Employers Avoid Workers Compensation Payments With “Contractors”June 26, 2015
Reports have surfaced about employers who avoid workers compensation insurance payments by labeling their employees as independent contractors. Research studies have shown that up to 20 percent of employers misclassify their employees as independent contractors. The studies have linked the rise in misclassifications to increases in workers compensation insurance premiums over the last two decades. A report published by the Economic Policy Institute stated that “misclassified workers can now be found in almost every sector of the economy.”
Illinois Law Targets Workers Compensation Fraud
The rising cost of workers compensation insurance has reportedly been a growing problem for employers in Illinois. In 2008, the state legislature passed the Employee Classification Act, which ensures that workers are automatically classified as employees, and eligible for workers compensation, unless the employer meets some very specific criteria. The law was designed to target industries, such as construction, which have dangerous work environments and seek to use independent contractors to avoid paying workers compensation premiums.
Truck Driver Case Shows Poor Enforcement of Workers Compensation Law
An example of how employers attempt to avoid the Illinois workers compensation law came in the case of truck driver Lucio Barrera. In 2013, Mr. Barrera signed on to work for DNJ Intermodal Services, a Memphis-based trucking company. Although he was listed as an independent contractor, the contract prohibited Mr. Barrera from working for other trucking companies. He was also required to pay for storage and repair costs for his truck. In January 2015, DNJ seized Mr. Barrera’s truck for back payments and terminated his employment.
Workers Compensation Lawsuit Highlights Victims
After receiving several paychecks with a zero amount, he filed a workers compensation lawsuit against DNJ. The lawsuit alleged that the restrictive nature of the contract should have merited that Mr. Barrera be classified as an employee. During the research for his lawsuit, Mr. Barrera and his attorneys discovered that up to 100 other drivers received similar treatment from DNJ. The suit alleges that DNJ failed to comply with the terms of the Employee Classification Act, including paying into the workers compensation insurance system for his coverage.
Political Battle Over Workers Compensation Reform
The battle over workers compensation reform in Illinois has ranged from the truck stops to the state house. A bitter political battle over changes to the state’s workers compensation law has spawned partisan accusations. Democrats favor changes in the law to benefit workers, even at the risk of deficit spending. Republicans in the Senate, along with Republican Governor Bruce Rauner, have opposed the changes, saying that the programs need to be reduced to keep the state competitive and allow it to attract more businesses.
Source: Chicago Tribune
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