Employers may try to save money on their insurance premiums by classifying their workers as independent contractors, not eligible for workers’ compensation benefits. If a worker is injured or sickened at work and files a claim for workers’ compensation benefits, the employer’s attempt to economize may backfire when the insurance company pays the benefits to the employee and pursues the employer for the added expense.
In a decision (Case No. 13-P-1677, entered June 18, 2014), involving a drywall contractor, Universal Drywall, LLC, the Appeals Court of Massachusetts affirmed an award of damages to Travelers Property Casualty Company of America, the company’s workers’ compensation insurance carrier, since Universal had improperly classified its workers as independent contractors when they were actually employees within the meaning of the Workers’ Compensation Act, Mass. G.L. ch. 152.
The insurance premium Travelers charged to Universal was based on the number of Universal’s workers who were eligible for workers’ compensation benefits. Since Universal classified most of its employees as independent contractors, not eligible for benefits, the premium it paid to Travelers was reduced because most of Universal’s workers were not covered. Continue reading →