Most people in the workforce understand the basics of workers’ compensation. The insurance coverage offered by your employer helps to pay for numerous benefits such as medical bills, travel costs, and loss of wages while you recover from an injury at work. Every state has its own rules and regulations when it comes to workers’ comp benefits. In South Carolina, all employers who regularly employ four of more workers must carry workers’ compensation insurance. Without this beneficial coverage, employees injured while on-the-job would end up filing expensive lawsuits against their employer every time there was an accident, and the situation would be complicated and time-consuming. Greenville, SC workers’ compensation benefits help make what could be a difficult experience much easier for full time and part time employees. However, those who are independent contractors may have a more difficult time acquiring compensation for their injuries.
While most employers in South Carolina must carry workers’ compensation insurance for their employees, there are some cases where this coverage is not a requirement. The law states that any employer who regularly employs four or more individuals, either full time or part time, must carry workers’ compensation insurance. Since most companies have more than four employees, this means every employer in the state should provide these benefits to their workers. However, there are always exceptions to this rule. Employers who work in agriculture, for railroad companies, or businesses that have a yearly payroll less than $3,000 are exempt from the law. Independent contractors are another exception that can sometimes make the legal side of workers’ compensation complicated.
Greenville, South Carolina Workers’ Compensation Exception for Independent Contractors
Workers’ compensation is a no-fault system of benefits that offers coverage to employees when injured at work. Independent contractors are not often considered to be employees. They work for themselves from one project to the next for various clients. Since they aren’t employees, clients or bosses do not need to carry workers’ compensation on them. While most independent contractors are fully aware of this rule and understand the consequences of not having coverage, there are some employers who will take advantage of this exemption.
How Employers Can Use Workers’ Compensation Rules to Game the System
Employers who refuse to pay for workers’ compensation insurance, even though required to do so by South Carolina law, will often attempt to pass off their employees as independent contractors. This can lower their costs and eliminate their liability if one of their workers becomes injured at work. It’s a tricky loophole that many employees often find themselves in, especially if they work for a smaller company or are in a dangerous industry such as
This issue is known as “Employer Misclassification,” and it happens more often than you think. According to the Internal Revenue Service, employers across the United States misclassify millions of workers as independent contractors. While it is possible for this classification to occur in error, more often it happens so that the employer can lower labor costs and reduce or eliminate the need to pay their state and federal taxes.
The fact that some employers genuinely classify their employees as independent contractors by mistake, while there are others who do it on purpose, makes the matter even more complicated than it already is. Yet, in both cases, the misclassified employees are the ones who must deal with a loss of wages and expensive medical bills that they are unable to pay since they are ineligible for workers’ compensation insurance. This is also a problem for state, federal and local governments who endure a loss of revenue because of employers legitimately ignoring their obligations to pay taxes.
Employees recognized as independent contractors, and know that their employer is going against the Greenville, SC workers’ compensation laws need to take a stand and challenge this unfair treatment by hiring a workers’ compensation attorney to help them receive the coverage and fair compensation that they deserve.
How Does SC Define Independent Contractors?
An independent contractor is a worker who offers goods or services to another person or business under the terms of an agreement or contract. The contract includes an overview of the work outcome, payment schedule, due dates, and other vital details. The contractor retains control over how they supply the company or individual with their goods or services.
Independent contractors are not subject to the guidance or control of an employer aside from the mutually binding agreement between them. Essentially, a contractor will refer to their ‘employers’ as a customer or client. Independent contractors will typically have more than one client at a time and consider themselves self-employed.
The IRS Service Test
The Internal Revenue Service is involved in identifying misclassified employees since the error can result in a loss of tax revenue. They look at numerous factors to determine whether a worker is an employee of a business or if they are an independent contractor based on the following three categories.
The IRS looks at who has control over the worker, such as if the company has the right to control the worker, the deadlines, and quantity of work or does the worker have control over a number of goods they produce and when. If the company offers training for the worker, for example, this shows that the worker should follow the rules and guidelines for the company. This indicates that the worker is an employee and not an independent contractor.
When the IRS determines the financial side of the situation, they look at whether the outcome of the worker’s efforts is controlled by the person paying them. This can include everything from how the worker receives their payment, if their job-related expenses are reimbursed, or if the employer provides them with the tools they need to complete their work. An independent contractor can incur a monetary loss or gain all the profits from their own work.
Type of Relationship
The IRS will also look at the relationship between the employer and employee to determine if there is a misclassification. They may consider certain factors such as if there is a written contract involved or if the worker receives employee benefits such as a retirement plan or health insurance. They will also look at the type of work the employee provides and if it is a necessary part of the business for the future. If the goods or services offered appear to be only for temporary use, then it is likely that the employee is an independent contractor.
Contact Double Aught Injury Lawyers for Assistance with your Workers’ Compensation Case
Workers’ compensation rules and regulations are complex enough for regular employees. However, when someone falls into the gray area of being an independent contractor, things become even more complex. Misclassified employees identified as independent contractors, whether by accident or on purpose, have the right to file a claim against their employer and receive fair compensation following an on-the-job accident. The knowledgeable team at Double Aught Injury Lawyers can assist you with this issue. No employee should be denied workers’ compensation benefits if their employer is required to carry it. The workers’ compensation team at Double Aught Injury Lawyers for a FREE consultation.
Bryan Ramey is a Personal Injury Attorney who practices in the upstate of South Carolina. He graduated from The University of South Carolina School of Law, and has been practicing law for 27 years now. Bryan Ramey believes in representing the injured. Learn more about his experience by clicking here.