OKLAHOMA ALLOWS INDEPENDENT CONTRACTORS TO OPT OUT OF WORKERS COMP COVERAGE

Generally, every employee hired in Oklahoma or who is injured in Oklahoma is covered by the workers’ compensation laws of the state.  Independent contractors are not employees and are therefore not covered.

The issue of whether a person or entity is an employee or an independent contractor is a complicated one. Nevertheless, the Workers’ Compensation Commission provides CC-Form-36A: Affidavit of Exempt Status under the Administrative Workers’ Compensation Act and CC-Form-36C: Cancellation of Affidavit of Exempt Status for use by contractors. The Affidavit of Exempt Status is a two-page document, and the independent contractor must complete and sign both pages. The second page includes an 11-part checklist to aid in determining whether the person is or is not a bona fide independent contractor. The form states “[i]f the greater weight of the statements do not describe your business, you should not sign the attached Affidavit …”. In other words, there is no single factor which controls. The Affidavit of Exempt Status which the proposed independent contractor must complete includes questions such as whether the company exercises very little control over his work; whether he is engaged in business for others; whether the company does not supply the things needed to perform his job; whether the work he does is not the regular business of the company; and whether he has the right to terminate the relationship without any liability.

Just because a person has incorporated or is an LLC does not automatically transform that person into an independent contractor. That is but one factor. A written contract with the customer/owner will not alone transform the worker into an independent contractor. Independent contractors and companies alike must be aware of this area of the law in order to avoid the myriad of problems which can arise from misclassifying a worker.

With the new tax laws benefitting independent contractors with a 20% deduction from their income, now is a good time for companies to re-assess any persons/entities which may be classified as independent contractors.

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