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Independent Contractors vs. Employees – Know Your Rights

People who work as independent contractors are excluded from coverage under the Minnesota Workers’ Compensation Act, but there is no official independent contractor definition. Just because your employer says you are an independent contractor does not necessarily mean it is true. Many times, an employer says that to avoid paying workers’ compensation insurance. Do not accept this as true. If you were injured at work, contact an experienced workers’ compensation lawyer at Schroeder & Mandel for a FREE consultation and analysis.

Independent contractors vs. employees have different workers’ compensation rights, so it is important to understand which category best suits you. When determining if the injured worker was an independent contractor or employee, we first look at whether our client or the alleged employer had a right to control the means and manner of performance. We then consider the following factors:

  • Right to Discharge: Employees can be terminated with little notice, without cause, or for failure to follow specific rules or methods. Independent contractors cannot be discharged if they produce a result that meets contract specifications.
  • Availability to Public: Independent contractors make services available to the general public instead of one single entity.
  • Compensation on Job Basis: Independent contractors are paid per job rather than payment by the hour, week, or month.
  • Realization of Profit or Loss: Independent contractors can realize a profit or suffer a loss as a result of his or her services. Employees can’t.
  • Termination: Independent contractors agree to complete a specific job, are responsible for its satisfactory completion, and are liable if they fail to complete the job. Employees can quit without incurring liability for non-completion. 
  • Substantial Investment: Independent contractors make substantial investments in the facilities (not tools) they use to provide services. Employees use facilities furnished by the employer.
  • Responsibility: Independent contractors act independently, not on behalf of the employing unit. Employees’ behavior, however, is the employing unit’s responsibility.
  • Services Fundamental to Business: Employment is indicated where the services provided are necessary to the fundamental business purpose for which the organization exists.


If an employee gets hurt working for an employer that does not have workers’ compensation insurance, they are NOT automatically excluded from the Minnesota Workers’ Compensation Act. In Minnesota, lawful employers pay into a Special Compensation Fund that provides benefits to injured workers of uninsured employers. When we file a claim against the Fund on behalf of an injured worker, an investigator evaluates the factors listed above. If the Fund agrees that the worker was an employee and not an independent contractor, it provides the same benefits to the employee as in every other work comp claim.

S&M Workers’ Compensation In Action

We recently settled a case where our client worked as a driver taking people to appointments.  Her company placed its logo on the sides of her car and required her to get a DOT Physical.  After she passed the physical, the company told her where and when to go. The company paid her by the hour. While transporting a person for her job, she was injured in a motor vehicle crash. We did an investigation and found the employer did not have work comp insurance. We filed a claim with the Special Compensation Fund and eventually settled the claims for $255,000.

We’ll Fight For You

The analysis of determining if a worker is an independent contractor or employee is complicated, but we’ll fight for you. We encourage injured workers to contact us for a FREE consultation to discuss any questions pertaining to work-related injuries. You deserve a life free from pain, and we’re here to help fight to recover what you’ve lost.