Before beginning work on a project, determine if workers’ compensation covers your independent contractor.
Before any project, you will want to ensure that the right protection is in place. Not only for the peace of mind for your business, your finances, but also for your independent contractor. If you’re questioning if your contractor will be covered under your company’s workers’ compensation insurance, you’re not alone.
Independent contractors are not eligible for workers’ compensation coverage. However, employers are not required by state law to purchase coverage for independent contractors. Some employers misclassify employees as contractors to avoid paying payroll taxes and workers’ compensation premiums for them – this is highly unadvised.
Independent contractors are not eligible to be covered under workers’ comp due to:
- Lack of direction and control – Independent contractors provide a service without the direction of the employer who hires them. It is only the independent contractor that decides how the service is provided, who provides it, and the method of accomplishing it.
- The method of pay – To be an employee to receive workers’ compensation coverage, the worker doesn’t need to be interviewed and formally hired. Where employees receive wages on a salaried basis, independent contractors receive payment for the job.
- Specialized equipment – An independent contractor typically provides the necessary equipment to complete the job. An employer usually provides the equipment for the employee to complete his or her job.
- Unique skills – If the work is highly skilled, and the worker only performs a single job, the worker is likely an independent contractor. On the other hand, if the worker is trained by and receives regular work from the same company, the worker is more likely to be considered an employee.
Does your business have the right workers’ compensation in place? Don’t know where to start? Give the experts at Nahai Insurance Services a call to get started on securing the all-encompassing protection for your business!