Distinguishing a Contractor from an Employee
Question: We recently hired a contractor to do some remodeling work on the bathroom of our Glendale home. We asked that he only work between 8 a.m. and 12 p.m. while our daughter was in preschool. Before any work was started, we signed an agreement with the contractor that he would be paid every two weeks based on hours worked and materials purchased. Three days ago the contractor slipped in the bathroom and broke his ankle. He now wants us to pay for his medical bills because he said he was our employee, and that as our employee we should have had workers’ compensation insurance to cover his medical bills. Do we have to pay the medical bills for our contractor’s broken ankle?
Answer: Probably not. If the contractor was your employee, and you did not have workers’ compensation insurance, you could have liability for his medical expenses. The contractor was probably an independent contractor, however, and you should have no liability for his medical bills. The key factor in distinguishing between an employee and an independent contractor is behavioral and financial control. In other words, did you have the right to control how your contractor performed the work, or did you just want the work done? Although the requirement of only working during the hours of 8 a.m. to 12 p.m. while your daughter was in preschool may be evidence of control, the contractor was not actually required to work during those hours, but he could only work during those hours. Payment every two weeks for hours worked and materials purchased was probably just for convenience, and was probably not a “paycheck” for an employee. Therefore, you should not be liable for the medical expenses for your contractor’s broken ankle.
Other factors in determining an independent contractor:
- The contractor was hired to perform a single task like remodeling your bathroom.
- The contractor is paid on a per job basis according to a contract.
- The contractor maintains a separate business with separate equipment, tools, inventory, and office.
- The contractor’s profits or losses are determined after realizing costs to perform the job.
- The contractor has recurring business liabilities or obligations.
- The contractor maintains separate operations without any commingling with your business operations.
Other factors in determining an employee:
- The employee is guaranteed a regular wage amount for an hourly, weekly, or other period of time.
- The employee is told when and where to work and what sequence to follow.
- The employee has a relationship with you that is permanent or indefinite.
- The employee performs key aspects of your regular business activity.
- The employee is provided with benefits such as a pension plan, vacation pay, sick pay, or even workers compensation insurance.
An overwhelming majority of these factors are in your favor and label the injured worker as an independent contractor responsible for his own insurance. You should not be liable for the contractor’s broken ankle.