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Pam Lester
Senior Underwriter
Public Risk Underwriters
The debate continues in the workers’ compensation arena as employers struggle with the classifications of employee vs. independent contractor. Throw in the increasingly popular ‘leased employee’ and your head really starts to spin. Over the next few months, parks and recreation departments expand programs, public works and maintenance crews struggle to keep up with Mother Nature, and police and fire departments look for innovative ways to keep on top of the pulse of the community. All this can add up to substantial sums of money.
Do your part to not assume additional liability. Consider the following guidelines when bringing on personnel, vendors, and contractors.
Who is an “employee”?
It is any person who receives remuneration from an employer for performing any work or service.
Up to three corporate officers of a corporation or any group of affiliated corporations in the construction industry may elect to be exempt. Each officer must be a shareholder owning at least 10 percent of the stock of the corporation and must be listed as an officer with the Division of Corporations.
“Employee” includes an independent contractor working or performing services in the construction industry; a sole proprietor or a partner engaged in the construction industry; all persons being paid by a construction contractor, unless the subcontractor has a valid exemption.
Independent contractor status applies only to individuals not engaged in the construction industry. Independent contractor status applies only if the individual meets at least four of the six listed criteria defining an independent contractor.
1 |
Maintains a separate business with their own work facility, truck, and equipment |
2 |
Holds or has applied for a federal employer identification number |
3 |
Compensation is paid to a business and not an individual |
4 |
Must hold one or more bank accounts in the business entity’s name |
5 |
Most do work for any entity and does not have to complete an employment application to get the job |
6 |
Receives compensation for services rendered on a competitive bid basis or completion of task defined by the agreement, unless it says that an employment relationship exists |
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An individual who does not meet at least four of the criteria defining an independent contractor may still be presumed to be an independent contractor by meeting any one of seven listed conditions:
1 |
They will work for a specified amount and has control over their work |
2 |
They incur expenses related to their work |
3 |
Responsible for the completion of the work |
4 |
Paid a commission on a per job basis only |
5 |
Can incur a loss or profit for work performed |
6 |
Has continuing liability and business obligations |
7 |
Success or failure depends on the business receipts to expenditures |
An individual claiming to be an independent contractor has the burden of proving that he or she is an independent contractor.
The term “employer” includes employment agencies and employee leasing companies and similar agents who provide employees to other persons.
| Food for thought: |
| The case of Jerry Ware v. Workers’ Compensation Appeals Board, Bel-Air Country Club: |
Ware was a caddie who filed a workers’ comp claim for orthopedic injuries. Ware claimed employment but the Club contested, stating that he was an independent contractor who was paid in cash, had no set hours, and was free to work elsewhere. Initially, the Supreme Court denied employment, but on appeal, the decision was reversed. Among the reasons cited in the Appeals Court decision was the Club supervised dress, behavior, types of services; caddying was an integral part of the Club, plaintiff did not have his own business and the Club provided caddie rooms and lockers.*
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| Reed v. Yackel: |
| The Court of Appeals held that Reed was indeed an independent contractor because the work he performed was not viewed as integral to the employer’s business and he held himself out to the public as one who could be hired for general labor.* |
You must examine your subcontractors on a case-by-case basis but the safest way would be to require a Certificate of Insurance from the contractor’s insurance agent each time they perform work for you.
Remember that your workers’ compensation auditor will review your records and will pickup any uninsured subcontractors without hesitation. Make it your practice to always use contractors who can provide you with proof of workers’ compensation and general liability. Better safe than sorry!
*References: Florida Senate Bill 50-A Workerscompinsider.com
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