Determining employment status is crucial in resolving conflicts and issues around many important things, like workers’ compensation (WC) coverage, wage and hour law, pension eligibility and more.
Employers often utilize independent contractors during busy periods throughout the year, or to work on special assignments that may or may not be part of the employer’s regular business.
For independent contractors, employers do not pay employment taxes, nor do they withhold federal, state and local taxes from payments made to independent contractors. Additionally, independent contractors are not included in an employer’s benefits program, they are not eligible for unemployment insurance benefits, and they are also exempt from wage and hour and employment discrimination laws.
Why does this matter, you may ask? The circumstances of your work and your relationship with your employer may actually classify you as an employee under the law – and as a result, entitle you to specific employee benefits. Yet your employer may be treating you as an independent contractor, and in doing so, infringing on your rights.
When it comes down to determining your employment status – i.e., whether you are an employee or an independent contractor – chances are much better than average that, by law, you aren’t an independent contractor, even if your employment contract explicitly states that you are.
It probably seems counterintuitive to you that an employment contract may not mean what it says. Yet the issue of control – specifically, the right to exercise control, whether used or not – has more to do with determining your work status with a given employer than an actual signed agreement.
There is a great deal at stake for you and your loved ones in this, so let’s look closely at the issue and try to make sense of it all.
What constitutes an employer/employee relationship?
With regard to employment law, federal law governs in some situations, but resolutions often hinge on state law. According to Ohio law, a valid employer-employee relationship exists when a person who hires an individual to perform services maintains the right to exercise control over the manner and means by which the individual performs his or her services. This right of control – and again, it may or may not ultimately be exercised – is the single most important factor in determining the employer-employee relationship.
For example, according to OH Admin. Code Sec. 4141-3-05, the right to discharge a worker at will and without cause is strong evidence of the right to exercise direction and control.
What effect does an employer-employee relationship have on Workers’ Compensation coverage?
A valid employer-employee relationship must exist for an individual to be eligible for WC coverage. In ascertaining whether or not someone is covered as an employee under state WC laws, the state will look to whether that worker has the right of control—and also whether that worker is a member of the class targeted for protection by specific rules designed to protect employees. For example, someone who works in an employer’s factory and utilizes that employer’s equipment would be more likely to expect the employer to take the responsibility for accidental injuries and would have a greater chance of being considered an employee rather than an independent contractor.
However, problems occur when individuals who are technically employees are treated by employers as independent contractors. While doing good, honest business is always the best practice, it’s not hard to understand what motivates some employers to engage in this practice. The benefits of denying your status as an employee are sizeable—as mentioned earlier, for independent contractors, employers do not pay employment taxes, and nor do they withhold federal, state and local taxes from payments made to independent contractors. Additionally, independent contractors are not included in an employer’s benefits programs, they are not eligible for unemployment insurance benefits, and they are also exempt from wage and hour and employment discrimination laws.
How can you determine your employment status?
In matters of employment and WC law, courts utilize a method of analysis called the totality of the circumstances in which decisions are based on all available information rather than clearly defined rules or standards. This leaves considerable room for interpretation and legal maneuvering on the part of employers and their legal team. Therefore, if you believe you are being denied WC benefits to which you are legally entitled, we highly recommend consulting with an experienced Nager, Romaine & Schneiberg Co., L.P.A. attorney who understands WC law inside and out and has a track record of success defending workers in matters relating to WC claims and employment status.
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All Ohio residents have a constitutional right to workers’ compensation claims in the state of Ohio. Employers cannot simply walk away from their obligations under the law.
If you believe your WC rights are being violated, contact Nager, Romaine & Schneiberg Co., L.P.A. Our experienced WC attorneys fight side by side with workers; we will aggressively pursue your case and work to help you or your loved one obtain the benefits to which you are entitled under the law.
Additionally, if you have current WC claims and are getting ready to retire, or if you plan to sign a voluntary separation agreement, your rights are at stake—retirement can affect WC claims, and you need to seek immediate legal advice. Finally, in the event you are hurt at work, or terminated after reporting a workers’ compensation injury, you need to seek immediate legal advice. Contact the Ohio workers comp lawyers at NRS Injury Law by filling out our No-Risk Consultation form, or call (855) GOT-HURT and speak with one of our trained staff members.