In Episode 123 of The Workplace podcast, CalChamber Executive Vice President and General Counsel Erika Frank and attorney John Parente discuss the impacts of workers’ compensation law and legal requirements on worker classification and remote work agreements.
California has not been in favor of the independent contractor status and has tried to remove it for some time, says Parente, who has more than 43 years of experience in workers’ compensation law and is Of Counsel at Laughlin, Falbo, Levy & Moresi LLP.
Then along came AB 5 and while it meant to target the gig industry, it led to many unintended consequences and had a dramatic effect on many industries, such as the trucking, film and music industries. The Legislature then had to scramble to make exceptions to the law because of all these unintended consequences, Parente explains.
Employers hire independent contractors for several reasons, but one of the top reasons is that the cost of workers’ compensation insurance is dramatic — and it’s especially burdensome on small employers, he says.
Hiring independent contractors is especially appealing right now, as employers are finding it very challenging to find workers, Frank points out. While employees enjoy the independence of working from home, current law makes it difficult for employers to offer this option due to the number of requirements that have to be met.
So, Frank asks, what is the risk if an independent contractor gets injured?
Parente answers that employers should carry workers’ compensation insurance. There is tremendous liability if an employer doesn’t carry the insurance and the contractor is deemed not to be an independent contractor.
Moreover, Parente recommends that when an employer is hiring an independent contractor, they should consider whether that individual has an independent business license; whether they promote being a business entity on their social media or website; and whether they have other clients. These factors would support the fact that the individual is in fact an independent contractor and not an employee.
Cost of Claims
Parente stresses that it’s a crime to employ workers and not carry workers’ compensation insurance. Moreover, if an employer does not carry insurance and an injury occurs, the employee may not only file a workers’ compensation action, but may file a civil action as well.
Fighting both actions at once can get very expensive, he cautions. A typical workers’ compensation defense costs from $5,000–$20,000, depending on how complicated the case is. Civil defense starts at a minimum $25,000 and can reach as high as $100,000, depending on how complicated the case is.
So, again, there is tremendous risk associated with being uninsured, he says. And in some professions, such as roofing, the rates can be very, very high.
“So, it makes sense to get a basic policy, and even if you only have one or two employees it saves you so much more in the long run,” Parente says.
What happens if a remote worker gets injured at home?
An employee working from home is going to present problems for employers in regard to industrial injuries at home, Parente says. He explains that if someone trips over their own feet at the workplace and is injured, the injury would be considered an industrial injury even though the injury was a result of self negligence.
If an employee works from home and sprains their ankle and it was not related to any form of work activity, then it would be hard for the employee to prove that it is a workers’ compensation claim. However, this is a bit tricky because the employee can lie about when the sprain happened.
Another claim that can be hard for the employer to defend is if the injury is related to an employee’s job duties. If an employee develops carpal tunnel and their job duties include keyboarding, then it will be hard for the employer to defend the claim.
Other problems may arise if an employee needs a physical accommodation or has an ergonomic problem. While it’s incumbent on the employee to tell the employer of accommodation needs, the employer should still talk to their workers and determine what needs they may have.