I own a design firm, and we regularly employ freelance designers and photographers. Some work for us sporadically and others work for us on a regular basis. What are my responsibilities regarding liability and workers’ compensation?
In California, employers do not have to cover freelance, independent contractors with workers’ compensation insurance.
That being said, according to the Department
of Industrial Relations, employers often improperly classify
their employees as independent contractors to avoid paying
payroll taxes, minimum wage or overtime, or complying with other
wage and hour requirements such as providing meal periods and
rest breaks. As potential liabilities and penalties can be
significant, it is important that each relationship be thoroughly
researched and analyzed before classifying an individual as an
independent contractor and not an employee.
The Division of Labor Standards Enforcement presumes that the worker is an employee per California Labor Code Section 3357. However, the actual determination of whether a worker is an employee or independent contractor depends upon a number of factors. One of the more significant factors is whether the person to whom service is rendered has the right to control the worker, the work being done and the manner and means in which it is performed. For more insight into applying the “multi-factor” or the “economic realities” tests which help determine employee status, take a look at what standards were adopted by the California Supreme Court in the case of S. G. Borello & Sons, Inc. v Dept. of Industrial Relations (1989) 48 Cal.3d 341.
Even if an employer decides they have an independent contractor and are not required to provide workers’ comp, it might still be in the employer’s best interest to provide it since otherwise they may be opening themselves up to potential liability. Typically, if a case goes to trial, the court will often sympathize with the injured individual.
With that in mind, employers should shop around for an insurance carrier that best meets their needs. Cost is one consideration, but other factors include services provided, ease of access to claims adjusters and doctors in the network. Employers may purchase the workers’ comp insurance from the State Compensation Insurance Fund or from a private insurance company.
Workers’ compensation insurance provides six basic benefits:
- Medical Care: Prompt and effective medical treatment
- Temporary Disability Benefits: Payments employee receives if they can’t work while recovering
- Permanent Disability Benefits: Payments employee receives if they don’t recover completely
- Supplemental Job Displacement Benefits Or Vocational Rehabilitation: Vouchers to help pay for retraining or skill enhancement if employee doesn’t recover completely and doesn’t return to work
- Death Benefits: Payments to an employee’s children or other dependents if employee dies from a job injury or illness.
Sometimes a disagreement can arise between you and your employee over issues such as whether the injury was sustained on the job or how much in benefits they are entitled to receive. However, the vast majority of workers’ comp claims are resolved without any problems. When a dispute arises, the Division of Workers’ Compensation can help resolve it through its Information and Assistance Unit or by going before a judge at one of the division’s 23 local district offices plus satellites.
There are several excellent resources that provide more details about California’s workers’ compensation laws. Employers should review the California Department of Industrial Relations - Division of Workers Compensation website. Visit the Sacramento County Public Law Library website for a complete list of resources available at the law library.
Do you have a question for the County Law Librarian? Just email firstname.lastname@example.org
Check back next week for more on workers’ compensation in Steven Yoder’s November feature on captive insurance. Tired of the wait? Become a print subscriber!
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