What factors decide if a person is an employee?

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IRS revenue ruling 87-41 and the factors used to determine employment status under workers’ compensation in Michigan.

It seems like the issue of employment status comes up on a regular basis. Many of our clients get called independent contractors when they are in fact employees. This can make all the difference when claiming workers’ compensation benefits.

Employee misclassification is a big problem in Michigan. Some businesses intentionally pay wages as non-employee compensation (Form 1099) to avoid purchasing workers’ compensation insurance.

Amendments to Michigan’s Workers Disability Compensation Act in 2011 changed who is considered an employee. On and after January 1, 2013, services are employment if the services are performed by an individual whom the Michigan Administrative Hearing System (MAHS) determines to be in an employer-employee relationship using IRS revenue ruling 87-41.

This is a departure from the old test that looked at whether a person maintained a separate business, held themselves out to the general public, and was an employer subject to the act.

We have noticed some confusion on this issue. The United States Court of Appeals found the amendatory language did not necessarily replace the older test. Its opinion seems to permit a hybrid analysis.

A recent decision from the Board of Magistrates found the amendatory language clear and unambiguous simply requiring application. It provided a good summary of the factors and showed how they apply.

Here is a list of the 20 factors contained in IRS revenue ruling 87-41: (1) Instructions; (2) Training; (3) Integration; (4) Services Rendered Personally; (5) Hiring, Supervising, and Paying Assistants; (6) Continuing Relationship; (7) Set Hours of Work; (8) Full Time Required; (9) Doing Work on Employer’s Premises; (10) Order of Sequence Set; (11) Oral or Written Reports; (12) Payment by Hour, Week, Month; (13) Payment of Business and/or Traveling Expenses; (14) Furnishing of Tools and Materials; (15) Significant Investment; (16) Realization of Profit or Loss; (17) Working for More Than One Firm at a Time; (18) Making Service Available to General Public; (19) Right to Discharge; (20) Right to Terminate.

We recommend speaking with an experienced attorney if workers’ compensation benefits have been denied based upon your employment status.

Michigan Workers Comp Lawyers never charges a fee to evaluate a potential case. Our law firm has represented injured and disabled workers exclusively for more than 35 years. Call (855) 221-2667 for a free consultation today.

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Author Bio Jeffrey Kaufman

Author
Jeffrey E. Kaufman
Michigan Workers Comp Attorney

Jeffrey E. Kaufman has extensive experience in workers compensation cases and has recovered millions of dollars in benefits for his clients. He believes all injured workers deserve to be on equal footing with insurance companies and employers, and fights tenaciously so their rights are secured and protected.


“Jeff also helped me with getting my Blue Cross bills paid. I would absolutely recommend him and the whole firm. Jeff and the firm did everything they were supposed to do for me and my case.”
Ricardo Perfetto

Hundreds of 5-Star Reviews

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Get Help From our Michigan Workers’ Comp Lawyers Today

You’re not alone. Our Michigan workers’ comp lawyers have been called the best in the state, and our clients love how they’re treated with care, respect, and responsiveness. We will give you the time you need, we will explain your legal rights, and we will always treat you with respect.

Our workers’ compensation and Social Security disability lawyers always put your needs first. Get to know your legal team.

Our attorneys post regularly about common issues related to workers’ comp, including common injuries, settlement calculations, laws, and more.

Injured? It’s Time to Get Some Answers

Don’t let the insurance adjuster push you around. Request your free consultation today.

"*" indicates required fields

This field is for validation purposes and should be left unchanged.

Our attorneys post regularly about common issues related to workers’ comp, including common injuries, settlement calculations, laws, and more.

Our workers’ compensation and Social Security disability lawyers always put your needs first. Get to know your legal team.