Risky Business: What happens when gig workers get injured on the job

What happens when you thought you had workers' comp, but your company says you don't.

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On the morning of July 1, 2013 48-year-old long haul trucker Rick Shepherd was in the final stretch of a job transporting freight from Atlanta to San Bernardino. As he approached Joshua Tree National Park his left tire blew out and he lost control of his 18 wheeler. The accident ended his career and left him disabled. It would also leave him destitute. He didn’t know it at the time, but he wasn’t eligible for workers’ compensation.

Shepherd estimates he had driven Interstate 40 at least 500 times in his 26 years as a truck driver. However, on that July morning, as he took a curve, something didn’t feel right. Wildfires in the area created particularly strong and unusual winds, Shepherd said; and his truck went over the guardrail, up a hill and then nose first into a ravine.

Nearly dead from catastrophic injuries, Shepherd was airlifted to a Nevada hospital where he spent three days in a coma. The left side of his body was rebuilt with titanium. Eventually, he was transported to his home in Arkansas, where he spent four months bed ridden.

The bills started arriving almost immediately.

Shepherd’s accident. (Photos courtesy: Rick Shepherd)

“Okay, we got problems”

The medical treatment quickly exceeded $100,000. At the time, Shepherd didn’t have health insurance.

Then the accident bills arrived.

“The cleanup was astronomical,” said Shepherd, “the San Bernardino Fire Department, they wanted $900 for the response. California wanted $35,000, they said I did to the road and guardrail and this, that and the other. I’m like, oh my gosh, I can’t afford these bills.”

Shepherd told the billing agencies he was an employee of the trucking company, Trans America, and that it was responsible for accident and medical costs. However, his employer said he was an independent contractor,  making him liable for the costs of the repairs and his medical treatment.

“I said, okay we got problems,” said Shepherd.

Shepherd was paid with a 1099-MISC tax form. Receiving a 1099-MISC does not necessarily mean a worker is an independent contractor although that is how it’s commonly used.  A true independent contractor is someone who is running their own business and solely responsible for all of the costs.  

As a “1099er” Shepherd learned he had none of the protections afforded to employees, including workers’ compensation, unemployment insurance or liability coverage.

Shepherd’s life, as he knew it, was over. Too injured to work and unable to pay his bills, he sold his two homes, his car and applied for food stamps. “I used to make $105,000 a year. I am now probably living off of maybe, maybe, $14,000 a year now,” he said. “I have to trim back on everything.”

Overwhelmed by debt, Shepherd declared bankruptcy. He currently lives in a trailer in Arkansas and skips the physical therapy he needs because he cannot afford the $25 co-pay.

During the few months Shepherd drove for Trans America, he said the company provided the truck, brokered the load and told him when and where to deliver it. Convinced he was legally an employee and not an independent contractor, he sought legal representation. Three years later, a judge ruled that he was, indeed, an employee entitled to benefits.   

“Now it’s really confusing because he is in bankruptcy because of these medical bills but in fact they should have been paid through workers’ comp,” said Brett Borah, Shephard’s attorney.

Trans America has not responded to a request for comment.  

To further complicate Shepherd’s case, his employer didn’t provide workers’ compensation coverage for him, which is illegal under California law.

California has two funds to support injured workers when their employers fail to carry workers compensation. The process can be costly, time consuming and can require going to trial, but if a worker qualifies, the funds award a claim and then attempt to collect from the employer. Borah was able to get Shepherd some compensation from one of the funds late last year.

“Thank God I wrecked in California,” said Shepherd. “With no workers’ comp insurance I’d be just on my own. I’d be put in a nursing home or living under a bridge.”

“It’s not highlighted when you take the job”

Manny Vasquez. (Photo by Laith al-Majali)

Independent contract work comes in many forms. Manny Vasquez, 26, was working as a bike messenger  when he ended up on the hood of a car after being hit at a Long Beach intersection. The crash caused a torn ligament in his knee and required surgery. Vasquez didn’t have health insurance.

When it came time to pay for the medical treatment, he applied for workers’ compensation only to find out he didn’t qualify because he was an independent contractor. It was a shock. Other than paying more in taxes, Vasquez had no idea what the difference was between an employee and an independent contractor.

“It’s underhanded because it’s not highlighted when you take the job. Nobody mentions these things,” said Vasquez, who spent six months staying with family and friends while recovering from his injuries.

“The problem is people taking these gig jobs are not fully informed on what coverage they have or in these cases, what coverage they don’t have,” notes Paul Leigh, a health economist at UC Davis.

The gig economy is growing, and is predicted to employ as much as 50 percent of all workers by 2030. However, the impacts of independent contractors on the workers’ compensation system are not fully known.

“This is an important area for academic research and we haven’t done the work we should have on independent contract work and workers’ compensation claims and how these influence overall workers’ compensation in the past 15 years,” said Leigh.

Leigh is concerned employers are increasingly avoiding financial responsibilities by labeling workers as independent contractors and forcing them to incur all of the risks with no safety nets. When contract workers get injured and can’t cover the costs, it can be the taxpayers – not the employers – who are stuck with the bills, said Leigh.

