Kentucky requires most employers to provide workers’ compensation insurance coverage for their employees. But the requirement ends there. If you work for a company as an independent contractor, the company typically does not have a workers’ compensation obligation to you.
However, some businesses misclassify employees as 1099 workers to avoid paying them benefits. If you are unsure about your eligibility for workers’ compensation benefits or believe that you are a Kentucky misclassified employee, you should contact a Kentucky workers’ compensation lawyer.
An experienced workers’ compensation lawyer at Morgan, Collins, Yeast & Salyer can help you understand your rights and whether you are entitled to claim workers’ compensation benefits.
The General Rule: 1099 Contractors and Workers’ Comp
Kentucky’s workers’ compensation laws require most companies to provide workers’ comp to their employees. Workers’ compensation coverage is no-fault insurance that provides benefits to full-time and part-time employees who are injured on the job or who become ill due to working conditions. Workers’ comp insurance benefits pay for all related medical bills and a portion of lost income while the injured or ill employee recovers.
In exchange for these benefits, employees cannot sue employers for work-related injuries or illnesses. Still, some employers balk at approving workers’ compensation claims for deserving employees.
However, Kentucky law generally does not require employers to provide workers’ compensation benefits to independent contractors, freelancers, and other self-employed workers—sometimes called 1099 employees after the 1099-MISC tax form filed for these workers. These workers are not covered by the company’s workers’ compensation insurance policy but may buy insurance for themselves instead.
Workers who are denied workers’ comp benefits in Kentucky should contact our Kentucky workers’ compensation attorneys to discuss their rights to claim compensation. Independent contractors injured at a job site should speak with our workplace injury attorneys. If you are not eligible for workers’ compensation benefits, you may have the right to pursue a personal injury claim in some cases. A worker could have been misclassified as a 1099 independent contractor when they were, in fact, an employee.
The Big Exception: Misclassification
Some employers incorrectly classify their employees as independent contractors to avoid paying for workers’ compensation coverage. A newly adopted test should make it more challenging to get away with if injured workers know to apply for workers’ comp and to appeal a denied claim.
In 2023, the Kentucky Supreme Court established a six-point economic realities test to determine whether a worker should be considered an employee or an independent contractor.
The court ruling arose from a case known as Oufafa v. Taxi, LLC, in which a taxi driver who had been shot by a customer and paralyzed was denied workers’ compensation. The company he worked for leased vehicles to drivers that could only be used for company rides and identified its drivers as independent contractors.
The taxi company said that the taxi driver was an independent contractor and was not eligible for workers’ comp coverage. The taxi driver’s appeal to the Kentucky Department of Workers’ Claims and the appellate court failed, with each applying a different standard but determining that the driver was an independent contractor.
The Supreme Court’s economic realities test was adopted in Mouanda v. Jani-King International, a wage and hour case. The Court cited a desire for consistency in classifying workers across different statutory employment protections.
The economic realities test consists of the following six factors:
- The permanency of the relationship between the parties,
- The degree of skill required for rendering the service
- The worker’s investment in equipment or materials for the task
- The worker’s opportunity for profit or loss, depending upon their skill
- The degree of the alleged employer’s right to control how the work is performed
- Whether the service rendered is an integral part of the alleged employer’s business
The Court stated that the central question to the economic realities test is the worker’s economic dependence upon the business for which he is laboring. That issue had not been specifically captured under the Department of Workers’ Claims’ in-depth analysis of the taxi driver’s case nor under prior case law.
The KY Education and Labor Cabinet, which oversees the workers’ compensation system in the state, says, “If analysis of these factors reveals the employee is economically dependent upon the alleged employer’s business, he or she is an employee and not an independent contractor.”
What Can 1099 Contractors Do for Protection?
If you have been denied workers’ compensation benefits you believe you should receive, the most important step to protect your rights is to contact a knowledgeable attorney. Our law firm urges you to contact our KY workers’ compensation lawyers immediately.
We’ll review your claim free of charge and press an appeal on your behalf if you have a case. We can also help you file your initial claim so you may focus on recovering from your injury.
If you are truly a 1099 independent contractor, you can purchase health and disability insurance for yourself.
An independent contractor injured in an accident caused by someone else’s negligence might be entitled to file a personal injury claim to seek compensation for medical expenses and lost wages. If you are injured in an accident that occurred because of a business’s negligence or recklessness, you may seek compensation for your losses. That could include compensation for your pain and suffering, which workers’ compensation does not pay.
The personal injury attorneys at Morgan, Collins, Yeast & Salyer are prepared to demand the total compensation you deserve for your injuries and losses
Frequently Asked Questions About 1099 Employees
Can I sue my employer in Kentucky if I’m a 1099 contractor and get hurt?
If you are a 1099 contractor and are not covered by the company’s workers’ compensation plan, you may be entitled to pursue a lawsuit against the employer.
Is it illegal to classify employees as 1099 in Kentucky?
A 1099-MISC classification refers to the type of tax form that independent contractors and freelance workers receive listing their wages. It’s a valid classification for certain types of workers. But misclassifying workers as independent contractors is illegal when it’s done by a business to avoid paying workers’ compensation insurance, unemployment coverage, Social Security taxes, Medicare taxes, or other employer-paid taxes and withholdings.
What happens if I don’t have workers’ compensation in Kentucky?
You may pursue litigation against a negligent party that injured you if you are not covered by workers’ compensation in Kentucky.
How Do I Report Worker Misclassification in Kentucky?
Business owners that misclassify employees as independent contractors may suffer such consequences as:
- Tax penalties plus interest
- Labor law and safety violation charges
- Payment of back unemployment insurance premiums
Report employee misclassification or fraud:
- Online here
- By email at desauditors@ky.gov
- By U.S. mail with this form completed at Office of Unemployment Insurance, Tax Audit Branch, P.O. Box 948, Frankfort, KY 40601
- By phone at 502-564-6838
How a Kentucky Workers’ Compensation Lawyer Can Help
Workers’ compensation law is complex, and most workers know little about the insurance program until they have been injured on the job or developed an occupational illness and need benefits. That gives an unscrupulous employer and their workers’ comp insurers an advantage. If you have been injured on the job and are being told you don’t qualify for workers’ compensation, you should contact our workers’ comp attorneys immediately.
The Kentucky workers’ compensation lawyers of Morgan, Collins, Yeast & Salyer stand ready to pursue the full workers’ comp benefits you deserve.
Contact us today to start with a free, no-obligation initial consultation.
