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Bill Exempting Independent Contractors From the Nebraska Workers’ Compensation Act Proceeds

LB 276 will get its first reading before the Nebraska Legislature.  On April 14, 2015, the Business and Labor Committee placed the bill, with amendments, on the General File.

LB 276, introduced by Senator Burke Harr, seeks to amend the Nebraska Workers’ Compensation Act in order to provide an exemption for independent contractors.  In order to be exempt from the Act, independent contractors would apply for certification with the Nebraska Workers’ Compensation Court.    If, after considering a number of factors, the administrator of the Nebraska Workers’ Compensation Court determines that the applicant qualifies to be a certified independent contractor, a certificate good for two years would be issued.  If certified as an independent contractor by the Court, the independent contractor is not entitled to any benefits under the Nebraska Workers’ Compensation Act.

It is difficult to say what kind of impact LB 276 will have on injured workers.  Currently, the Nebraska Workers’ Compensation Act does not apply to independent contractors.  In disputes where the nature of the relationship between the injured worker and defendant is in question, the Workers’ Compensation Court applies a multi-factor test to determine whether the injured person was an employee or an independent contractor. If the injured party is an employee, he or she can get work comp benefits.  If the injured party is an independent contractor, he or she does not get work comp benefits.  The same would be true under LB 276 with the exception that the determination of whether a person is an independent contractor would be made before an injury occurs rather than after.

Under the current law, where the determination of the injured worker’s status as an employee or independent contractor is made after an injury has occurred seems to be the most appropriate way of determining an injured worker’s employment status because it allows for consideration of all the actual facts pertaining to employment relationship prior to the injury.  Under LB 276, the Court would apply the multi-factor test before an injury has occurred.  The concern with this approach is that an injured worker who would otherwise be eligible for benefits had the multi-factor test been applied after the injury occurred is now precluded from recovery because his or her status as an independent contractor was determined before the injury and without any regard for what the actual relationship was between the injured worker and employer.

Check back for updates on LB 276 as well as other issues concerning Nebraska Workers’ Compensation law.

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