The difference between independent contractors and employees is sometimes difficult to distinguish when it comes to workers’ compensation insurance.
California courts and state agencies typically use a number of tests to determine whether an individual is an employee or an independent contractor. A crucial factor in determining employment status is the employer’s right to direct and control the work being performed. If you have the right to control the manner and means of the work performed, the courts have routinely decided that the “independent contractor” is actually your “employee”.
There are many other considerations, but the answer to any one factor does not necessarily determine status. Among them, whether the person performing the service:
Other factors include:
If there are questions, the Labor Code assumes a worker is an employee for workers’ compensation purposes. The burden of proof to support the independent contractor status of a worker falls on the employer. The Labor Code also requires that any subcontractor who does not have an active valid contractor’s license be treated as an employee, not an independent contractor. However, even though a worker may have a valid license, the worker may still be an employee depending on the factors as discussed above.
A good rule of thumb: as an employer, always protect yourself.
If proper documentation is not maintained and presented to our auditors, we are obligated to charge premium for any liability that may exist under your workers’ compensation insurance policy.
If you are unsure of your worker’s status as either an independent contractor or your employee, please contact your local State Fund office and speak to a representative.