Difference Between An Independent Contractor vs. An Employee: What Is Your Responsibility For Worker
Sometimes it is difficult to distinguish whether a worker is an employee or an independent contractor. Therefore, the simple fact of having an agreement to conduct the project as an independent contractor does not make it valid. In California, compensation laws related to employee status are different from laws to independent contractors. Therefore, it is important to know the laws in the state where you are currently located.
A written contract will not establish a relationship between the contractor and the worker. For instance, if you were a contractor and decided to hire a subcontractor with his own employees for a project. In an event of an injury at work: Are you responsible for workers’ compensation insurance? Yes, if your subcontractor does not does not have a valid license.
For example, the State of California has established that a subcontractor can only be considered an independent if licensed, as required by Chapter 9 of Division 3 of the Business and Professions Code. Therefore, if a subcontractor is not licensed and gets to performs work that required it, the subcontractor is an employee of the contractor. Therefore, you would be responsible for workers’ compensation benefits on the occasion that a worker of your subcontractor will become injured.
Not all occupations have an extended amount of licenses such as a construction industry. For this reason, California has several test to determine if a person is an employee or an independent contractor. No test fully determines the factors, but can help guide you in the right direction. A crucial factor is determining if you have the right to direct and control employees. Therefore, if you have the right to direct the work conducted by the independent contractor, you would be consider his employer making you liable for any future injuries.
Some of the tests you could used are:
- If the person performing the service has independently chosen the burdens and benefits of a private employee.
- If the person performing the service is occupied / or in different occupations or businesses compared to yours.
- The person performing the service provides different skills required in the particular occupation.
- If the employer or the person performing the service supplies the instruments, tools,
and the place of work.
- If the person performing the service has the right to hire and fire his employees.
Remember, the test above is not the only determining factor, and it is always a great idea to consult with a professional before commencing a project.
Protect your future. If certain jobs require a license, insist on seeing the license and keep a copy for your records. Always contact the State Contractor's Licensing Board to verify if the license is valid for the type of work they will conduct, and obtain the original certificate of Workers' Compensation Insurance from all contractors and subcontractors that they have.
If the occupation does not require a license, or if you are unsure about an employee's status for any reason, contact your local State Fund office and speak with a representative. Our agency has accumulated years of experience in Workers' Compensation, for this reason send us a text or talk to one of our representatives and obtain a quote easily.