Workers Comp Corner – November 2016
Workers Comp Corner is sponsored by National Financial Partners: For more information or rates on Workers’ Compensation or any other business insurance contact Chuck Rose at National Financial Partners, 802-775-4443 or [email protected]
www.nfp.com/poulos
Understanding Misclassification, Miscoding & Fraud Part 1 of 5
Employers who comply with the state’s labor laws should not be put at a competitive disadvantage by businesses that do not adequately insure their employees.
This is why the Department takes seriously accusations of misclassification, miscoding, and fraud committed by employers doing business in Vermont.
A team of trained investigators and attorneys is prepared to respond promptly to complaints filed with the Department. Click here to complete a complaint form.
Our staff will shut-down non-compliant businesses and impose civil penalties, as necessary, but the Department’s primary goal is to educate employers of their legal responsibilities and achieve voluntary compliance. In some cases of non-compliance, the Office of the Attorney General may also seek criminal penalties.
Misclassification
Misclassification occurs when an employer improperly classifies employees as “subcontractors” or “independent contractors” to avoid paying for benefits such as workers’ compensation insurance coverage.
The test for misclassification in workers’ compensation insurance coverage is different than the test for Unemployment Insurance.
In Vermont, it’s assumed that anyone compensated for work is an employee UNLESS the employer can demonstrate otherwise, or there is a specific exemption in law.
If you are an employer who has one or more employees, and you hire another “individual” to perform work in the course of your business, most likely that individual is your employee. This is true even if the individual receives a “commission.”
An independent contractor, on the other hand, is someone you hire who performs a job that is not similar or connected to your business and whose work you have no direction or control over.
Misclassification Examples
Independent contractor: You have a property management company and you hire a plumber to fix the plumbing in your company office; chances are this person is an independent contractor if this individual’s work is otherwise not connected to your business and you provide no direction to this individual.
Employee: As part of your company you fix up houses and hire a plumber to inspect and repair the plumbing in your buildings; this individual is your employee if you direct the work that this individual performs, the hours of employment, the materials or tools he or she is to use, etc.
Statutory Employer: The plumber has two assistants who work with him on your buildings; the plumber has no workers’ compensation insurance coverage for these assistants. Chances are, you will be considered the statutory employer of the two assistants for purposes of workers’ compensation insurance coverage.
For more information about misclassification, exclusions, and employees vs. independent contractors in the Workers’ Compensation insurance context, click on the following links:
Misclassifications
Exclusions
Employees vs. independent contractors
