When an employee is injured on the job, what follows is fairly straightforward. The employee will seek treatment and file a workers’ compensation claim with L&I. This will usually result in L&I covering all necessary medical expenses; and if the employee is unable to work, the employee will receive wage replacement benefits. For injuries that are more serious that result in disability or death, the employee may qualify for partial or total disability benefits. In the case of a workplace fatality, the employee’s dependents may receive various death benefits.
This is all a function and consequence of the employer and employee dutifully paying into Washington State’s workers’ compensation insurance program, and receiving benefits of being a “covered worker” under the program. The employer’s primary responsibility, meanwhile, is limited to supporting the employee and L&I in the administration of insurance benefits, and in bringing the employee back to work when the employee is ready.
But what happens when an independent contractor is injured? If the contractor is not covered by workers’ compensation insurance, it gets complicated and messy, involving a series of L&I investigations and consequences.
Here’s a summary/sequence of what happens when an independent contractor is injured on the job:
- If the independent contractor seeks medical treatment at a hospital for her on-the-job injury, it will initiate an L&I claim. This claim will in turn trigger an investigation by L&I into whether the contractor is entitled to workers’ compensation benefits.
- When an L&I investigation occurs, there will be one of two possible results. L&I will either determine that the worker was a legitimate bona/fide contractor, and that the contractor is therefore not entitled to workers’ compensation benefits i.e. an exempt independent contractor. Or L&I will determine that the worker was misclassified as a contractor, and is actually an employee/covered worker who is entitled to benefits.
- If the independent contractor is determined to be an employee/covered worker, even though the contractor was not covered by workers’ compensation insurance, L&I will grant the misclassified contractor all benefits she would be entitled to as an employee.
- Based on what we’ve seen, it seems that if there is an on-the-job injury involving an independent contractor, L&I’s preference/objective is to find the injured worker to be a covered worker, in order to grant them benefits…particularly if it was a serious injury. And after determining the injured worker to be a covered worker, L&I then goes after the putative employer to hold it responsible.
- In “going after” an employer, L&I will seek to do the following: a) make the findings necessary to determine the injured worker to be a covered worker; b) conduct a full audit of the employer’s business to try to find out if other contractors are misclassified, and assess the employer for other misclassifications; c) for serious injuries, it will assess a Claim Cost Penalty against the employer, which is the cost of providing benefits to the injured contractor. In case of serious injuries or death, a Claim Cost Penalty can be the hundreds of thousands of dollars L&I anticipates paying out in medical treatment or as death benefits.
In view of the above and the obviously very serious consequences that follow when a non-exempt independent contractor is injured on the job, we recommend the following:
First, when classifying somebody as an independent contractor, consider that an on-the-job injury will likely trigger the above sequence of events that will require you to defend your independent contractor classification, or face consequences of an agency that is highly motivated to find that a worker was misclassified. It’s a serious part of classifying somebody as an independent contractor that companies don’t think enough about.
Second, if you’re in a line of business where a contractor is likely to get injured, and where L&I will be inclined to find the injured worker to be a covered worker, you may want (indeed, need) to protect yourself and your business, as well as the contractor, by voluntarily treating the contractor as a covered worker for workers’ compensation purposes. This way, if there is an on-the-job injury, you know your business and contractor are covered. See our article on Hybrid Independent Contractors discussing when certain independent contractors can/should be treated as covered workers.
Third, as soon as an independent contractor is injured on the job, involve an experienced attorney immediately, as there are a series of steps that can be taken to avoid/mitigate risks.
Getting the above right can ensure that both you and your independent contractors are not devastated by an on-the-job injury.