Employee or Independent Contractor? It Makes a Difference.
Not necessarily. What the employer calls the worker does not make it so. There are formal tests that L&I and the Courts use to decide if a worker is an independent contractor or a worker.
No. You could sign a contract saying you are the man on the moon and it would not be true. An agreement between you and your employer does not control Labor and Industries.
Tax form 1099 sent to you by an employer does not make you an independent contractor. A 1099 is a federal tax form used for federal tax purposes. It does not determine how L&I will apply it’s rules.
There are many, and each agency has its own tests. The agencies include the Federal Department of Labor, IRS, Employment Securities and Washington State Department of Labor and Industries. This page is written for injured workers in the Washington Labor and Industries system. If you are an employer or if you are interested in another system, contact them or a lawyer who does that work.
Your status as an independent contractor or as an employee makes a huge difference in taxes, recordkeeping, employment benefits, L&I claims, third party lawsuits, and in L&I premiums and assessments.
The most important factor is one of direction and control. In general an employer controls an employee. The essence of the employment relationship is personal labor. There is however much more to this. There are specific L&I tests, and here they are:
If one of these two statements is true, then the individual is an independent contractor.
If the worker is not an independent contractor via the personal labor test above then the employer must use the 6-part or 7-part test to determine if the employee is a worker or an independent contractor. When using the 6-part or 7-part test, remember that your worker must pass all 6 parts to be exempt from coverage (7 parts for construction). If your worker doesn’t pass all parts of these tests, they are a worker, not an independent contractor, so the employer must provide workers’ compensation.
More bad news for employers. Employers who unfairly compete by not paying L&I premiums are considered to be cheaters. L&I and other state and federal agencies aggressively audit and police employers. They are watching the line between employee and Independent Contractor. If they find an employer on the wrong side of the line, it could get expensive
A worker is an employee. The statutes found in, RCW 51.08 specifies who is a worker and the exceptions.
Yes they do. Coverage is mandatory. Almost all workers must be covered. RCW 51.08.180 specifies who is a worker.
Yes there are exceptions to mandatory L&I coverage. RCW 51.12.020 lists exceptions to include domestic servants, gardeners and handyman in or about the private home of the employer, sole proprietors, or partners, bona fide corporate officers, entertainers, newspaper vendors, and some vehicle operators. There are other exceptions. See all of the Statues in RCW 51.12.
It’s complicated: consider this example. If a homeowner hires a plumbing company:
An independent contractor is hired to perform a specific limited task, and when they are done with that or those tasks they get paid.
An employee is hired on an ongoing basis and is paid for their time.
An independent contractor can sue you if you are negligent. An employee cannot.
For sure they will, so long as the employer approaches L&I first.
FAQ – Frequently Asked Questions About L&I Claims with Helpful Answers
Third-Party Claims with an L&I Injury
Third-Party Election Form
Temporary Agency Employee Lawsuits and L&I Job Injuries. Third Party Rights in Washington.
L&I Benefit Information for Injured Workers
Telephone – Call for information or a free strategy session – 206-736-4427