Workers' compensation only protects employees. Workers who hold titles other than employee are typically not covered by the protections of the Utah Workers' Compensation Act. Some employers misclassify their workers in order to save on paying for workers' comp and other employee protections. Even though the worker is called something else, they are treated as employees in every other way. This is both illegal and unethical. Here are the definitions of different worker titles to help protect against potential misclassification:
What is an employee?
The Utah Courts determine a worker to be an employee based on two criteria: (1) the amount of control an employer has over the worker and (2) how the worker is paid. Firstly, employers have the right to control where, how, and for how long an employee carries out their tasks. For example, employees usually work an assigned shift based on the employer's schedule. If an employer has the right to control their workers this way, their workers are considered to be employees. It doesn't matter if they actually controlled these factors or not, just that they had the right to do so. Secondly, employees are paid according to a certain wage or salary. Payment amount is based on how much an employee works. The Utah Courts consider workers who fit these criteria to be employees.
"Independent Contractor" is arguably the most common title used to misclassify employees. An independent contractor is “independently established” from their employer. They have their own practice or business, which is separate from whoever they may be working for at the time. Since independent contractors are separate from the employer, they are expected to provide their own equipment and training for a job. They are typically only hired for a specific project and their employment with the employer terminates after the project is finished. Independent contractors are free to choose their own hours so long as they finish their contract within an agreed upon timeframe.
In contrast, employees are reliant on their employers for equipment and training, and are told when and where to work. Their relationship with the employer is more general, and doesn’t typically terminate with the completion of a specific project. If you are told that you are an independent contractor by your employer but are provided with equipment, training, and/or a work schedule, chances are you have been misclassified.
Members of LLCs
An LLC is a type of business. LLC stands for “Limited Liability Company”. LLC ownership is shared among various individuals called "members". Members of an LLC are considered to be “self-employed” rather than employees based on their shared ownership. Since they are not employees, they do not qualify for the benefits and protections that employees do. There is an exception to this in an Utah state law, passed in 2011.Under this law, construction-based LLCs are required to provide workers’ compensation and unemployment benefits to their members. Multiple construction LLCs in the Utah and Arizona area had been claiming their employees were members to avoid providing workers’ comp and other workplace protections, and this law was a response to those LLCs. This law protects most employees of construction-based LLCs from misclassification as members.
Even with that protection, you should always be cautious about your employer labeling you as a “member” of their LLC, whether they are construction-based or not.
There is a simple test to tell if you are an employee being misclassified as a volunteer: are you being paid? Volunteers, by definition, perform services without compensation beyond reimbursement for actual expenses. You are not a volunteer if you are being paid for your services.
The Utah Workers' Compensation Act doesn't cover volunteers, but there is a still a chance you could qualify for workers’ compensation benefits if you get hurt while volunteering. The Utah legislature passed a law in 2016 allowing employers to include volunteers in their workers compensation coverage. This coverage is not required, so not every organization offers it. Organizations who offer specific workers compensation coverage for their volunteer workers must post notice of this coverage in the workplace and on its website where it recruits volunteers.
You should always check if an organization or company provides coverage for volunteers before volunteering with them. If they do and you get hurt while volunteering, you need to follow workers' comp law in reporting your injury and getting treatment. You can find more information about that in other blog posts.
Employees are covered by benefits and protections through their employment that independent contractors, LLC members, and volunteers do not. These protections are essential to keeping our workforce safe. Employers who seek to avoid providing these protections through misclassifications hurt workplace integrity. You can keep your employer accountable and protect yourself as you keep the distinctions above in mind and ensure you are properly treated at work.
For more information and answers to questions about specific situations, call Tim Daniels at 435-592-1235!