Are Independent Contractors Eligible for Workers' Compensation in Santa Ana?

California has a comprehensive workers' compensation system that provides benefits for employees injured on the job. But independent contractors are generally excluded from coverage. In this post, we’ll overview the system and discuss the complex rules around contractor eligibility in Santa Ana.

Overview of California Workers' Compensation System

What is Workers' Compensation?

Workers' compensation is a mandatory no-fault insurance system required by California Labor Code Section 3600. It is paid for by employers and provides benefits for workers injured on the job. Benefits include medical treatment, partial wage replacement, vocational rehabilitation, and death benefits.

What Types of Injuries are Covered?

Workers' compensation covers physical and mental injuries arising out of and in the course of employment. This includes work-related injuries and certain occupational diseases.

Who is Eligible for Benefits?

Generally, employees are covered by workers' compensation. Independent contractors are excluded, with some exceptions.

The rules around independent contractor eligibility can be complex. Whether a contractor qualifies depends on the specific details of their work arrangement. We'll analyze this issue more below.

Independent Contractor Status in California

The Common Law Right to Control Test: California historically used the common law "right to control" test to determine if a worker is an employee or independent contractor. This examines the level of control exerted over the details of the work, based on Borello factors like supervision, hours, and integration into the business.
Statutory Changes to the Test: Laws like AB 5 codified parts of the common law test into statute. This created a high bar for companies to prove a worker is an independent contractor not under their control.
Proving Independent Contractor Status: The burden is on the company to show an independent contractor classification is proper. This requires satisfying all parts of the stringent statutory test.

Exceptions Where Independent Contractors Can Get Benefits

"Statutory Employees"

Some workers like construction truckers and loaders are deemed "statutory employees" eligible for comp regardless of the control test.

Contracts for Professional Services

Licensed professionals like doctors and lawyers have separate tests based on their profession rather than company control.

Business Executives and Limited Partners

True company officers and limited partners are theoretically ineligible for comp. But their status can be challenged if exerting significant operational control.

Impact of Misclassifying Employees as Independent Contractors

Benefits Denied to Misclassified Workers

Misclassifying employees as independent contractors denies them critical protections and benefits including:

Ineligibility for workers' compensation benefits – Employees injured on the job are entitled to medical treatment, temporary disability payments, permanent disability ratings, supplemental job displacement vouchers, and more. Misclassified contractors do not receive these benefits.
No unemployment insurance – Employees who lose their job through no fault of their own can collect unemployment benefits. Misclassified contractors cannot collect unemployment when their work ends.
No state disability benefits – Employees can get partial wage replacement through the state disability insurance program if they suffer an illness or injury off the job. Misclassified contractors do not qualify for these benefits.
No union protections – Employees have rights under federal labor laws to organize, collectively bargain, and engage in concerted activity. Independent contractors lack these legal protections.

Penalties for Employers

Intentionally misclassifying employees as contractors carries severe consequences for employers including:

Fines for misclassification and premium evasion – State agencies can levy fines of $5,000 to $25,000 per violation when employers are found to have intentionally misclassified employees as contractors to avoid premiums and taxes.
Lawsuits by workers seeking proper benefits – Misclassified employees can sue their employer to recover the benefits they should have received, like workers' compensation and overtime pay. This exposes the employer to civil liability.
Tax liability for unpaid payroll taxes – By treating employees as contractors, employers avoid payroll taxes for Social Security, Medicare, unemployment insurance, and more. This can lead to tax bills with penalties and interest when misclassification is discovered.

Get the Compensation You Deserve After a Workplace Injury

If you are an independent contractor injured on the job in Santa Ana, you may still be eligible for workers' compensation benefits. The laws are complex, so contact the experienced legal team at Ufkes & Bright for a free consultation.

Our attorneys have more than 50 years of combined claims experience and a rich history of success achieving substantial settlements for our client’s workers' comp claims for independent contractors and employees in Santa Ana. We will review your case details and advise you on the best course of action to take to get the maximum compensation you deserve.