Workers’ Compensation Eligibility: Employee vs. Independent Contractor

One of the first questions you must consider in your workers’ compensation case is whether you are an employee or an independent contractor. In Minnesota, this distinction is very important. One of the most fundamental requirements of workman’s compensation is that the worker is in an employee-employer relationship. Usually, this means that the worker is in an at-will employee who can be fired or quit without legal repercussions. With an independent contractor, the worker does not have an employee-employer relationship. Instead, the relationship is often based on a contract and the independent contractor can face a lawsuit if he does not complete his end of the bargain. Because there is no employee-employer relationship, an independent contractors falls into the portion of Minnesota workers who are not entitled to workman’s compensation benefits.

However, it is important to understand that whether you are an employee or independent contractor may not be as clear cut as your employer wants you to believe. Even if your employer calls you an “independent contractor,” the court has the power to decide that in reality you were an employee. This is possible because the court examines the actual conduct of the parties, not arbitrary titles. Generally, when deciding whether a worker is an employee or independent contractor, the court will look at the actual conduct of the parties in the following five categories:

  Characteristics of Employee Characteristics of Independent Contractor
Control

 

Does your employer control the means and manner of your work? Are you required to follow instructions about when, where, and how you will do your work?

 

 

An employee must follow the employer’s instruction regarding when, where, and how the work must be completed. The employee may have some input and may even decide when, where, and how, but he/she must ultimately comply with the employer if it prefers an alternative means or method.

 

 

An independent contract usually has far more flexibility than an employee. The independent contractor often controls when the work will be done, where it will be done, and how he/she will get the project completed.

 

Payment

 

Who determines the value of your services? Are you paid on a regular schedule? Are taxes and deductions taken from your check?

 

 

An employee usually does not determine the value of their service. Their paychecks come at regular intervals, such as bi-weekly, and taxes and deductions are already removed. Employees also do not bare the risk of the business, nor does he/she get profits.

 

 

An independent contractor often negotiates the value of their work with the employer and receives payment without taxes or deductions taken out. Payments usually occur as negotiated. The independent contractor takes on the risk of the job, and therefore, also stands to gain profits if it is successfully completed.

 

Tools and Materials

 

Are you required to supply your own tools and materials, such as cars or equipment?

 

An employee is usually not required to supply anything for their employment. A mode of transportation to get to/from work is not a required tool unless your employer requires you to travel during the day in your own vehicle.

 

 

An independent contractor will likely supply his/her own tools and is responsible to replace them when broken.

Premises

 

Does your employer control the premises where the work is performed?

 

 

An employee has very little to no control over the premises where the services are performed.

 

An independent contractor generally has his/her own place of business and controls the premises.

Discharge

 

Can your employer sue you for breach of contract if you terminate the relationship? Is your employment at-will?

 

An employee can usually be fired at-will. Both the employee and employer often have the right to terminate employment without incurring legal liability.

 

 

An independent contractor and employer have usually negotiated an agreement that creates legal liability if either terminates the relationship early or the work is not performed.

 

 

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