INSURANCE:
Workers’ Compensation Dilemma

Many administrators are under the impression that all doctors who are independent contractors are exempt from California labor laws governing workers’ compensation requirements. In fact, this may not be the case.

It is important to note the differences in the labor codes pertaining to employees, as they are different from the IRS guidelines. You may have a true independent contract as far as payroll tax withholdings are concerned, but workers’ compensation insurance may still be your responsibility.

INDEPENDENT CONTRACTOR OR EMPLOYEE?

One of the most frequently asked questions concerning workers’ compensation coverage is whether a given individual is an employee or an independent contractor. There is no absolute test! In many cases it may take a court of law to make the determination. There are, however, certain basic questions which, if answered in the affirmative, help determine the status of an individual.

An independent contractor is defined in Labor Code Section 33353 as follows:

“Independent contractor - means any person who renders service for a specified recompense for a specified result, under the control of his principal as to the result of his work only and not as to the means by which such result is accomplished.”

California workers’ compensation laws, by statute, are construed liberally; in other words, in favor of the claimant. There is a presumption of employment UNLESS the employer can meet the burden of providing an independent contractor relationship. The following is a check list, which will assist you in determining the relationship between an independent contractor:

Employee:

  • Has the right to discharge, at will, without cause.
  • Has specific title and/or position.
  • Works under the direction of a supervisor.
  • Uses company tools and/or apparatus.
  • Working hours are set by the company.
  • Is paid by salary or by the hour.


Independent Contractor:

  • Responsible only for the result of the work performed.
  • Usually under a written contract, the principal is unable to discharge at will.
  • Engaged in a distinct occupation or business.
  • Is a specialist, does actual work without supervision.
  • Supplies their own tools.
  • Has no set hours, may come and go at will.
  • Paid on a per job basis.
  • Has their own workers’ compensation coverage


Types of Workers’ Compensation Laws and Insurance Requirements

Insureds and insurers are generally acquainted with the nature of workers’ compensation laws and insurance requirements in the state in which they reside or do business, but are frequently handicapped by unfamiliarity with conditions in other states in which they have a risk situation that must be dealt with quickly. Furthermore, those concerned with business operations on a national basis must know the laws, the requirements and the options and must be kept abreast of changes.

 

Further information: (818) 782-5337 Labor Enforcement, State of California and your legal consultant or attorney.