The way a company classifies its workers – whether as employees or independent contractors – has a significant bearing on whether they will be able to collect workers’ compensation benefits for an on-the-job injury.
You see, employees are entitled to workers’ compensation benefits. Independent contractors aren’t. The problem is too many companies say their workers are independent contractors, when the collective evidence shows they are in fact employees. For these individuals, workers’ compensation benefits are not totally out-of-reach, but they are tougher to get because workers first have to prove in court that they are actually employees.
Now, North Carolina Gov. Pat McCrory has signed an executive order designed to crack down on those companies who purposely misclassify workers in order to avoid paying workers’ compensation insurance.
Executive Order 83 establishes a new office within the North Carolina Industrial Commission: The Employee Classification Section. The idea is to make it easier and more efficient to share information and initiate collaborative enforcement against rogue companies.
It’s an issue that is of interest not only to workers who may get injured, but also to other businesses. When a company plays by the rules, classifies its workers correctly and pays the appropriate level of workers’ compensation insurance, that costs money. It’s not exorbitant, but it is an expense. So when other companies skirt those rules, they start out at a disadvantage because they aren’t paying their share. Plus, if a worker is injured and the company doesn’t have the right insurance, the burden shifts not just to the worker, but taxpayers, in the form of emergency medical services costs, social services and long-term disability benefits.
In short, the only one who wins in this game is the crooked employer.
Gov. McCrory was quoted as saying this new division will work with a myriad of other state agencies to make sure any reported state law violations are investigated and, if verified, penalized and rectified.
Liaisons will be appointed from the Division of Employment Security, the Industrial Commission and the North Carolina Department of Revenue to make sure each agency is taking the right kind so enforcement actions and are sharing all the information that needs to be shared. There is also a provision of the order that allows for a more open door policy between the Department of Labor, Department of Insurance and the Employee Classification Section.
The issue of worker classification was first taken up by the legislature last year, largely because of the fact the issue was spotlighted by an investigative series by the Raleigh News & Observer. However, lawmakers failed to reach a compromise on the issue prior to the close of the session, so McCrory took this executive action to get the ball rolling. He told reporters he hopes this is only the beginning and that legislators will now be able to build on what he’s already established.
The governor has appointed Bradley Hicks, a former investment house attorney and a state business development official, to head the new bureau.
Workers who have been injured and believe they have been wrongly classified as independent contractors should contact an experienced workers’ compensation attorney.
If you have been injured at work, contact the Lee Law Offices at 800-887-1965.
North Carolina Governor Signs Executive Order on Employee Misclassification, Jan. 11, 2016, Insurance Journal
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