Synopsis: Employment Relationships in Work Comp for Illinois and Your State.
Editor’s comment: I caution my readers—if you have detailed questions about any of these complex WC issues for the five states KCB&A covers, email me at firstname.lastname@example.org. Outside our five states, I can hook you up with a solid local WC defense attorney—just email me.
When is It Your Employee vs. Independent Contractor
In situations where elements of both an employee-employer relationship and an independent contractor relationship are present, most WC hearing boards and reviewing courts look to the following major factors in determining whether Claimant is an employee:
· The relationship of the work performed to the overall business of both the individual performing the work and the regular work of the alleged employer;
· The party most likely to have insurance coverage for the loss;
· The right to control the manner in which the work is performed;
· The method of payment for the work performed;
· The right to discharge and the means of discharge;
· The party furnishing tools, materials and equipment.
Case law and outcomes are generally unpredictable. U.S. WC Boards/Commissions and courts ostensibly utilize formal legal standards as their published decisions are presented to the larger public—they may typically indicate the ‘right to control the work’ is a paramount standard. Illinois WC also now has the Employee Classification Act (820 ILCS 185) which outlines the above elements to assist in categorizing workers as employees or independent contractors.
More veteran observers point to the ‘deep pocket’ theory of who has available insurance (or ‘self-insurance’) coverage when an individual suffers a serious injury and is left without any source of paying for time lost and medical bills. Remember if the injured party had his or her own workers’ compensation policy, they probably wouldn’t be bringing the claim. The party most likely to have insurance coverage faces a very strong burden of establishing the individual claiming to be an employee was an employer in their own right and had an equal responsibility to obtain insurance to cover his or her own injuries.
The above concept is critically important in ongoing work relationships, particularly where the individual claiming to be an employee worked alone and continuously performed most or all of their work for the individual or organization claiming to be the employer.
A good example of this is a truck driver who only delivers loads for one organization, even if the driver owns his own truck and pays all of his own expenses (not including workers’ compensation coverage). Where this is occurring, we strongly urge you require such an individual to present continuing proof of workers’ compensation coverage for his own injuries. Where the injured individual is left without coverage, the IL WC Commission and courts have gone to great lengths to find that such an individual is an employee.
Another growing area of legal controversy is the mischaracterization or misclassification of workers as independent contractors when they are filling traditional employee roles. If a general contractor or building owner hires five plumbers and keeps them working at all times, it may become difficult to call each of them “independent,” particularly if they only work for the same company for weeks, months and years.
Misclassification of workers is designed to avoid payroll taxes, unemployment benefits, workers’ comp insurance and other costs. The Illinois Department of Labor and many of our sister states are “attacking” this concept with new and punitive laws whenever and wherever they see it. In the workers’ comp arena, we do feel protections should be in place to insure injured workers are provided benefits when the unforeseen occurs.
‘Independent Contractor Agreements’
Also, you can be confident the IL WC Commission and other states’ WC systems tend to be extremely suspicious of ‘independent contractor agreements’ or other documents designed to clearly state or claim an individual is an independent contractor in advance of the injury.
When all the facts and circumstances of the work being performed lead to the conclusion the individual performing the work is an employee, the IL WC Commission may completely reject the terms of the ‘independent contractor agreement’ as a subterfuge designed to mislead both the Commission and the injured employee.
Our favorite example of this is the trucking company that had each driver execute an ‘independent contractor agreement’ when further investigation also disclosed the driver also had to fill out a typical ‘employment application’ which was contained in the same file. Don’t be misled into thinking an ‘independent contractor agreement’ will be necessarily be legally enforceable—in many instances, the Commission or other Board will provide an even higher level of scrutiny when presented such documents.
In a serious injury, it is likely the employee may seek out legal assistance and a veteran workers’ compensation attorney will readily bring such a claim and ignore the misleading agreement. An employer may get caught without needed WC coverage if you don’t report to your insurance carrier/TPA or otherwise reserve for such losses.
Only to the extent an injured individual views such a document as legally enforceable and doesn’t seek benefits, it may have its intended informal effect. In our view, the risks are much too high to rely on it.
Special employment relationships
Undocumented Workers—“Illegal Aliens”
This is a challenging area of U.S. law. Our U.S. Supreme Court in their landmark ruling in Hoffman Plastic Compounds, Inc. v. NLRB rendered employment agreements with undocumented workers illegal. Most states ignore this ruling and I consider all of it very controversial. Please note my personal view you can’t/shouldn’t get state or federal workers’ comp benefits unless you are first part of a legally binding employment agreement. Many state courts interpreting WC laws ignore this simple concept and dole out benefits, even if the “agreement” isn’t legally binding.
