Michigan Workers’ Disability Compensation Act: Independent Contractors as Employees

Michigan Workers’ Disability Compensation Act: Independent Contractors as Employees

by / Tuesday, 04 March 2014 / Published in Workplace Woes

The Michigan Workers’ Compensation Act provides for employees injured within the scope of their employment. The Act reduces an employer’s liability because it prevents them from being sued for injuries that occur on the job. The act bars all claims, UNLESS the employer commits an intentional tort.

However, employers often try and reduce having to pay for their employees by classifying them as independent contractors. An independent contractor is a special legal relationship where the employer is not liable for the injuries sustained by the independent contractor or to others (there are some limited exceptions).

Generally, the line can be blurry, and the Michigan Workers’ Disability Compensation Act has a test to determine whether an independent contractor is actually an employee who would be covered under the act. It’s called the economic-reality test:

  1. What are the effects of terminating the employee?
  2. Is this person an integral part of the person’s business?
  3. Does the employee depend on the job for the payment of their living expenses?
  4. Does the employee furnish his own materials?
  5. Does an independent contractor customarily perform this work?
  6. Does this person control wages, hiring, firing, etc.?

So, employers, be careful how you classify your employees because courts will nitpick what you say and hold you liable for the workers’ disability benefits that employees to which are entitled, despite classifying an employee as an independent contractor.

Goodwin & Scieszka is a personal injury firm in Southfield, Michigan that’s been fighting for you for over 30 years:

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