Every business owner is required to carry workers' compensation for employees. They do not have to carry this coverage for independent contractors. Understanding the distinction can help ensure you're protected if you're injured at work.
Are you an Independent Contractor or an Employee?
Before you can decide whether an employer's workers' comp covers you, you need to know how the law classifies your relationship with the business.
Independent contractors:
- Control how and when the job is done and by whom
- Receive payment by the job
- Pay their own taxes
- Provide all equipment necessary to complete the job
- May work for several companies simultaneously
- Are responsible to obtain any training
- Pay for licenses and other documents needed to work
- Can sue a business for work-related injuries that occur while on the job at their facility
Employees:
- Complete a job according to directions and methods given by an employer
- Receive hourly or salaried wages
- Understand that taxes are taken out of their paychecks
- Complete jobs with equipment provided by the employer
- Typically work exclusively for one company
- Receive training from their employer
- Receive licenses and other work-related documents from their employer
- Give up the right to sue the employer for injuries sustained while at work
What are the Consequences of not Carrying Adequate Workers' Comp Coverage?
Some employers may misclassify legitimate employees as independent contractors, whether from confusion or to avoid the cost of insurance and payroll taxes.
Disobeying workers' compensation laws can result in fines and penalties that affect a business's ability to operate.
If you work in a trade that commonly uses subcontractors, confirm your classification and coverage with your employer or see Street and Road Contractors Workers Compensation for industry-specific guidance.
How do Independent Contractors Get Workers' Comp?
Because independent contractors are self-employed, many rely on health insurance for on-the-job injuries, but that may not cover lost income or certain work-related costs.
Independent contractors can purchase their own workers' compensation policy and receive a Certificate of Insurance to show they are covered while on a job.
For contractors in specialized fields, options and requirements can vary; see Swimming Pool Contractors Workers Compensation for an example of industry-focused coverage resources.
If you're an employee, double-check your workers' compensation benefits to make sure they are current and that you are covered for workplace injuries. If you're an independent contractor, consider purchasing workers' comp coverage so you are protected on the job. If you're unsure how to proceed, talk to an agent.
Frequently Asked Questions
Can an employer misclassify me as an independent contractor?
Yes; misclassification happens and may be due to confusion or intentional cost-cutting, but it can be challenged through state agencies or legal advice.
If I'm an independent contractor and get injured, who pays?
Independent contractors typically rely on their own health insurance unless they have purchased a workers' comp policy that covers work injuries.
Can an independent contractor buy workers' compensation insurance?
Yes, independent contractors can purchase their own workers' comp policy and obtain a Certificate of Insurance to show coverage.
Do employees lose the right to sue their employer if injured at work?
In most cases, employees covered by workers' compensation cannot sue their employer for workplace injuries, as workers' comp is the exclusive remedy.