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Independent Contractor or Employee?

On Behalf of | Jan 5, 2018 | Worker's Compensation

Iowa workers compensation benefits are available to Council Bluffs employees who are injured in the course of their employment. Independent contractors don’t qualify unless they purchase their own workers compensation insurance. State statutes are not all that helpful in spelling out the difference so Iowa courts have used common law (judge made law) to help decide who is what in a particular set of circumstances.

The use of independent contractors instead of employees has become widespread. Businesses may attempt to take an advantage by hiring people to work on a specific project or perform a certain type of work normally at a lower cost than hiring an employee. Some of these employers are illegally misclassifying workers as independent contractors in order to avoid the laws, rules, regulations, taxes and costs that come with hiring an employee, including paying for workers compensation insurance to cover the person.

Statutory law

Iowa Code  §85.61(11) states that under the law, ‘“Worker” or “employee” means a person who has entered into the employment of, or works under contract of service, express or implied, or apprenticeship, for an employer…’

The law also spells out specific instances where a person would be considered an employee under the law and Iowa Code §85.61(11)(c) lists those not considered employees, including,

  • A person whose employment is purely casual and not for the purpose of the employer’s trade or business,
  • An independent contractor, and,
  • An owner-operator of a truck under certain circumstances.

As part of the process of determining if a claimant is an employee, he or she needs to show at the time of the injury he or she was rendering services for the alleged employer. The employer then has the burden of proving the claimant was an independent contractor and not an employee.

Common law

The state Supreme Court in the case of Henderson v. Jennie Edmundson Hospital in 1970 spelled out a five part test to help determine if the injured worker was an employee at the time of the injury. The factors the court spelled out are,

  • The alleged employer’s right to select the worker, or to employ at will,
  • The alleged employer has an obligation to pay wages to the worker,
  • The alleged employer’s right to discharge or terminate the relationship,
  • The alleged employer’s right to control the work being performed, and,
  • Whether the alleged employer is the responsible authority in charge of the work or for whose benefit the work is performed.

The court also stated the parties’ intent as to the nature of their relationship could be considered. The state court of appeals in Stark Construction v. Lauterwasser in 2014 wrote that “community custom” may be looked at if there’s a question as to which party controlled the work being done.

That decision states in part,

…the most important consideration in determining if a person is an employee or independent contractor is “the right to control the physical conduct of the person giving service…If the right to control, the right to determine, the mode and manner of accomplishing a particular result is vested in the person giving service [that person] is an independent contractor, if it is vested in the employer, such person is an employee.” (quoting Schlotter v. Leudt.

If you have been injured on the job, even if you signed an agreement stating that you are an independent contractor, you may still be considered an employee under Iowa workers compensation law if the facts, as they are applied to these different tests, show that there was an employee-employer relationship at the time of the injury.

Contacting a Lawyer

The Telpner Peterson Law Firm, in Council Bluffs, Iowa, represents employees who have suffered workplace injuries in Iowa or Nebraska. Our principle workers compensation attorney, Walter Thomas, stands up for you so that you get the maximum benefits under law. To discuss your case schedule a complimentary consultation with our Council Bluffs office. Simply call 712-309-3738 or contact Telpner Peterson Law Firm online.