Workers’ Compensation Benefits and Independent Contractor Status

It is becoming increasingly common for employers to argue that an injured employee is an independent contractor. Under Michigan law, independent contractors are not entitled to workers’ compensation benefits (unless they carry their own insurance coverage). Disputes concerning employee status are most common in the construction and building trades.

The 2011 Michigan Workers’ Compensation Act defines an employee as any person performing service in the course of his trade, business, profession, or occupation. However, an employee cannot:

• Maintain a separate business
• Hold himself or herself out to and render service to the public
• Cannot be an employer subject to this act

Unfortunately, there was still debate as to who qualified as an employee for workers’ compensation purposes. On 11/25/2014, the Michigan Supreme Court addressed the employee vs. independent contractor analysis in Auto Owners Ins. Co. v. All Star Lawn Specialists.

In the case, a worker was injured when a leaf vacuum tipped over. At the time of the injury, the company he was working for had multiple insurance policies– including workers’ compensation, no-fault auto, and general liability policies. When the worker filed negligence and no-fault auto claims, the insurance companies asserted that he was an employee of the company (and therefore should receive workers’ compensation benefits instead of negligence damages or full no-fault benefits).

According to the Michigan Supreme Court, a worker does not have to meet all three of the criteria listed above. Instead, if any of the three criteria are met, a worker is an independent contractor. In other words, if a worker either runs his own independent business, offers his professional services to the general public, or qualifies as an employer under the Michigan Workers’ Compensation Act, he will be ineligible for workers’ compensation benefits.

Notably, independent contractors, while ineligible for workers’ compensation benefits, may file negligence claims seeking damages in excess of Michigan workers’ compensation structure.

If you have been injured while working, and have questions about your employment status, please contact McCroskey Law today. Our team of skilled workers’ compensation attorneys are available in Muskegon, Grand Rapids, and Battle Creek. Initial consultations are always free. We are here for you.