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Independent Contractor vs. Employee: Why the Difference Matters

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When Tommy L. Spears came to work on January 20, he believed he was a full-time employee for a tree-cutting service called Chafin Clear Cutting Inc. It wasn’t until after he was injured that he learned the truth.

Spears was injured at one of the company’s timber mills. He suffered shattered cheek bones, a collapsed lung, a ruptured aorta, a broken back, and broken ribs when a partially cut tree fell on him.

A few months later, Spears filed a formal complaint against Chafin, citing failure to reasonably care and protect workers. His claim alleges the company allowed untrained workers to cut trees, failed to inspect work areas prior to cutting, and failed to provide cutting plans or protective equipment to workers.

When he filed for insurance benefits through workers’ compensation, however, Spears found his claim denied. Chafin told insurers that Spears wasn’t a full-time employee but an independent contractor. This means he was ineligible to receive any compensation for his physical, financial, and emotional distress.

In Spears’ worst-case scenario, a simple title change meant the difference between fair compensation and unjust denial. If you work with or have been contracted independently in Evansville, you may want to know what the difference in these two roles mean; it could jeopardize any workers’ compensation claims you make.

Employees

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Full-time workers receive paychecks that have income tax, Social Security, and Medicare withheld, not to mention health insurance (if applicable). These employees are protected under employment and labor laws and can file workers’ compensation claims through their company’s insurance provider. At the beginning of their employment, full-time workers fill out a W-4 tax form, provide tax information on a W-2, and receive a regular paycheck.

Independent Contractors

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On the other hand, independent contractors are self-employed. Even if they frequently work with a single company, independent contractors do not receive benefits like health insurance or a 401(k). In addition, they do not automatically generate work credits for Social Security when they’re paid by the company contracting them. Instead, they have to pay Social Security taxes quarterly or annually when filing estimated taxes or income tax returns. Most importantly, independent contractors are not protected by the same labor and employment laws that protect full-time hires.

How to Tell If You’re an Employee at Your Evansville Job

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Though tragic, stories like Tommy Spears’ are not one-of-a-kind. Employers across the country attempt to save a buck by classifying employees as independent contractors rather than committing to them full-time. Workers in Evansville aren’t immune to this. Even if you think you’re given full-time hours through a single company, they may not consider you a real employee. Look for the following job characteristics to know the difference:

  • Equipment: One of the telltale signs that you’re considered an independent contractor is having to supply your own equipment to do your work. Employees will have access to all the necessary equipment through the company.
  • Temporary work: Jobs advertised as “temporary” often fall under the category of independent contractor. Confirm with your employer whether you receive employment benefits or not.
  • Regular hours: As an employee, you are expected to work a certain number of hours a week, and at certain times during the day. If you set your own hours or experience no punishment for coming in late, you may be an independent contractor in the eyes of the company.

If you believe yourself to be employed but have been treated like an independent contractor, talk to your supervisor or review how the IRS determines employment. You can file a report of your situation to officially classify your role one way or another, giving you clarity and leverage for future employment.

Keep in mind that companies can treat independent contractors much differently than employees in a legal sense. Since independent contractors are self-employed, it is their responsibility to carry their own insurance, which means the company can refuse to compensate for injuries incurred on the job.

Help from an Evansville Work Injury Lawyer

Discovering whether you are an independent contractor or an employee has serious legal consequences. If you believe you have been wrongly identified in a personal injury or workers’ compensation claim, contact Hensley Legal Group today. Your first consultation is on us.