination could not be made based on one of the above factors, then the employer would make the decision based on:
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The level of skill that is involved in the job
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How permanent the working relationship between the employer and the individual is
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How the position relates to the overall business operation of the company
The general consensus was that this final rule was the opposite of states’ goals of discouraging companies from hiring independent contractors instead of creating permanent positions. While the rule did allow companies to offer independent contractors some benefits without affecting their contractor status, most companies generally hire contractors so they will not have to provide workers’ compensation insurance or other benefits. If you are an independent contractor who is injured while performing job-related duties, the law offers limited protection.
Independent Contractor vs. Employee
The legal argument over when an independent contractor is actually an employee has played out in multiple courtrooms across the country over the past several years. In the majority of these cases, the courts make their decisions based on the level of control the company has over the worker and whether there is enough control to establish an employer-employee relationship.
Contact a Will County Job Injury Lawyer for Help
In Illinois, if a person is injured on the job, just because the company has classified that individual as an independent contractor does not mean they will not qualify for workers’ comp. It is not up to the employer to make that decision, since the Illinois Workers' Compensation Commission has multiple factors that make that determination. A skilled Joliet, IL workers’ compensation attorney will be able to evaluate your case and determine if you should qualify for benefits. Call McNamara Phelan McSteen, LLC at 815-727-0100 to schedule a free consultation and find out about your legal options.
Sources:
https://www.dol.gov/agencies/whd/flsa/2021-independent-contractor
https://www.federalregister.gov/documents/2021/05/06/2021-09518/independent-contractor-status-under-the-fair-labor-standards-act-flsa-withdrawal