In New Jersey, the workers’ compensation system provides no-fault financial benefits to employees who suffer a work injury or occupational illness. But does workers’ compensation extend to independent contractors? This question is becoming increasingly important as the economy has greater numbers of freelance or “gig” workers. However, a worker’s right to workers’ compensation benefits often comes down to how they are classified by their employer.
Independent Contractors vs. Employees
An employee refers to a worker who usually works exclusively for their employer and is dependent on their wage or salary for income. Conversely, an independent contractor is someone who holds themselves out as providing a service to multiple different clients. Employees are paid via a W-2 form, with the employer required to withhold income and FICA taxes and pay payroll taxes for their employees. Independent contractors are paid via a 1099 form, with no taxes withheld from the money paid to the contractor. Employees are also entitled to wage protections, such as minimum wage and overtime, while independent contractors have no such protection.
How to Determine If a Worker is an Employee or an Independent Contractor
Under New Jersey law, workers are presumed to be employees rather than independent contractors. However, some employers choose to classify their workers as independent contractors to avoid the expenses imposed by minimum wage/overtime, payroll taxes, or workers’ compensation. Courts use a test that looks at several factors to determine if a worker can be validly classified as an independent contractor. These factors include:
- The worker has and will continue to operate without the employer’s control or direction over the means of how the worker completes their job
- The services provided by the worker are not part of the company’s usual course of business
- The worker is normally engaged in an independent business or occupation, holding themselves out to be available to perform the same kind of work for other clients or customers
If all these factors are met, a worker can usually be properly classified as an independent contractor. Normally, how the worker is classified in their written agreement with an employer has no bearing on the analysis of their status.
Can Independent Contractors Receive Workers’ Comp?
In New Jersey’s workers’ compensation system, only employees are entitled to workers’ compensation benefits from their employer. Independent contractors may not seek workers’ comp benefits from the organization that hired them to do work. However, contractors may still be able to receive workers’ comp benefits after suffering an injury or illness in the course and scope of their work.
First, because independent contractors are intended to be in business for themselves, they might purchase workers’ compensation insurance for their own business and purchase coverage as an owner of the business. However, for someone working as a “freelance” independent contractor, this may not be financially viable.
An independent contractor may also be entitled to workers’ comp from the organization that hired them if the contractor can show that they have been misclassified as an independent contractor. If the contractor should have been classified as an employee, they can file a workers’ comp claim.
Contact a Freehold Personal Injury Lawyer to Discuss Your Workplace Injury Case in New Jersey
Were you or a loved one injured due to a workplace accident in New Jersey? Don’t let the medical bills pile up while you wait for the negligent party or their insurance company to do the right thing. Right now, you need an aggressive workers’ comp attorney on your side, fighting to get you the compensation you need, want, and deserve. The skilled attorneys at the New Jersey Workers Compensation Lawyer represent clients injured in Toms River, New Brunswick, Fort Lee, Freehold, and throughout New Jersey. Call (934) 200-5372 or fill out our online contact form to schedule a free consultation about your case. We have an office conveniently located at 82 Court Street Freehold, NJ 07728, as well as offices in Toms River and New Brunswick.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.