The whole problem is employers shouldn’t be able to take unfair advantage of hiring an undocumented worker to have that worker become seriously injured or killed without any recourse or benefits for either the worker or their family. The other side of this same problem is many U.S. employers are presented with and hire workers who are lying or falsifying documents to get hired and then use their faked status as “employees” to make questionable, fraudulent or unsupported WC claims. There isn’t a great answer to this conundrum--I am sure this legal battle and its contradictions will continue for the foreseeable future.
Volunteers are not generally considered employees under most states’ WC Acts—check with KCB&A or your local defense counsel. Purely volunteer workers who are not paid and have no expectation of payment are excluded from coverage even if they suffer severe injuries. Please note, workers’ compensation benefits other than medical bills such as TTD/TPD and PPD are calculated based on the wages/salary of the worker—volunteers don’t have a wage/salary from which to calculate those weekly benefits.
Again, remember this concept may give you a legal ‘option.’ It is possible the volunteer may have a viable common law liability claim and it is conceivable workers’ compensation benefits can be paid which might serve to cut off the third party exposure.
Casual or part-time employees
Casual or part-time employees even with very low wages are covered by most state and federal Workers’ Compensation Acts and should be entitled to benefits despite part-time status. In these situations, the employees’ average weekly wage may be under or close to the minimums for TTD and PPD. It is not the minimum for amputations, death or total and permanent disability benefits—those minimums are exponentially higher. The part-time employee’s average weekly wage may actually become the amount they can be paid for TTD and PPD (see the last two sentences in Section 8(b)(2) and 8(b)(2.1)). This low rate leads to minimal exposure in claims involving part-time employees unless the individual was working more than one job and the employer was aware of dual employment.
Loaned and borrowed employees—Staffing/PEO’s
From time to time, an employee of one company may perform job duties for another company either under a contractual relationship or in a relationship implied by the nature of the employment. In such claims, both employers are simultaneously liable for WC benefits with one of the employers having primary liability for a loss. In these situations, the employer benefiting from the services of the employee at the time of the accident will be found to be the primarily responsible party. Secondary liability will be on the company providing the worker—unless there is an agreement to the contrary.
However, if the borrowing employer does not pay or fails to timely pay benefits, the loaning or original employer must pay. The IL WC Act is clear--liability is joint and several in such situations. Again, remember the unstated rule is to insure the injured employee has WC insurance coverage resulting in benefits for the loss. It is incumbent on risk managers and defense attorneys to make sure which entity has primary liability in defending or managing such claims. You may want to address choice of counsel as well as liability for payment of counsel in any agreement.
Lack of WC Insurance Now Ends IL WC Exclusivity
The other aspect of handling such claims is the IL WC Commission’s heightened efforts to police and patrol all Illinois employers to stop uninsured employers from operating without WC insurance and/or file for civil and criminal penalties where appropriate. Starting in 2011, the Act was amended to allow two possible legal outcomes where an employer does not have insurance for a work injury.
First, the employee can make a traditional WC claim against the employer and due to the lack of WC insurance, the employer can try to adjust the claim and pay what is due under the Act.
Second, the employee can also sue the employer in Circuit Court for the injury. When they do so, damages are effectively unlimited. Due to the lack of WC insurance, there is no more exclusivity protection. Section 4(d) of the Act now states:
Employers who are subject to and who knowingly fail to comply with this Section shall not be entitled to the benefits of this Act during the period of noncompliance, but shall be liable in an action under any other applicable law of this State. In the action, such employer shall not avail himself or herself of the defenses of assumption of risk or negligence or that the injury was due to a co-employee. In the action, proof of the injury shall constitute prima facie evidence of negligence on the part of such employer and the burden shall be on such employer to show freedom of negligence resulting in the injury.
This statutory provision basically creates “all-fault” liability on the uninsured employer.
Never Allow Executives of Independent Contractors to “Opt-Out” of WC Coverage and Contract to Work for You Without Coverage
There is a little-known provision of the IL WC Act that allows the owner or partners of a company to “opt-out” of coverage to save money and take the risk of injury upon themselves. This sets up a situation where a company that hires that executive or partner is doing so in a setting where there is no protection/insurance for a work-related injury in your workplace.
