288 Human Resources Management for Public and Nonprofi t Organizations
Independent contractors are not considered to be employees and do
not have to be covered under the workers ’ compensation policy of the
organization that hired them. Most state workers ’ compensation agencies
apply the same test as the Internal Revenue Service (IRS) for determining
whether a contractor is truly independent and not just called so by an
employer who does not want to match the contractor ’ s Social Security
contributions or deduct and withhold income taxes. To decide whether
a contractor is independent, the IRS examines the relationship between
the worker and the organization. Evidence of behavioral control, fi nancial
control, and the type of relationship are considered.
Behavioral control covers facts that show whether the business has a right
to direct and control how the work is done through instructions, training,
or other means. Financial control covers facts that show whether the orga-
nization has a right to control the business aspects of the worker ’ s job.
This includes the extent to which the worker has unreimbursed business
expenses, the extent of the worker ’ s investment in the business, the extent
to which the worker makes services available to the relevant market, how
the organization pays the worker, and the extent to which the worker can
realize a profi t or incur a loss. Type of relationship covers facts that show
written contracts describing the relationship the parties intended to create;
the extent to which the worker is available to perform services for similar
businesses; whether the business provides the worker with employee benefi ts,
such as insurance, a pension plan, vacation pay, or sick pay; and the
permanence or impermanence of the relationship.
The contractor should probably be covered under the organization ’ s
workers ’ compensation policy if the contractor can be fi red or quit without
any contractual liability; the contractor is reimbursed for business and
travel expenses; the contractor performs the task in person, on company
property, and during set hours; the contractor is paid by the hour, week, or
month rather than the job; and the organization provides the contractor
with tools or equipment. The state ’ s workers ’ compensation agency should
be contacted for verifi cation.
In most states, unpaid volunteers are not considered to be employees
and typically are not covered by workers ’ compensation. But in some states,
there are exceptions for police and fi re volunteers, and other volunteers may
be covered under special circumstances.Military Leave
Reserve and National Guard units called to active duty have rights with
respect to the retirement and health benefi ts provided by their employers.