When people work as contractors or subcontractors, there is sometimes confusion, or even fraud, when it comes to payment of workers’ compensation benefits.
Traditionally, an employer maintains workers’ compensation insurance to cover workers injured in the workplace or made sick by a work-related illness.For contractors who work for others, like in construction, the picture looks different.
In Colorado, independent contractors are exempt from the workers’ compensation policy of the person for whom they provide service.Some employers take advantage of this by misclassifying their employees as contractors, and thereby avoid paying premiums to their insurer that would allow the workers to receive workers’ comp benefits if they are injured.
The factors that identify what an independent contractor is, and is not, have been the subject of court cases in recent years.The Colorado Department of Labor and Employment recommends that employers create a document with specific language to support their claim that the worker is a contractor, not an employee.
Once an employer can establish that a hired worker is an independent contractor, not an employee, the contractor has the responsibility to purchase their own workers’ compensation policy.So what happens when a contractor hires others?
Subcontractors And Workers’ Compensation
Construction is a great example for discussing the rights of subcontractors to workers’ compensation benefits.
When looking at a construction site, it might appear that most workers are self-employed or have loose working relationships with others, in addition to those who are full-time employees.Instead, a construction site might better be considered a network of relationships where the responsibility for payment of workers’ comp is tangible and required.
The Colorado Worker’s Compensation Act states that anyone who conducts business by contracting work out to others, including subcontractors, is considered an employer, more formally known as a “statutory employer.”
When an independent contractor hires others to perform work, like on a construction site, the contractor must obtain a workers’ compensation policy for those workers.If working alone, a contractor may also purchase their own workers’ comp policy, to ensure they are covered if they suffer an injury.
If a business hires a contractor with employees, it is the responsibility of the contractor to maintain workers’ comp insurance.If the contractor fails to do so, the business is responsible for the workers’ comp insurance on the subcontracted employees, because the business becomes the “statutory employer.”The business can then attempt to recover its costs of workers’ comp from the contractor who failed to do so.
If you work for a contractor and are injured on the job, it is important to understand that you should have access to workers’ comp benefits.If your contractor, or the business that hired the contractor, fails to provide insurance information to make a claim for benefits, speak with a workers’ comp attorney as soon as possible.
Experienced Adams County Workers’ Comp Lawyer Answers Your Questions
When you have questions about your workers’ compensation coverage, we have answers. The Law Office of John A. Anderson, Jr., LLC offers a free consultation to discuss your case and outline your options for moving forward with a denied claim or other benefit problem.Contact us or call (303) 880-7994 today.