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North Carolina orders workers' comp for so-called 'contractor'

When it comes to whether someone is entitled to workers’ compensation coverage for an on-the-job injury, one of the most fundamental issues is who the injured worker’s employer is. Since workers’ comp is provided by employers to employees, workers can’t make a claim if they’re not considered an actually an employee. So, for example, an independent contractor wouldn’t be eligible.

In a recent case, however, the North Carolina Court of Appeals ruled that a man who had been hired as an independent contractor was actually an employee, legally speaking. This is an interesting area in which workers’ comp law and employment law overlap.

The case involved West Point Farms in Rutherfordton, which had hired a maintenance man, who received a salary and free living accommodations in a trailer. That maintenance man in turn hired a carpenter’s helper, who was considered an independent contractor and paid hourly, although he was paid by the farm, not the maintenance man.

As more employees were hired, the living accommodations in the trailer got crowded, so West Point asked the maintenance man and the carpenter’s helper to build an apartment in a barn. While the pair was working on the apartment, the carpenter’s helper was injured and sought workers’ comp coverage.

At first, the courts turned him down because he was thought to be a contractor. However, the North Carolina Court of Appeals considered his work situation under the rules of employment law and determined that he was an employee and entitled to coverage.

Under both North Carolina and federal law, there are specific rules about who can be considered an independent contractor versus an employee. The courts consider a number of factors, including:

  • Does the worker have other clients, his own business cards, and a website?
  • Does the worker handle his own bonding and liability insurance?
  • Is the worker free to set his own schedule, determine his pay rate, and decide how the work is to be performed?
  • Does the job involve technical skill, initiative and judgment?
  • Does the worker use his own equipment, or is it provided by the business?
  • Does the worker play an integral role in the business?

In this case, the carpenter’s helper had no other clients, was paid by the hour and closely supervised by the maintenance man, and the farm provided most of his tools and materials. Based on the balance of those factors, the appeals court said he was legally an employee of the farm. Since the injury occurred during working hours and on a project initiated by the farm, the carpenter’s helper was entitled to workers’ comp.

Source: Risk & Insurance magazine’s Workers’ Comp Forum, “Hourly pay, supervision by farm employee show helper is employee,” Aug. 30, 2013

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