My area of practice is not primarily labor law, however on a few occasions, I have handled claims against uninsured clients by injured workers. The reason I’m addressing this issue right now is because California is on the forefront for leading other states and countries in making changes to worker’s compensation policies.
California has battled danger in the workplace through strict enforcement of its labor laws. If you hire people to work for you and pay them over a certain amount of money, then you must have worker’s compensation insurance. The nightmare of penalties and costs to you if you do not have this insurance, can be devastating, as well as the criminal penalties that could follow.
Recently, I attended a hearing/conference at the Workers Compensation Appeals Board (“WCAB”), the agency that determines whether a worker is an employee or an independent contractor in deciding disputes. I was representing a company being sued by an injured worker for worker’s compensation. The company I was representing did not have worker’s compensation insurance when he performed services for my client.
• He claimed he was an employee; we claimed that he was an independent contractor. He said that he was injured on the job; we challenged the injury, claiming it had occurred prior to working for my client.
• We claimed the man was soliciting jobs as an independent contractor using images from my client’s jobs (on which he had worked); he claimed he was just looking for labor jobs.
• We pointed out that the contractor had accepted pay via an IRS 1099 form, which is how independent contractors are paid; he didn’t argue that point; he just said he thought that was how he was supposed to be paid.
• We had declarations from others, with whom the man worked, that he had brought his own tools, worked when he wanted and did not have to be supervised. They also agreed that he had been injured elsewhere before working for my client.
A little about the Workers Compensation Appeals Board: this state agency doesn’t care one bit what your reasons are for not having worker’s compensation insurance and they don’t take into consideration any financial hardship you may endure if they find for the worker. This agency only wants money for the worker, regardless of whether the employer goes broke while trying to pay. Also, they will rule against you more times than not as to whether your worker was an independent contractor or an employee.
While we felt that we had a strong case in proving that the worker was an independent contractor, the WCAB judge seemed to argue on behalf of the worker during the conference. After all, this is California and it is extremely zealous in protecting its workers. However, the antagonism we were experiencing, lessened somewhat when the judge learned there were likely other deep pockets – two other possible employers – who could compensate the worker. One was the project’s designer; the other a homeowner who is a very well-known member of the entertainment community.
As soon as the judge heard this, he asked when the house had been purchased. “Recently,” was the answer to which he stated, “Oh good. Then the homeowner most likely has worker’s comp insurance through his homeowner’s insurance policy.”
With this insurance, that judge knew he would not have to hold a trial to determine whether the worker was an employee or not. Trials take time and cost the state money which also creates a backlog of work for the judges. So even though we believed we could win this case, it will likely come down to whether the homeowner has worker’s comp insurance.
So here’s my word to the wise: If you employ even a nanny or a maid, and are paying them $100 or more while on the job, you should definitely look into purchasing worker’s comp insurance, either alone or through a homeowner’s policy. Because sooner or later it could happen to you – even if you treat a worker like a member of your family.
Ultimately, those who work in wealthy homes are more savvy now than they used to be and if they run into a situation where they are injured and don’t have the money to pay for their medical bills, then they may be looking to you to help them out.