Q: What documentation is needed to dispute an audit against workers comp insurance company?

A: You need a very experienced attorney in Maryland.

A typical workers compensation attorney handles claims involving workplace injuries either on behalf of the employer or the injured worker.

You need a different type of lawyer with more sophisticated civil litigation experience including a thorough knowledge of "misclassification" of workers and the tests used to determine whether a worker is an employee or a true independent contractor. Contract forms, exclusion forms, and invoices are usually helpful evidence, but are usually not dispositive of the true classification of a worker. And there are big risks to businesses if they have misclassified workers as independent contractors rather than employees.

There is currently a huge push by government regulators and affected third-parties like workers compensation carriers to investigate and pursue employers who may have misclassified their workers. Last October, the Dept. of Labor published notice of proposed rulemaking on this subject which is going to give greater weight to factors like the amount of skill required for the work, the degree of permanence of the relationship between the worker and the employer, and whether the work is part of an integrated unit of production. Low-skill workers who work primarily, if not exclusively, for your business in circumstances analogous to a production line or construction site are much more likely to properly classified as "employees" (despite what documents may say) than an electrician hired on a one-time basis to replace an electrical outlet in your office. Given the current regulatory environment, you should not take this audit lightly.

While Justia does not have an area of practice for attorneys called "employee misclassification," you need to find a Maryland attorney with a thorough knowledge of this subject or you may find that your workers' compensation carrier, and eventually other interested parties including the IRS, could be demanding a lot of money from your business.

A: If you haven't already, you should speak with an attorney ASAP.

At best, documents like independent contractor agreements, exclusions forms, and invoices demonstrate an intent to create and maintain an independent contractor relationship. But many other factors can outweigh this intent and will often lead to a finding that a relationship is actually an employment relationship.

By definition, an independent contractor is a completely separate ("independent") business from the hiring party. Essentially, an independent contractor is a service provider and, therefore, the hiring party is really just a client or customer who is contracting for services.

So, when a hiring party treats a worker like an employee (such as controlling the worker's schedule, pay, task management/prioritization, etc.), that worker is an employee. Even if the parties agree that the worker is an independent contractor, the law disagrees. Rather, the worker is an employee who has been "misclassified" as an independent contractor.

Addressing a misclassification claim involves more than "documentation." It requires legal analysis -- applying the relevant rules to the relevant facts. Any number of rules may be at play, including the IRS rule (for federal tax purposes); the DOL rule (for federal FLSA/"wage and hour" purposes); state or local tax or "wage and hour" rules; and rules for specific laws.

A knowledgeable attorney can help evaluate proper worker classification, as well as the likelihood of successfully defeating a misclassification claim. Generally speaking, employment law attorneys tend to be more familiar with the rules for distinguishing between employees and non-employees (including independent contractors).