Are You an Independent Contractor or an Employee?

A recent Michigan district court case sheds some additional light on how the court determines whether you are an employee or an independent contractor for workers' compensation. In Max Trucking, LLC v. Liberty Mutual Insurance Corporation No. 14-2115 (6th Cir. 2015), a judge ruled that truck drivers were employees of the trucking company even though the drivers were in lease-to-own agreements with the company for their truck; the drivers could decline work from the company; and, the drivers received all tax benefits for the truck on their personal tax returns.

The case highlights that a court will view the "totality of the relationship" when determining whether you are an employee or an independent contractor in a workers' compensation case.

Employees vs. Independent Contractors

In the Michigan case, Liberty Mutual alleged that drivers leasing trucks from Max Trucking were employees of the company and billed the truck company for workers' compensation premiums. The trucking company insisted that drivers were independent contractors and refused to pay the increased insurance premiums.

When determining whether you are an employee or an independent contractor, the court will consider factors such as:

  • Who controls the manner in which the way work is performed;
  • What are the terms of employment between the parties;
  • What is the nature of the work;
  • What skills are required for the performance of the work;
  • Is payment by time or by the job;
  • Is work performed part of a regular business;
  • Can the alleged employer terminate the person;
  • Who supplies the tools required for performing the job; and,
  • Who is responsible for the end result.

PA Workers’ Compensation Laws Are Complex

Pennsylvania's workers' compensation laws do not require that judges consider every factor when determining whether you are an independent contractor. According to case law, judges determine the nature of your employment by considering the factors that are relevant to the facts in your case. Independent contractor status is decided on a case-by-case basis rather than a strict set of factors that are applied in each case. Other factors that a court may consider include who provides training for the job, who maintains the job site, who pays for travel and business expenses, can the person work for another company simultaneously, and who sets the hours of work.

In the Max Trucking case, it would seem as if the drivers would be independent contractors based on the fact they were making a significant investment in the truck they were purchasing, could decline work from the trucking company, and assumed personal financial loss and gain from performing the work, the court disagreed. After reviewing the "totality of the relationship," the court concluded the drivers were employees. The court based this in part on the opinion that the drivers were economically dependent on the trucking company to perform the work of a truck driver because they were leasing trucks owned by the company.

Have Been Injured in a Pennsylvania Worksite Accident?

The distinction between an independent contractor and an employee determines whether you receive benefits under Pennsylvania's workers' compensation laws. Our Harrisburg workers' compensation attorneys understand the factors considered by the court when determining employment status. If you are being denied workers' compensation benefits by your employer or its insurance company, contact Handler, Henning & Rosenberg LLC for a free consultation. You may have a legal claim to workers' compensation benefits under Pennsylvania WC laws.


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