Workers’ Compensation and the Independent Contractor Myth

As an employer, you may think your employee is an independent contractor based on IRS rules and payroll withholding. But under workers’ compensation rules, your independent contractor is considered an employee. If you don’t have a workers' compensation policy for that contractor, you will be on the hook for all the benefits due to injury, death, disability and lost wages.

The government wrote the rules to force employers to pick up the tab for these costs- not the state. The state almost always sides with the victim/employee against the employer. Protect yourself and buy a workers’ compensation policy.

A true independent contractor is an established business which has:

1. Their own general liability and workers’ compensation policy.
2. Their own business license.
3. Advertises their services to the public and has other customers.
4. Performs work not normally performed by you.
5. Supplies their own tools and materials.
6. Charges a fee rather than an hourly rate.
7. Has complete control of how they do their job.

Any one of the following may cause the Workers’ Compensation Commission to decide that an employee relationship exists:

If the independent contractor:

1. Is furnished and office.
2. Is given business cards that indicate they are part of your company.
3. Is paid hourly rather than a fee for a contract service performed.
4. If you supervise their time.
5. If you supervise how they do their job.

The state is forcing employers to pay more for employees’ care and there is no way around it. As deficits rise, look for more aggressive enforcement by government agencies. For questions about workers’ compensation and other business insurance, call Allied Brokers.

Visit our website at www.alliedbrokers.com for information about all the types of insurance we offer. Or call 1-888-505-7988 for a free rate quote.