Can Independent Contractors in the Construction Industry Get Workers’ Comp?

In the construction industry, many contractors use subcontractors to perform some of the work. A lot of contractors work alone or with a single partner. The combination of these two facts can lead to problems getting workers’ compensation benefits for injured contractors.

Do contractors have workers’ compensation insurance?

If a contractor works alone, owns his own business, or has a small partnership, corporation, or LLC, he may not have workers’ compensation insurance. Most businesses with employees do have to hold this insurance, or be self-insured. But if you work alone and have no employees, you may not have purchased it. (See Minn. Stat. § 326B.701.) Many construction contractors hand some of the work over to subcontractors, which is when workers’ comp problems begin.

Is a subcontractor an independent contractor or an employee?

If a subcontractor legally is an independent contractor, then the original contractor does not have to pay workers’ compensation benefits to her. Minnesota has an extremely strict test specifically for construction subcontractors to determine if they are truly independent contractors. The subcontractor must be registered with the DLI, and all of the following nine factors must be met:

1. The subcontractor maintains a separate business with her own office, equipment, and materials;
2. The subcontractor has a federal EIN or has filed business or self-employment tax returns with the IRS if she has performed services in the previous year;
3. The subcontractor is operating under contract, under which the subcontractor controls the means of performing the services, to perform specific services for a contractor for specific amounts of money;
4. The subcontractor is incurring the main expenses related to the services she is performing;
5. The subcontractor is responsible for the satisfactory completion of the services that she has contracted to perform for the contractor and is liable for a failure to complete the services;
6. The subcontractor receives payment from the contractor for the services performed on a commission or per-job or competitive bid basis only;
7. The subcontractor may profit or suffer a loss under the contract
8. The subcontractor has continuing or recurring business liabilities or obligations; and
9. The success or failure of the subcontractor’s business depends on the relationship of business receipts to expenditures.

If a subcontractor does not meet any one of these nine factors and gets hurt on the job, then the contractor will have to pay medical expenses and wage-loss benefits. If the contractor has no workers’ compensation insurance, he will have to pay out of pocket. And if the contractor is an LLC or corporation, its partners or owners could be personally liable for the expenses.

Need help getting workers’ compensation for your injury? Joe Osterbauer, Esq. and the Osterbauer Law Firm stand up for injured Minnesota workers’ rights. Joe’s 27 years of workers’ compensation experience and his team’s speedy service combine to get clients the results they need. To schedule a free consultation, visit Osterbauer Law Firm online or call Joe’s office at (612) 334-3434.