Itâ€™s not uncommon for 1099 workers to experience an on the job injury. Â Unsurprisingly, it is common for employers and insurance defense interests to then lean on the 1099 document or tax filing status to erroneously claim that the injured worker is ineligible for Industrial Insurance Act (workersâ€™ compensation) coverage. Â Because the error rate by employers is so high in making that claim, even if youâ€™re working as a so-called â€śindependent contractor,â€ť you should ask your doctor to file an L&I claim on your behalf. This will trigger a more thorough and thoughtful analysis, which you can then compare to the information provided here or with a free, no obligation consultation with one of our dedicated Washington Law Center L&I attorneys.
The highest purpose of our Washington workerâ€™s compensation system is to provide â€śswift and certain reliefâ€ť to injured workers and their families.1 Â After decades of trial and error in the application of our workersâ€™ compensation laws, it has become a matter of equity and efficiency to include many â€śindependent contractorsâ€ť within the statutory definition of â€śworkerâ€ť for purposes of work injury claims.Â Â However, given the freedoms of contracting parties (as opposed to the obvious negotiation disadvantages an employee-servant has in relation to his employer-master) the parameters of coverage are not limitless. The ultimate determination of coverage is not based on what a worker is called, but what legal status the worker actually has at law at the time of injury. Â For the required analysis, we look to two statutes, as explained through precedential court decisions, to instruct when industrial insurance coverage applies to the injured worker asserted to be an â€śindependent contractor.â€ť
The Essence of the Independent Contract Must be Personal Labor
The rule is clear: if the independent contract is essentially limited to personal labor, be it manual labor or otherwise, then the â€śindependent contractorâ€ť is considered a worker for purposes of the Act. Â In other words, coverage is then probable. Accordingly, we must then understand when the essence of an independent contract went beyond personal labor. The holding in White v. Department of Labor and Industries, 48 Wn.2d 470, delineates three conditions of when an â€śindependent contractorâ€ť will not be allowed workersâ€™ compensation coverage: Â (a) when the independent contractor must, of necessity, own or supply to the job site special machinery or equipment to perform the contract; (b) when the independent contractor obviously cannot perform the contract without assistance; or (c) when the independent contractor who of necessity or choice employs others to do all or part of the work he has contracted to perform.3
Put simply, if you need special or technical equipment to perform the contract and you supply this to the job site, or you employ subordinates or other specialized workers to perform all or parts of the contract for which youâ€™ve been hired, you are ineligible for industrial insurance coverage as a true independent contractor. Â OTHERWISE, if all you provide in performing the independent contract is basic tools and your own body, the essence of what you give is personal labor, you may likely be eligible for industrial insurance coverage. Still, thereâ€™s more.
The Business Arrangement between the Independent Contractor and Contractee Must Constitute Employment
It is not enough to establish that you are a â€śworker.â€ť Â You must also establish that the person with whom you have a contract (or contractual relationship) is also an â€śemployerâ€ť for purposes of the Act. Â This will be determined by such conceptual considerations as whether your putative employer has the right to direct and control the manner and timing of your work (the â€ścontrolâ€ť test), as well as whether you are dependent on the putative employer for your livelihood (the â€śdependencyâ€ť test). Â These considerations and tests are then encompassed within RCW 51.08.195. Malang v. Department of Labor and Industries, 139 Wn.App 677 explains that a putative â€śworkerâ€ť will instead be deemed a non-liable contractor (i.e., there is no workersâ€™ compensation coverage for the â€śworkerâ€ť) if all six of the following conditions are met:4 Â
(a)The individual has been and will continue to be free from control or direction over the performance of the service, both under the contract of service and in fact; and
(b)The service is either outside the usual course of business for which the service is performed, or the service is performed outside all of the places of business of the enterprise for which the service is performed, or the individual is responsible, both under the contract and in fact, for the costs of the principal place of business from which the service is performed; and
(c)The individual is customarily engaged in an independently established trade, occupation, profession, or business, of the same nature as that involved in the contract of service, or the individual has a principal place of business for the business the individual is conducting that is eligible for a business deduction for federal income tax purposes; and
(d)On the effective date of the contract of service, the individual is responsible for filing at the next applicable filing period, both under the contract of service and in fact, a schedule of expenses with the internal revenue service for the type of business the individual is conducting; and
(e)On the effective date of the contract of service, or within a reasonable period after the effective date of the contract, the individual has established an account with the Department of Revenue, and other state agencies as required by the particular case, for the business the individual is conduction for the payment of all state taxes normally paid by employers and businesses and has registered for an received a unified business identifier number from the state of Washington; and
(f)On the effective date of the contract of service, the individual is maintaining a separate set of books or records that reflect all items of income and expenses of the business which the individual is conduction.
If youâ€™ve suffered an on-the-job injury or occupational disease (such as a repetitive stress injury), even if you are working as a so-called 1099 â€śindependent contractor,â€ť it is likely that the Industrial Insurance Act will ultimately provide you coverage. Â For this reason, our multiple experienced Washington Law Center workersâ€™ compensation attorneys do unanimously recommend that you file an L&I claim through your doctor and pursue benefits.
If the benefits are denied to you initially based on an employer protest that you are actually an â€śindependent contractorâ€ť who should be denied coverage, then please immediately and consult with an attorney concentrating their practice in Washington Labor & Industries claims.
This page is co-authored by Attorneys Aaron VanderPol and Spencer Parr of Washington Law Center. Â This page provides general legal information and may not be relied upon as legal advice with respect to the particular facts and circumstances of your claim. Â No attorney-client relationship is established by Washington Law Centerâ€™s publication of this general information. Please call (206) 596-7888 with any questions or to obtain actual legal counsel regarding your industrial injury or personal injury case.