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Worker misclassification is bad news for those injured on the job

In the past, when a person was injured on the job it was usually clear that there would be workers’ compensation benefits available to compensate the injured employee. This is because statutes requiring employers to pay workers’ compensation insurance have long been in place. However, changing employment trends have made it so that more and more often, injured workers are finding themselves without workers’ compensation coverage for the care they may desperately need.

Economists call these new employment practices “contingent employment,” and they are creating more inequality and insecurity for the American workforce. Contingent employment refers to any type of employment in which the employee is not kept on the employer’s standard payroll. This includes contract work, temp work, and part-time work. These types of workers are often excluded from certain rights, such as wage benefits or workers’ compensation benefits.

According to a professor at the University of North Carolina, the increase in employers’ use of contingent work structures for their employees has significantly increased rates of job insecurity.

One of the most damaging forms of contingent employment is misclassifying workers as independent contractors. Both federal and state laws have established specific tests to determine when a worker is an independent contractor. Many employers are classifying workers as independent contractors even though they do not meet these standards. Doing this is tempting for employers because there is little enforcement and they can save up to 30 percent on payroll costs by simply issuing the contractor a 1099 at year’s end and not paying any payroll taxes whatsoever, including workers’ compensation insurance. 

Independent contractors, including those in the trucking, construction, and package delivery industries, are particularly vulnerable to the dangers of workplace accidents. Many workers in these fields experience high levels of stress on the job and may be fearful of reporting dangerous working conditions because of their temporary or limited employment status. Without workers’ compensation benefits, these workers could face critical issues if they are injured in an accident.

Because matters relating to workplace accidents and worker classification are complicated, it is advisable for a person who has been injured on the job to seek the advice of an experienced workers’ compensation attorney. 

Source: The American Prospect, "Workers on the edge," David Bensman, April 7, 2014

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