Ask a Lawyer - Archive

I have this 1099 employee that has worked for me on and off for the past several years. When I need extra help I would call him to come and work. He is a handy man and does maintenance on my machines. His schedule is set by him, I tell him when I need the job done. I may call him in the mornings and tell him to come in late in the afternoons since his work would get in the middle of my production. Sometimes I call him and tell him not to come in that I do not have any work for him. Last week while he was doing maintenance on a machine, after he was done he was cleaning it. The machine was unplugged. Several people in the facility that were working mentioned to him not to turn on the machine when he was cleaning it. I have cameras that show him when he plugged it in, turned it on and immediately after that his hand got caught in it. Someone ran to his help unplugged the machine. His hand swelled up pretty bad so I offered to take him to the doctor he didn't want to go but I didn't think he could drive either. After taking him to the doctor they said he had fracture his finger and that would need surgery. He said he did not want to get that done. He went home that day. I called every day to see how he was doing and he said he was fine. Until I received a phone call from an attorney asking about that injury and if we had worker's comp insurance. A 1099 subcontractor should take care of his own. Can I be liable for this? What do I do?

You have a problem here just based on the observation that you use the term "1099 employee." There is no such thing. If you pay someone and issue a 1099 to that person, you are treating him as an independent contractor and not as an employee. There are a number of incentives for companies to want to hire people as independent contractors -- one being that independent contractors should be responsible for their own insurance. Another big consideration is payroll taxes where a company must collect and pay in an employee's portion, as well as pay in a matching employer's portion. But just calling a worker an independent contractor does not necessarily make it so.

There are a number of factors to consider, including the control issues you mention (e.g., which party determines work hours and work schedule). Whenever there is a gray area, the law is usually going to presume employment status. And it doesn't help your situation that you have called him an "employee." So, you'd better go see a lawyer on this immediately since you could be looking at potential liability exposure not only on workers' compensation issues, but also on payroll tax issues if it is determined that this fellow should have been characterized as an employee rather than in independent contractor.