Kentucky Independent Contractor Bill Could Impact Worker’s Compensation Cover

A bill that could affect whether employers in Kentucky are required to provide worker’s compensation insurance for many workers received approval from the Kentucky Senate and is headed for the House of Representatives.

Senate Bill 81 would effectively allow more workers to be classified as independent contractors, meaning that an employer would not be required to provide worker’s compensation coverage for them.

Worker’s compensation cases in Kentucky are down in recent years with injuries reported to the state falling to 21,263 in 2012 compared to 48,151 in 1998 and fatality reports plummeting to 40 in 2012 from 113 in 2006, according to figures from the Department of Workers’ Claims.

Those numbers could fall further if this bill receives passage.

The Kentucky Worker’s Compensation Act requires almost all employers to provide worker’s compensation coverage for workers in the event they are injured or become ill as a result of their job. One exception to the general requirement is independent contractors. An employer is exempt from providing worker’s compensation coverage for a worker who is classified as an independent contractor.

Unfortunately, there is no universally accepted, easy to understand definition of “independent contractor.” In some situations a worker’s independent contractor status is clear to both parties. But disputes frequently arise over whether a worker is an employee or an independent contractor.

As the law stands, when a worker’s compensation judge is required to make a determination, four factors are typically considered:

• Nature of the work performed as it relates to the business of the possible employer
• Extent of control of details of the work
• Professional skill of the worker
• Intentions of the parties

The proposed legislation would provide a much broader definition of “independent contractor,” by stating that the person is “engaged in a distinct occupation or business and that the person supplies the instrumentalities, tools, and skills required to perform the work contracted for. …”

In addition, the bill would “require the Labor Cabinet to be the determining authority in issues related to employee misclassification.” Finally, the bill exempts the “prime contractor for a subcontractor’s misclassification of an employee, and for exempting independent contractors from certain benefits.”

The bill’s sponsor, Sen. John Schickel, R-Union, says the bill has support from Kentucky’s business sector. That’s no surprise since it would clearly benefit employers if fewer workers are required to be covered by worker’s compensation.

Opponents are concerned that the legislation, if passed, would “allow anyone employed by someone else to be considered a contractor,” including farmers, factory workers and school teachers, said Sen. Ray Jones, D-Pikeville.

If you have been injured in a Kentucky workplace accident and your employer has denied your claim for worker’s compensation on the basis that you are an independent contractor, you have the right to appeal that denial.

Because the definition of “independent contractor” remains elusive, a worker’s compensation judge will look to the specific facts and circumstances of your situation when deciding if your employer is exempt from covering your injuries. Having an experienced Kentucky worker’s compensation attorney on your side at the appeal stage can dramatically increase your chance of succeeding.