Independent Contractors and Workers’ Compensation in Arizona

With the rise of the gig and freelance economies, more Arizonans work as independent contractors than ever before. They face the same risks of work injuries and occupational illnesses that traditional employees face; however, Arizona workers’ compensation laws treat independent contractors differently for work-related injuries.

Full or part-time employees who suffer a workplace injury or become sick on the job are typically entitled to benefits under Arizona’s workers’ compensation system, which is a form of business insurance they purchase through an insurance company.

Employees can receive workers’ compensation benefits, including compensation for medical care, partial lost wages, rehabilitation services, and even death benefits.

The same cannot be said, however, for independent contractors.

Under Arizona state laws, employers are not legally required to purchase workers’ comp coverage for independent contractors. This puts contractors in a precarious position if they are injured on the job without a workers comp policy to cover medical bills, physical therapy, or the cost of rehabilitation services.

However, there are cases in which employers can misclassify employees as independent contractors, so the employer can avoid paying insurance costs to cover their work injuries. If you believe that has happened to you, then it is time to contact an experienced workers’ compensation lawyer at Matt Fendon Law Group on your side.

Since 2008, Matt Fendon—a board-certified and nationally recognized Phoenix workers’ compensation attorney—and his team are capable of handling the most complex job injury claims. Call or contact us today for a free consultation if you have suffered a workplace injury as an employee or as a contractor.

Who Is an Independent Contractor?

An independent contractor refers to a variety of people and small business owners. These can be self-employed individuals like sole proprietors or people who have their own business like a construction industry general contractor or subcontractor engaged under a written contract to work on a job site.

Examples of contracting businesses include roofers, landscapers, housekeepers, truck drivers, rideshare drivers, and providers of physical labor or other services.

What’s the Difference Between Employees and Independent Contractors?

Employees and independent contractors have many key differences, including:

• Employees must have their income taxes and Social Security and Medicare contributions withheld from their pay. Independent contractors do not have any money withheld from their pay but instead remit their tax obligations themselves, usually in estimated quarterly payments.
• Employees are entitled to the protections of various labor laws, such as Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, and the Fair Labor Standards Act. Independent contractors do not qualify for the protection of such laws.
• Employees primarily derive their income from working for one employer. In contrast, independent contractors may work with several clients and advertise to provide services to different clients or customers.

By default, a worker is classified as an employee rather than an independent contractor. However, a worker may be misclassified as an independent contractor in Arizona if they meet the state’s “right to control” test. This test evaluates whether a worker or an employer has the “right to control” how work is performed.

With an independent contractor, an employer only has the right to dictate the results of the work. But with an employee, an employer can also control how the employee achieves those results. Factors that are considered under the right-to-control test include:

• The duration of employment: Permanent, indefinite employment indicates employee status, while working on a project or fixed-term basis may indicate independent contractor status.
• The method of payment: Workers paid by regular hourly wages or salaries should be classified as employees. Employees who invoice on a billable hour or project basis might qualify as independent contractors.
• Who provides the equipment and materials for the job: Independent contractors are expected to use their own tools and equipment, while employees may expect to have those furnished to them by an employer.
• The right to hire, fire, or discipline: An employer may hire, fire, and discipline employees. With an independent contractor, an employer may only terminate the contract according to its terms.
• The right to exercise control over details of the work: Employers may direct employees in specific details of how they perform their work, including when and where they must work. Independent contractors have much greater latitude in completing their work, as an employer only has an interest in the end result.
• Whether the work is performed in the usual course of the employer’s business: Workers who perform the core services of the employer should be classified as employees. By contrast, employees who provide more ancillary work may be classified as independent contractors.

Do Independent Contractors Have the Right to Workers’ Compensation Benefits in Arizona?

As noted before, Arizona does not require employers to carry workers’ compensation coverage for an independent contractor.

Sometimes, it’s difficult for employees to know whether they actually qualify for workers’ compensation. Here’s an example:

Sarah is an employee for Company A, which works as an independent contractor for Company B. She slips and falls while working on a job for Company B. Sarah cannot file for workers’ compensation benefits through Company B because she is not their employee. However, she may be entitled to workers’ comp from Company A. Even though Company A is an independent contractor, Sarah is not.

Another problem is that the independent contractor status is frequently abused. Employers who purposely misclassify employees as independent contractors as a cost-cutting measure can be held accountable with the help of a seasoned workers’ compensation attorney.

When Do Independent Contractors Need Workers’ Comp?

Although sole proprietors and individuals working as independent contractors are generally not required to have a workers’ compensation insurance policy, there are circumstances where an independent contractor may want to consider purchasing a workers’ compensation policy of insurance, including for:

• Meeting the terms of a contract: Some businesses may require independent contractors to carry their own workers’ compensation insurance to ensure that the independent contractor (or anyone working under the independent contractor) does not make a claim against them.
• Providing financial resources for medical bills and lost wages: Many health insurance policies refuse coverage for injuries suffered in the course and scope of work. Workers’ comp insurance can also provide partial wage replacement when an independent contractor suffers a work injury or occupational illness that renders them unable to work.
• Hiring employees or subcontractors: An independent contractor who hires people to work for them on client projects may be required by Arizona law to purchase workers’ compensation insurance if someone is hurt while working for the contractor.

Common Independent Contractor Injuries

Examples of injuries that independent contractors can suffer while working for their clients include:

• Strains and tears of ligaments, tendons, and muscles
• Broken bones
• Neck and back injuries
• Traumatic brain injury
• Spinal cord injury/paralysis
• Repetitive stress injuries
• Crush injuries
• Electrocution
• Burns
• Toxic exposure
• Internal organ injuries and internal bleeding
• Amputation
• Deafness or hearing loss
• Blindness or visual impairment

What to Do If You’ve Been Hurt as an Independent Contractor

If you’ve been injured while working as an independent contractor, you can take steps to preserve your rights to seek compensation for your recovery:

• Seek immediate medical attention. Make sure to inform the doctor you were injured while working.
• Notify the employer of your injury. Until you’ve determined whether you are correctly classified as an independent contractor, you should abide by Arizona’s notification requirements to protect your right to potential workers’ comp benefits. Tell the employer about your injury in writing as soon as possible.
• Document the scene of your injury. Take photos of what harmed you and any visible injuries you may have suffered.
• Get witness statements. Collect contact information from anyone who may have seen the job accident.
• Keep copies of your medical records, any bills, invoices, or receipts you receive for medical expenses during your recovery, as well as your income statements. Workers’ compensation in Arizona covers medical costs, partial wage replacement, and disability benefits to qualifying workers. This information will be critical if you need to file a claim.
• Talk to an Arizona workers’ compensation attorney. Being an independent contractor may limit your access to workers’ comp benefits, but it’s wise to check your employment status first.

How Our Workers’ Compensation Attorneys in Arizona Can Help

If you were injured while working as an independent contractor, a workers’ comp attorney from Matt Fendon Law Group can help you by:

• Reviewing the facts and circumstances of your employment to determine whether you have been properly classified as an independent contractor under Arizona workers’ compensation laws.
• Walking you through your options for seeking financial compensation based on your employment status and the underlying circumstances of your work injury.
• Filing workers’ compensation claims on your behalf, as appropriate.
• Aggressively pursuing maximum workers’ compensation benefits for you, if possible.
• Identifying whether you have any third-party negligence claims and connecting you with qualified personal injury lawyers near you.

Don’t assume that your status as an independent contractor is accurate if you’ve been hurt on the job in Arizona. Call Matt Fendon Law Group for a free consultation today.