Workers Compensation for Independent Contractors and Subcontractors

Generally, employers and business owners who seek out the services of contractors and subcontractors are absolved from any liability for medical and accident-related costs of those independent contractors. However, this is at times, not the case as there are laws that classifies an independent contractor as your employee. Therefore, as a business person or employer, it is not safe to assume that your contractors can legally and fully protect your employees.

Policy Purpose

Close up on a file tab with the word contractors, focus on the main word and blur effect. Concept image for illustration of contractors or subcontractors company database.

In any working relationship, there should be a clear employer/worker relationship. However, more often than not, parties contract and subcontract with each other for the provision of better services in different ways.

Recent laws have made it difficult to determine whether workers providing various services are your employees or independent contractors.

The act (The Workers Compensation Act) delineates different responsibilities and guidelines of all the parties involved. To avoid confusion when using independent contractors, and before feeling comfortable ignoring your contractors when it comes to workers’ compensation insurance for contractors, contact us to learn more and avoid the unpleasant surprise during your end year worker’ compensation audit.

Identifying an Independent Contractor

Is your subcontractor an independent contractor or your employee?

An employer or business owner is responsible for the subcontractors’ workers compensation for contractors unless they;

• Are working as a corporation,
• Have valid WCB account,

Are working as;

• Employers in their areas of specialization,
• Are working for another company/employer,
• Are operating as partners (In a partnership with their own personal coverage)
• Are proprietors (and with independent personal coverage)

When contractors are viewed as your workers

When contractors or subcontractors fail to purchase workers compensation insurance for contractors; are not working as independent business entities, the California laws may classify them as your workers. Here are some examples where a contractor is highly likely to be considered as your worker:

• When the contractor is supplying only labor. A good example is a driver.
• When the contractor is supplying both labor plus major equipment, but he/she is not registered with the workers’ compensation board,
• When the contractor’s role is to provide labor plus some minor materials like drywall tapes, nails, etc.

When contractors and subcontractors are not considered your workers.

The only way contractors would not be considered as your workers is if they operate as independent entities. Here are three examples where contractors and subcontractors would be working as an independent business:

• If your contractor is working with a few more clients and has multiple contracts,
• If your contractor is providing a wide array of major equipment and is registered with the worker compensation board,
• If your contractor is actively advertising his/her services and is providing services to the public (multiple clients.)
• Request a copy of the independent contractor registration form
• Check to confirm that the contractor or subcontractor is registered
• Request for the contractor’s certification of insurance for general liability

What to do if in doubt or if the contractor/subcontractor doesn’t have coverage.

Lastly, do not hesitate to visit our website contact page and ask for help. This way, you will not only have an in-depth understanding to your workers’ comp for contractors, but you will also get premium services that will save you in the event of any injury or during an audit.

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