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Employee vs Independent Contractor, How the Workers Compensation Laws in New York Impact Each

The relationships between employers and employees and that between employers and independent contractors pose significant differences under New York law. This is important when considering whether or not an employer must obtain workers’ compensation insurance coverage for workers. While this article will provide some guidance, Littman & Babiarz Attorneys at Law, workers’ compensation lawyers in Syracuse, Auburn, Ithaca and Elmira, New York, can provide specific guidance by scheduling an appointment with one of our experienced team of attorneys.

According to New York Workers’ Compensation law, Independent contractors are not eligible for workers’ compensation coverage, and employers are not required to purchase coverage for them. However, there have been cases when some employers have deliberately misclassified employees as independent contractors in order to avoid paying payroll taxes and workers’ compensation insurance costs.

It must be pointed out that the final definition of an employee or an independent contractor is not left up to employers to determine, but by the State. New York workers’ compensation law specifies that an employee or independent contractor is defined by the circumstances surrounding a person’s work.

Who is an Employee in the State of New York?

The New York Workers’ Compensation Law requires that employers purchase and keep in effect workers’ compensation insurance coverage for all their employees. For the purposes of workers’ compensation insurance, several factors are considered in order to determine if a person is an actual employee. If a company meets any of the following criteria, and hired workers fit the descriptions, that person is considered an employee and must be covered by workers’ compensation insurance.

  • Right to Control – How much control a business has over someone they contract with for work is always a crucial factor in determining whether or not a person is an employee.
  • The character of Work – Work that is performed is consistent with the primary work performed by the hiring business indicates an employee.
  • Method of Payment – Employees are typically paid wages on an hourly, daily, weekly, or monthly basis, as well as other benefits, and taxes are withheld from all compensation.
  • Furnishing Equipment/Materials – Companies typically provide the equipment and/or materials used by employees.
  • Right to Hire/Fire – A company retains the authority to hire and fire employees generally at will, including over how and when work is performed.

It is important to note that all the above factors are generally considered in order to determine employee status, and no single factor carries more weight than the others. Littman & Babiarz Attorneys at Law are experienced workers compensation attorneys in Syracuse, Auburn, Ithaca and Elmira, New York, who can provide assistance in determining your employee or independent contractor status.

Who is an Independent Contractor in the State of New York?

Under New York law, independent contractors are considered to provide a service under contract, written or unwritten, without specific directions from the person paying for the service. The contractor controls how the service is provided, when it is provided, how it is provided, and the method of providing said service. The contractor acts freely, independent of control and direction from the person or entity that hired them.

Because they are not employed by the contracting entity, independent contractors are not eligible for coverage by workers’ compensation insurance provided by the contracting entity. Independent contractors may, however, purchase their own workers’ compensation insurance policy in addition to personal health insurance.

This would be desirable in the case of an independent contractor whose work carries a high degree of risk, such as construction work. In the event of an accident that causes the contractor to miss several weeks of work, the workers’ compensation policy would provide a means of support while the contractor recovered from the accident. This is an added benefit that a simple health insurance plan would not provide.

Insurers of Last Resort

Freelancers and other independent contractors may encounter difficulties obtaining their own workers’ compensation insurance. Large insurers may not see the point in selling such relatively small policies. In New York, businesses and contractors may purchase workers’ compensation insurance through private companies or through the New York State Insurance Fund.

Though these funds are often considered “insurers of last resort,” many state systems are A-rated insurance providers. In fact, New York’s fund is the seventh largest workers’ compensation insurer in the United States. Independent contractors and small-business owners are guaranteed a policy from these funds if they can’t afford coverage from private insurers.

Law Offices in Ithaca

Workers Compensation Attorneys in Syracuse, Auburn, Ithaca and Elmira

At Littman & Babiarz Attorneys at Law, our attorneys have helped numbers of New York employees and independent contractors with difficulties regarding the complexities of workers’ compensation laws. We are experienced workers compensation attorneys in Syracuse, Auburn, Ithaca and Elmira, New York, and we can help you today. Contact us online or by phone to arrange your free consultation.