Employee Versus Independent Contractor

We see it all the time. An injured worker calls into our office after a serious injury. They doubt we can help them. They almost apologize for “wasting our time.” “I doubt you can help me,” they say. “I was paid on a 1099 and my employer is telling me I was not covered on their workers’ compensation policy.”

It is true. Independent contractors are not covered by the North Carolina Workers’ Compensation Act. Companies that hire independent contractors have no workers’ compensation liability for injuries that the independent contractors sustain. However, the determination of whether a worker is an employee or independent contractor is much more complicated than what the employer calls the worker.

Several factors determine whether a worker is an employee or an independent contractor for workers’ compensation purposes. These factors are known as the Hayes factors because they come from a North Carolina Supreme Court case decided 80 years ago. The citation for the case and where the factors are listed can be found at: Hayes v. Board of Trustees of Elon College, 224 NC 11, 15–16, 29 S.E.2d 137, 139–40.

The Hayes factors are below. The factors are decided by whether the worker:
(a) is engaged in an independent business, calling, or occupation;
(b) is to have the independent use of his special skill, knowledge, or training in the execution of the work;
(c) is doing a specified piece of work at a fixed price or for a lump sum or upon a quantitative basis;
(d) is not subject to discharge because he adopts one method of doing the work rather than another;
(e) is not in the regular employ of the other contracting party;
(f) is free to use such assistants as he may think proper;
(g) has full control over such assistants; and
(h) selects his own time.

As you can see, whether a worker is paid on a W2 or a 1099 does not decide the issue. Furthermore, the questions is not answered just because the worker signs an employment contract that specifies the worker is an independent contractor. The question of whether a worker is an employee or an independent contractor is not decided by wording in documents or tax forms as much as it is determined by control.

The factors really come down to whether the worker controls his own schedule and way of work, or does the employer control the worker’s schedule and work. You are simply not an independent contractor if your “boss” tells you to be at work at 9:00 a.m. and that your day will end at 7:00 p.m. If your “boss” provides the tools, tells your co-workers (other workers you did not hire and cannot fire) what to do, and tells you how you need to the job, then you are an employee. All the tax documents in the world are unlikely to change that.

Employers love independent contractors. They do not have to spend on payroll taxes and avoid liability for all things employment including workers’ compensation coverage. Do not let your employer wash their hands of you simply because they think they can control your work and classify you as an independent contractor at the same time.

North Carolina Workers Compensation cases can be difficult and if you have questions about your workers compensation case, contact an experienced board certified workers compensation attorney at Cardinal Law Partners for a free consultation.