Employee or Self-Employed? Your status affects your eligibility for workers' compensation
June Walker, a tax and financial consultant for the self-employed, blogs about the difference between employees and independent contractors -- an important distinction where workers' compensation is concerned.
We've blogged here before about sneaky employers that wrongfully classifying employees as independent contractors with 1099 status. By doing so, employers save money on insurance, payroll taxes, health insurance coverage and workers compensation and cheat employees out of benefits.
In a famous and precedent-setting case involving Microsoft, the IRS ruled that the company had wrongfully classified employees as independent contractors because Microsoft controlled the "manner and means" of their work.
The ruling was clear: theirs was an employer-employee relationship, and it's the relationship that counts, regardless of any written contracts to so-called independent contractors may sign, as Walker explains here in this primer on the difference between being an employee and being a self-employed contractor..
I am employed by a person who has a house painting business, here in Fayetteville, NC.
I get paid by the hour. On payday, I found out that I am not considered an employee, I am a sub contract worker. I also discovered that my employer takes 10% of my pay each week for Workman's Compensation.
I have been researching NC Workman's Compensation Laws on the web, but
unfortunately, I have not been able to find anything concerning sub contract laws. I did find out however, that an employer who employs three or more persons is responsible to pay Workmans
Comp. My employer has six people working for him, yet we are still not considered employees.
Can anyone please tell me if my employer can legally do this? It just does not sound right to me.
Sincerely,
Don Kaminska
nope. If you sub contract, then you are responsible for providing your own insurance, which you can buy personal liability thru any insurance company. Also, if you are a sub contractor, then they usually get paid by the job, not the hour. Sounds to me like your employer is trying to get out the cheap way.