Michigan lawyer explains differences between employees and independent contractors when it comes to payment of workers’ comp benefits.
Michigan adopted its first workers’ comp law in 1912. It was designed as a compromise between labor and business. Employees hurt on-the-job are guaranteed medical treatment and lost wages regardless of their fault. In exchange for these guaranteed benefits, employers are shielded from civil lawsuits. But what about independent contractors workers’ comp claims in Michigan?
Workman’s compensation is a type of insurance that employers are required to purchase for their employees. It is intended to protect both parties in the event of a workplace accident. Benefits are paid regardless of fault but are very limited. Employers get protection from civil lawsuits seeking damages such as pain and suffering.
One of the biggest problems in the system is employee misclassification. This is when an employer intentionally pays wages as non-employee compensation (Form 1099). An employee cannot become an independent contractor simply because his or her boss decides it is so.
Michigan law says an employee is every person performing service in the course of the trade, business, profession, or occupation of an employer at the time of the injury, if the person in relation to this service (1) does not maintain a separate business, (2) does not hold himself or herself out to and render service to the public, and (3) is not an employer subject to this Act. A 20-factor test outlined by the IRS in Revenue Ruling 87-41 will also be used to determine employment status.
Does workers’ comp cover independent contractors?
Independent contractors are not covered under workers’ comp in Michigan. These individuals are on their own for medical treatment and lost wages should a workplace accident occur. However, an independent contractor is permitted to file a lawsuit based upon negligence and can seek economic and non-economic damages.
Watch out for employers who game the system by calling everyone an independent contractor. This is done to avoid legal responsibilities and reduce insurance premiums. It will be up to the magistrate to determine employment status and if benefits should be paid.
Do you need workers’ comp for independent contractors?
Michigan law requires employers to have workers’ comp insurance for employees only. It takes 1 employee working 35 hours or longer for 13 weeks or more to trigger this requirement. Failure to have workers’ comp could result in civil and criminal penalties. Workers’ comp benefits must also still be paid.
In Michigan, employers who fail to purchase mandatory insurance are still responsible for payment of workers’ comp benefits even if they misclassify someone as an independent contractor. Officers and directors of the company can be personally liable. Additional penalties include a $1,000 per day fine and imprisonment of up to 6 months as a criminal misdemeanor.
Injured at work? Contact our lawyers for a free consultation
If you are an independent contractor and were injured in Michigan and you have questions about your workers’ comp claim, call now at (855) 221-2667 or fill out our contact form for a free consultation with an experienced lawyer. There is absolutely no cost or obligation. We’re here for you.
For more than 40 years, our lawyers have been helping people like you who have suffered from on-the-job injuries in Michigan. We understand the physical, emotional, and psychological hardships you are experiencing from your accident. We also have the skill, experience, and know-how to protect you and get you the best possible payout amount for your case.
To see what our own clients have to say about the caring, compassion, and communication they received from us, you can read in their own words about their experience here on our testimonials page from clients we have helped.
Remember, every work injury claim and settlement is different and must be negotiated on its own merits. Do not accept any payout amount without fully understanding your legal rights.
Michigan Workers Comp Lawyers never charge a fee to evaluate a potential case. Our law firm has represented injured and disabled workers exclusively for more than 40 years. Call (855) 221-2667 for a free consultation today.
Related information:
Can I Sue My Employer For Pain And Suffering Damages In Michigan?