Sharing Economy, Independent Contractor and Workers Compensation

The sharing economy, independent contractor and workers compensation are not in sync.  The sharing economy is usually defined as goods or services that are accessed by consumers or businesses through the use of digital technology, especially through dedicated specific apps.  Prominent examples are Ebay and Etsy (selling/buying goods online), Uber (taxi service), Airbnb (lodging).

The benefits are ease of connection between buyers and sellers, reduced costs, less regulation and questionable taxation compliance.  The criticisms are the reduced costs are mostly benefit the large corporations behind the ventures, less regulation and lack of tax collection hurt consumers and society in general for the benefit of the large corporate interests.  In fact the sharing economy is a misnomer, it’s the access economy.  The large corporate forces behind the sharing economy like the term as it implies some hippy notion of freedom and egalitarianism.  The reality is quite different and one example is in relation to workers compensation.

The sharing economy ventures often use freelance workers, that they do not consider employees.  They do not want them categorized as employees so they do not have to pay vacation, payroll taxes, social security and Medicare deductions, unemployment contributions, profit sharing or workers compensation insurance.  So if a freelancer is hurt on the job, he or she may not get workers compensation.

Fortunately in Wisconsin, a company cannot just say the people working for them are not employees.  The law, Wis. Stats. Sec. 102.07 lists nine criteria, all of which must be met for an independent contractor, otherwise the worker is an employee for worker’s compensation purposes. They are summarized as follows:

1) maintains separate business with own office, equipment, materials and facilities

2) has a federal employer identification number or files a business or self-employment tax return

3) operates under contracts to perform work and controls means of performing the work

4) incurs the main expenses related to the work

5) is responsible for completion of work and liable for failure to complete work

6) receives compensation on a competitive bid and per job basis

7) may realize a profit or loss under the contract to perform

8) has recurring business liabilities or obligations

9) the success or failure of the business depends on the relationship of business receipts to expenditures

Many of the so-called sharing economy businesses are of great value to us all.  However, they should take social responsibility in terms of reasonable regulation and worker protections.

[nap_names id=”FIRM-NAME-1″] attorneys get the best results proving a worker is an employee when we have complete information from worker of his employment situation.  For example a subcontractor who injures his back may be an employee regardless being paid as an independent contractor.