Hospitals recoup the expenses by raising the premiums on those who are insured. Taxpayer funded programs like Medicaid become the substitute for unemployment insurance when independent contractors are too injured to work.

Leigh questions why this shifting of the financial burden isn’t seen as a fraudulent maneuver on behalf of insurers and employers.

“It can be the case that the employer may not classify the worker properly or may not record the injury properly. So I think the word fraud applies to employers and insurance companies equally as much as it applies to injured workers.”

“The courts, the DA, they are just not offended by this issue – yet,” he said. “It’s just not a sexy issue- employer fraud,” said Attorney Borah.

Various state and federal studies suggest up to 30 percent of employers misclassify their employees as independent contractors.

That misclassification costs federal and state governments billions annually in lower tax revenues and lost contributions to state unemployment and workers’ compensation insurance, however it is not a violation under federal law.

In 2011, California made it  illegal to willfully misclassify employees and allowed civil penalties of up to $25,000 to be assessed.

Four companies have been cited under the law since its passage.  One of them, Gold Connection in Fresno, was cited $380,000 in 2012 for intentionally misclassifying 76 workers as independent contractors.

The vast majority of misclassification cases California’s Division of Labor Standards Enforcement handles are not willful or intentional, but simply employers pushing the boundaries of what’s legal. Often, workers learn they’ve been misclassified only after they’ve made claims for disputes like not getting their overtime or being denied workers’ compensation.

Since 2011, nearly 800 Los Angeles port truck drivers discovered they were wrongly paid as independent contractors after filing claims for unreimbursed business expenses, among other things.  

Manuel Rios was one of them. He requested workers compensation after suffering a heart attack he says was brought on by work stress. “The lady at the office said, ‘you don’t get anything. Zero, zero zero for you. You cannot get anything,’” said Rios. For 23 years he’d been driving a truck for the same employer and was paid as a contract worker, but didn’t understand the implications until that day. Months later he was reclassified as an employee and discovered he was owed back wages and overtime. His claim with the Labor Commissioner is pending.

Port trucker Jaime Martinez, 61, joined a class action lawsuit alleging he was misclassified, which he discovered when he was injured on the job.

Martinez said during his nearly 20 years of employment with his company, he was asked to sign a take-it-or-leave it contract every three months. Though Martinez only reads Spanish, he says the contracts were always in English and stated that Martinez was an independent contractor.

He didn’t realize the ramifications of this arrangement until he was run over by his own truck, and injured his right leg. After hospitalization, he applied for workers’ compensation, but was denied. An attorney for the teamsters stepped in and he was determined to be an employee.

Jaime Martinez (Photo by Karen Foshay)

Once he was legally an employee, Martinez received his workers compensation payment which was used to pay off most of his medical costs. There’s no money for his physical therapy, which his doctors tell him he needs. He’s now living with his children and looking for work.

“I borrowed some money but I have to pay it back,” he said. “I try to work but the company didn’t want to give me back my work. “

Comments

  1. geraldfnord
    Feb 06, 2017, 7:13 am

    There's a reason why even some almost-libertarians want the State to handle medical care:once you decide that you're not going to just let people die or to languish entirely, that is to say remove them from The Market, it's much less intrusive for the State to just do medical care or insurance than to mandate businesses of all types' and sizes' being responsible, parse distinctions-without-differences such as the one central to the article, and the like.

  2. Giles
    Feb 03, 2017, 11:50 am

    It would be helpful to your listeners and people who are in the gig economy or thinking of getting in if you included in your story details about how one can avoid this -- be proactive and buy workers comp insurance for yourself. I work independently and pay roughly $600 per year for the coverage. When you consider these horror stories, it seems like a bargain.

    Now, this is not said to discount legitimate occasions of fraud. The driver in the first part of your story was driving the company's truck. If he provided all his own equipment I could see him being considered an independent contractor.

    But let's not just excuse people who get involved in the gig economy and don't do their homework (such as your bike messenger.)

    Employer's who knowingly misclassify workers should be dealt with, but there are mechanisms out there so gig workers can empower and protect themselves and the story does not mention this at all.

  • Giles

    It would be helpful to your listeners and people who are in the gig economy or thinking of getting in if you included in your story details about how one can avoid this — be proactive and buy workers comp insurance for yourself. I work independently and pay roughly $600 per year for the coverage. When you consider these horror stories, it seems like a bargain.

    Now, this is not said to discount legitimate occasions of fraud. The driver in the first part of your story was driving the company’s truck. If he provided all his own equipment I could see him being considered an independent contractor.

    But let’s not just excuse people who get involved in the gig economy and don’t do their homework (such as your bike messenger.)

    Employer’s who knowingly misclassify workers should be dealt with, but there are mechanisms out there so gig workers can empower and protect themselves and the story does not mention this at all.

  • geraldfnord

    There’s a reason why even some almost-libertarians want the State to handle medical care:once you decide that you’re not going to just let people die or to languish entirely, that is to say remove them from The Market, it’s much less intrusive for the State to just do medical care or insurance than to mandate businesses of all types’ and sizes’ being responsible, parse distinctions-without-differences such as the one central to the article, and the like.