The concept of workers’ compensation for your employees is pretty straightforward. This insurance helps pay for medical bills and lost income for workers who are injured or get sick while on the job. If you were to hire a plumber to repair leaky pipes, you’d expect that plumber to have this type of insurance to cover on-the-job injuries. What about independent or 1099 contractors? Are you obligated to procure workers’ comp insurance for contractors?
Identifying Independent Contractors
Usually, an independent contractor may be considered an employee if their work is directed by you as an employer. These questions may help you figure out where a 1099 contractor stands with respect to workers’ compensation coverage:
- Does the contractor take direction on where, when, and how to do the work from you?
- Are you responsible for training and/or equipping the contract employee?
- Can the contractor work for other companies?
- Can you hire or fire the contractor for reasons other than contractual obligations?
If an independent contractor functions in an employee-like role, you may be obligated to include that person in your workers’ compensation policy.
Covering Your People
Insurance policies are generally a part of any business’s plan for risk management. These coverages help provide for uncertainties or losses in the course of doing business. Independent contractors may differ from direct employees when it comes to compensation and most benefits, but you should know where they stand when it comes to workplace injury coverage.