Have you ever had an employer tell you you\u2019re not an \u201cemployee,\u201d but rather an \u201cindependent contractor\u201d? More importantly, do you know that independent contractors generally aren\u2019t entitled to workers\u2019 compensation benefits if they\u2019re injured at work? Well, the Vermont Department of Labor does, which is why misclassification of employees as independent contractors has been a hot button topic over the past few years.<\/p>\n
Employers must pay workers\u2019 compensation insurance for their employees but employers do not have to pay workers\u2019 compensation insurance for independent contractors. Over the years, the Vermont Department of Labor has identified some employers who try to save on buying mandatory workers\u2019 compensation insurance by claiming that their workers are not employees but are independent contractors.<\/p>\n
The Vermont Department of Labor and the Vermont courts take a dim view of this. The Department of Labor recommends that if employers are in doubt, workers\u2019 compensation should be purchased.<\/p>\n
In order to be eligible for workers\u2019 compensation benefits an employee-employer relationship must exist at the time of the injury. In Vermont, how do we tell if this relationship exists?<\/p>\n
First, we look at the \u201cright to control\u201d. Does the employer have the right to direct the result, the means and the methods by which the work is performed? If yes, an employer-employee relationship exists and the employer must provide workers\u2019 compensation coverage. If no, the situation involves an independent contractor and workers\u2019 compensation is not required.<\/p>\n
Next, we look at the \u201cnature of the business.\u201d The “nature of the business” test looks at:<\/p>\n
1) Whether the work being performed is the type of work that normally is done by an employee of the business? and<\/p>\n
2) Whether the work being performed is an integral part of the employer’s regular business?<\/p>\n
This test is designed to prevent business owners from avoiding workers\u2019 compensation liability by misclassifying workers who carry out some phase of their business as independent contractors instead of regular employees.<\/p>\n
Over the last several decades, The Vermont Supreme Court has addressed the question of whether an injured worker is an employee or an independent contractor. In fact, the Court looked at this question as far back as 1917 and, to this day, it continues to use the “right to control” test and the “nature of the business test.<\/p>\n
The Court has looked at cases involving:<\/p>\n
– Loggers<\/a><\/p>\n – Trucking Companies<\/a><\/p>\n – Construction Companies<\/a><\/p>\n – Real Estate Development Companies<\/a><\/p>\n