Is Workers’ Compensation Required for the Self-employed and Independent Contractors?

Workers’ compensation insurance is a mandatory policy that all business owners are required to carry. There are exceptions to the rule, however. Workers’ comp insurance is valuable because it protects both the employer and the employee. It protects the employer by taking the threat of a lawsuit off the table. On the other hand, it protects the employee by paying their medical expenses and lost wages while they are recovering from a work-related injury. However, there are a few misconceptions about whether or not people who are self-employed or who hire independent contractors need to carry a Workers’ comp policy. Let’s clear them.

Do Independent and Self-employed Contractors Need Workers’ Compensation?

Even though self-employed people and independent contractors may not be required to carry a Worker’s compensation insurance policy, they will still need to be able to prove they are in some way financial responsibility, like a personal health insurance policy. If an independent contractor is hired by a company that requires they have their own insurance, they will have to purchase a Workers’ comp policy to fulfill that contract.

If You Don’t Have Employees and Only Hire Subcontractors, Is Workers’ Comp Insurance Required?

If you only hire subcontractors, you may still be obligated to purchase a Workers’ comp policy. This will depend on the laws that are in place in your state. Some states require that business owners carry a Workers’ comp policy even if part-time subcontractors are the only ones working on the property. Many states require that business owners carry a Workers’ comp policy even if the subcontractor has shown they already have their own health insurance or Workers’ comp policy.

Penalties for Not Carrying Workers’ Comp Insurance for Independent Contractors

Different states have different penalties for business owners who don’t carry sufficient coverage for the people whom they hire. Some states assess a civil penalty, while others make it a criminal offense that could result in jail time. There are a few states that assess civil penalties as well as criminal charges. In order to learn more about your state’s individual laws and what the penalties are when it comes to Workers’ compensation insurance, you will need to talk to an insurance agent or an experienced Workers’ comp attorney.

Take Your Obligation Seriously

As a business owner, you are obligated to take care of your employees, especially if they are injured on the job. Even though subcontractors may not be considered an employee, they still work for you on your property. Protecting their best interest with a quality Workers’ comp insurance policy is the best way to ensure that they are properly compensated if a work-related injury occurs. Fulfilling your obligation is not only important, and it is mandatory in most states. If you aren’t sure what the laws are, you need to talk to an attorney or reputable insurance agent.

Self-Employed or Independent Contractor, Cover Yourself with J Archer Insurance

Making sure you have enough Workers’ comp insurance for everyone on your payroll (including yourself) is important. Contact the agents at J. Archer Insurance Group today to learn more about your obligations as an employer. Workers’ compensation insurance is a must when you own and operate a business. Get the answers you need so that you are always in compliance with the law!


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