We consider that model very dysfunctional. If the executive of what might be a true “independent contractor” suffers a serious injury, resulting in injury or death, there is always the specter of the executive or their family coming to the company that hired them and seeking WC benefits due to the lack of insurance. When you understand a serious WC claim can cost millions of dollars, you don’t want such exposure. Even if the company allowing such an executive or partner on your premises wins the coverage battle, you have to face the costs and uncertainty of litigation.
The defense team at KCB&A can readily assist my readers on all such issues/topics. If I can help, please send a reply.
We appreciate your thoughts and comments. Please post them on our award-winning blog. Happy Holidays to all!!!
Synopsis: Three Minutes and Your Life…Thoughts From Henry Jay Przybylo, M.D. author of the new book, Counting Backwards: A Doctor’s Notes on Anesthesia.
Editor’s comment: In Counting Backwards, Dr. Henry Jay Przybylo―a pediatric anesthesiologist with more than thirty years of experience―delivers an unforgettable account of the procedure’s daily dramas and fundamental mysteries. Dr. Jay has administered anesthesia more than 30,000 times in his career―erasing consciousness, denying memory, and immobilizing the body, and then reversing all of these effects―on newborn babies, screaming toddlers, sullen teenagers, even a gorilla. It is a fascinating read and perspective where lawyers and claims professions can get a different view on an important part of any case where anesthesia is provided.
Doctor’s comment: Give me three minutes, then you’ll give me your life. These are words that are cause for concern for any lawyer. A vacant promise, a scam, fraud? No. In the time it takes to post the latest announcement on LinkedIn or to listen to Van Morrison’s “Brown Eyed Girl,” we’ll talk, I’ll examine and then we’ll pass through automatic double doors leading to my sequestered place where I’ll induce a chemical coma, steal time, prevent memory, immobilize the body and then reverse these at will.
As an anesthesiologist, I alter heart rate, blood pressure and breathing, but I don’t cure. My care allows physicians to cut, probe and stick. Perhaps not curing isn’t entirely accurate. Without my care, procedures that are painful or require absolute stillness—clipping a brain aneurysm where any patient motion might alter the outcome—are not possible without my intervention In addition, I treat pain beyond the procedure room, both acute and chronic.
Many fear anesthesia and for good reason; it’s an act of faith. When asked how the anesthesia gas I administer day in, day out works, I have no solid scientific answer. It simply does. Forty million times every year in the U.S. alone. So as I ask a patient to have confidence in my abilities, I need to trust in my gas. I know what percent of gas is needed to keep a person safely anesthetized, and I measure continuously every imaginable vital sign and parameter, the percent of inhaled gas included. My intent is singular: that every patient emerges from my care in better condition than on entering.
The motto of anesthesiologists is vigilance. I noticed something unobserved by others in a photo from a recent published article of a wrist surgery on a woman who requested no anesthesia. The center of attention—and all the eyes in the room—were on the surgical site, her wrist. My question: Who was watching the woman? If, God forbid, something untoward happened, who in that room was charged with making life right? In the event of an allergic reaction to an injected medication, who possessed the expertise to successfully treat the woman? More than removing a patient’s senses, my charge as the anesthesiologist is to watch the patient as a whole and to correct confounding issues. High blood pressure is treated, blood sugars are followed and normalized, and so on and so on. For those requesting no anesthesia, the statistics on safety prove anesthesia is very safe and lead me to question, what’s to be gained?
Not everyone requires the mysterious, all-in-one anesthetic gas. Deconstructing anesthesia leaves its components: anxiety relief, amnesia, pain therapy (analgesia), remaining still (akinesia) and stable vital signs throughout (in my term, a-reflexia). All can be treated separately with a variety of medications and techniques. If inhaling a gas is undesired or medically unwise, pain relief and stillness can be achieved by blocking the nerves to the region of the procedure using local anesthetics, while supplemental medications treat anxiety and amnesia. Allow me the opportunity to build an anesthetic that best fits needs and leaves you in better health after my care.
Anesthesia is not a limelight specialty. I stand in the wings, and yet, I alter nearly every body function. Anesthesiology intervenes in life with a breadth, depth, and intensity that no other medical specialty possesses. Forgetting my name within minutes of discharge, I take no offense. Practicing in one of the RU—relative unknown—medical specialties such as anesthesiology, radiology and pathology means little to no face time with patients. That should not be taken to mean as the RU physicians’ work is secretive—just secluded. Most of my waking day is spent cloistered behind automatic double doors. But you can still speak with me; inquire about all options. Choices exist.
Please visit www.henryjaymd.com for more information on Dr. Jay and buying a copy of his amazing new book: Counting Backwards.