A commentator on a TV news show recently talked about new developments involving the ride company Uber. The commentator remarked that Uber has made sure to set up its procedures so drivers are independent contractors, not employees.
The dilemma over independent contractors versus employees is nothing new. It’s just expanding and affecting more of us with changes in the way Americans do business.
This was cited as a major trend at a national conference of workers’ compensation professionals. The International Association of Industrial Accident Boards and Commissions (IAIABC), meeting in April in Santa Fe, noted how new businesses like Uber are blurring the lines between employment and self-employment. This could lead, some participants said, to significant changes in how workers are protected, if they are protected at all.
Workers’ compensation is provided by almost all employers to employees. Employees injured at work are entitled to medical care with no deductibles or copays and, if unable to work due to the injury, cash benefits as a partial wage replacement.
Workers’ comp is part of the social safety net mandated for employed workers. This includes the right to get paid for their time including extra pay for overtime. The safety net also includes unemployment insurance for workers who get laid off, employer contributions to the worker’s Social Security and other benefits.
Self-employed people don’t get any of those protections. If you’re self-employed and get injured, or if you’re a consultant and your contract doesn’t renew, you’re on your own.
But if you’re the business owner starting a new business with limited capital, you have incentives to set it up so the people who work with you are independent contractors like Uber drivers. Being an employer may be more responsibility than you can handle.
Self-employment is common in New Mexico. According to the New Mexico Economic Development Department, in 2013 there were about 119,195 nonemployer businesses in New Mexico, and roughly 43,737 employer establishments.
All those self-employed people are not protected.
In workers’ compensation, two big questions determine whether an injury is covered or not. First, is the person an employee? Second, when the accident occurs, is this person at work or not at work? In real life, the answers are not necessarily simple.
If you work in a factory and get a paycheck, you’re an employee. You’re at work when you’re inside the building. When you step out the door (or drive out of the parking lot), you’re not.
But what if your boss asks you to stop at the post office on your way home? Are you covered if there’s an accident? What if you’re working at home and dividing your time between writing a report and doing your laundry? Those gray areas are one reason cases get litigated.
What if your “employer” makes you sign a contract saying you’re an independent contractor? That actually has a simple answer (in the past my job was to explain this to new business owners, who didn’t believe me). The contract is meaningless and unenforceable. Whether you are an employee or a contractor depends on several conditions, such as whether you control your own time. The IRS has a set of guidelines. The workers’ compensation system does not necessarily follow them. That’s another reason cases get litigated.
Participants at the IAIABC meeting suggested we might start hearing again about sweeping changes to the old protections, to provide equal coverage regardless of employment status. This concept was once called 24-hour coverage. We don’t have it because after years of national debate nobody could figure out how to make it work or who pays for it.
And the argument about Uber will continue.
Triple Spaced Again, © New Mexico News Services 2016