Multiple Employment, the DWC-3ME, and Self-Employment

Carriers often receive DWC-3ME forms in which the claimant lists himself or herself as the non-claim employer, alleging self-employment at the time of the injury and arguing for an increased AWW calculation by Carrier as a result.

There are two (2) specific areas in which the DWC-3ME should be scrutinized by Carrier before agreeing to the higher AWW.

First, there is an argument that the non-claim employer must carry workers compensation insurance to in order to qualify as a non-claim employer for the purposes of the DWC-3ME. Under Section 408.042(h)(l) of the Act, an “employee with multiple employment” is defined as “an employee who has more than one employer.” Then, Section 401.011(18) provides the following definition for “employer”: “unless otherwise specified, a person who makes a contract of hire, employs one or more employees, and has workers’ compensation insurance coverage.”

Unless the self-employed claimant can prove he or she carrier workers’ compensation insurance at the time of the injury, Carrier may assert that they do not meet the definition of a non-claim employer.

Second, there is an argument that self-employment “income” simply does not qualify under Section 408.042(e). That section notes that the claimant needs to provide evidence of “wage payments” that are reportable as wages “for federal income tax purposes.”

If the reported non-claim employer is an S-Corporation, there will be W2 wages. Those will be listed on the K1 form. That is not self-employment income, however. Further, it is more than likely that as an alleged self-employer the claimant actually has a single member LLC. In that event, income is not considered “wages” because the claimant cannot be employed by himself. Thus, he would report the self-employment income on Schedule C and that would not be considered “wages.”

26 US Code § 3121 defines:

• • • “Wages”: For purposes of this chapter, the term “wages” means all remuneration for employment, including the cash value of all remuneration (including benefits) paid in any medium other than cash.
    • “Employment”: For purposes of this chapter, the term “employment” means any service, of whatever nature, performed (A) by an employee for the person employing him.
    • “Employee”: any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee.

The IRS has pointed out: “Self-employment income is income that arises from the performance of personal services, but which cannot be classified as wages because an employer-employee relationship does not exist between the payer and the payee.” https://www.irs.gov/individuals/international-taxpayers/self-employment-tax.

If you receive a DWC-3ME listing self-employment as the non-claim employer, and would like assistance determining whether or not AWW should be increased as a result, please contact FOL and speak with an attorney: gqs@fol.com.