Can you receive compensation if you’re self-employed & become injured?
Georgia law requires most employers to carry workers’ compensation insurance if they employ 3 or more employees, including full-time, part-time and seasonal staff.
The benefits made available to eligible injured workers include lost income, compensation for qualified medical and rehabilitation treatment, death and other benefits.
However, they only cover an employee’s financial losses for injury, illness or death that incurred during assigned work hours while doing assigned duties. They don’t cover injuries while doing unassigned duties or during lunch or other breaks.
An employer can satisfy its workers’ compensation obligation by purchasing third-party workers’ compensation insurance or complying with requirements for self-insurance.
But what if you are self-employed?
One issue sometimes raised in connection with an on-the-job injury is whether the injured party is independently or “self” employed. In Georgia, self-employed workers aren’t required to be covered by workers’ compensation insurance.
What does self-employed mean?
Often, a self-employed person performs services or labor for another person.
If they’re injured, taken ill or die while doing so, are they an employee of that other person or are they self-employed?
This is a fundamental question in determining whether they’re eligible for benefits under the other person’s workers’ compensation coverage.
One evidence of status is whether a worker is issued an IRS form W-2 (as an employee) or an IRS form 1099 (as an independent contractor). Unfortunately, some unscrupulous employers attempt to avoid their workers’ compensation obligations by inappropriately classifying their employees as being freelancers or self-employed. They try to document that classification by issuing 1099s during tax season.
Common law classifies whether the worker controls when and how they perform their services. Also, they typically enter into a written contract governing the scope, specifications and delivery of the product of their services. It doesn’t govern how they perform the services to produce the required result.
In Georgia, the self-employment classification is defined by statute OCGA §34-9-2(e):
“(e) A person or entity shall otherwise qualify as an independent contractor and not an employee if such person or entity meets all of the following criteria:
(1) Is a party to a contract, written or implied, which intends to create an independent contractor relationship;
(2) Has the right to exercise control over the time, manner, and method of the work to be performed; and
(3) Is paid on a set price per job or a per unit basis, rather than on a salary or hourly basis.
A person who does not meet all of the above-listed criteria shall be considered an employee unless otherwise determined by an administrative law judge to be an independent contractor.”
What can a self-employed worker do without workers’ compensation insurance?
If you are a self-employed worker, you typically aren’t eligible to be covered by the workers’ compensation coverage of the party for whom you render services. You also aren’t required to buy workers’ compensation insurance, though this is recommended.
What should a self-employed independent contractor do to protect themselves against injuries incurred while performing services?
First of all, even if you have insurance, you can always sue the person responsible for your injuries or illness. In the case of death, your survivors can sue under the Georgia Wrongful Death Act.
You can also buy special life insurance with accidental death benefits. You can cover auto-related injuries with auto insurance for your injuries. (Take note that rates may be affected by your declaration that you use your vehicle for work.)
However, as a self-employed worker, you uniquely wear 2 hats. You are both an employer and an employee.
Can you buy workers’ compensation insurance to cover yourself? Should you?
The answer is yes, and yes.
Why should a self-employed worker buy workers’ compensation insurance?
If you’re injured while performing work as a self-employed worker, you cannot be covered by another’s workers’ compensation insurance. In addition, your health, auto or accident and disability insurance might deny the claim since it’s related to your work.
Even if you were covered, those coverages might not cover income replacement—with the possible exception of disability insurance. Your own workers’ compensation insurance would, however.
A health or disability insurance policy might specifically exclude work-related incidents because your insurance provider prefers that you make your claims under workers’ compensation. For these reasons and more, a self-employed worker should have workers’ compensation insurance even if you have health and other insurance.