What Is the Difference Between an Employee and an Independent Contractor in Workers’ Compensation?

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Wondering, what is the difference between an employee and an independent contractor in a workers' compensation claim? The contractor vs. employee designation will play a role in determining your eligibility for benefits after an on-the-job accident. Iowa law prohibits independent contractors from collecting workers’ compensation benefits; therefore, the classification is critical to your case. In most cases, defining the line between contractor and employee is simple. But, for some, it can be more difficult to determine what constitutes an employee and what makes a worker a contractor.

What Is the Difference Between an Employee and an Independent Contractor?

The contractor vs. employee distinction is an important one. Independent contractors perform work for a business, but are not subject to the control of the business. Employees fall under the purview of their employers and must perform tasks assigned to them in the manner in which they're instructed. Understanding the difference between these classification types is one of several important workers' compensation things to know which may affect your claim for on-the-job injury benefits.

Indicators You Are an Independent Contractor

You may be classified as an independent contractor if:
  • You operate like your own business. That means you are listed in the phone book on your own, operate out of a separate location, or even have a company business card.
  • You set your own prices before you work.
  • Your work is by the job; therefore, you are not on anyone’s payroll or salary.
  • You have contracts with the employers/companies you do work for.
  • You have people that work for you, not under you.
  • You do not have a supervisor; instead, you are in charge of your work schedule and task management.
  • You do not receive health benefits from the employer/company you are doing work for.
  • You have been classified as an independent contractor by the IRS.
A contractor could work for a company full-time, but still be an independent contractor. For example, you own your own business and file your own taxes through that business, but you have only one client that you work 40 hours per week for. You do not receive benefits, and you are on a contractual basis; therefore, you are still not an employee of that company.

If You Are an Employee, You Are Entitled to Benefits

If you are not classified as an independent contractor, and you are injured at work—whether due to the employer’s negligence, another employee’s oversight or even your own error—you are entitled to workers’ compensation benefits. Iowa employers are required to provide insurance through a private insurer or become self-insured providers so that they can handle all workers’ compensation claims received. If an employer does not provide this coverage, they are then liable for all workers’ compensation benefits, damages, and even criminal penalties under Iowa laws. For your work injury, you may be entitled to benefits for:
  • Medical—These benefits are paid to the medical provider for all reasonable and necessary medical care related to the work injury. This can include medications, treatments, etc.
  • Disability—This includes wage replacement, but cannot exceed 80 percent of your weekly spendable earnings (your net earnings). The level of disability pay you will receive depends on which category of disability your injury has placed you into.
Iowa workers' compensation law limits the time you have to file such claims. You are also required to notify your employer of the injury immediately following the accident. If you do not file within the specified time, you may forfeit your right to collect benefits. To learn more about the difference between an employee and an independent contractor, and to get assistance with your workers’ compensation claims, contact Pothitakis Law Firm, P.C. today or fill out an online contact form.
Photo of Niko Pothitakis
For the past 15 years Mr. Pothitakis has focused his practice on Workers Compensation and Personal Injury Cases. The firm has two locations, one being in Burlington, Iowa and the other in Keokuk, Iowa. Mr. Pothitakis works with many area unions and employee organizations to provide advice, assistance, and guidance as it relates to employment issues. Mr. Pothitakis provides free consultations to those with legal questions in the firm's areas of practice. In this initial meeting or conference potential clients are provided advice on their need for assistance and how they need to proceed.