Has an independent contractor been injured while on the job at your business? More than 15.5 million workers in the United States are independent contractors.
An independent contractor can have many different benefits to your company. There is a risk if they suffer an injury while in their work capacity for your business.
Read on to learn the answer to the question, ‘Are independent contractors covered by workers’ compensation?’
Independent Contractors vs. Employees
An independent contractor is different from an employee under the laws of your state. They are also treated differently under the federal tax code in the United States.
Business owners don’t pay social security or employment taxes for independent contractors. Instead, you compensate them with an hourly rate of pay. At the end of the year, an independent contractor must use Form 1099 to file their taxes.
Employees of a company often have health insurance, retirement plans, and other benefits. Independent contractors don’t have that same luxury. They are on their own for insurance and are responsible for their own taxes.
This limitation on benefits for independent contractors includes a lack of insurance coverage.
Workers’ Compensation and Independent Contractors
Business owners in any industry must be familiar with workers’ compensation. That’s because you need to be sure you have the insurance coverage to protect your investment.
Companies have workers’ compensation insurance to cover them from unexpected injuries to employees. This insurance can cover employees’ medical expenses. It may also pay for lost work time as a result of the injury on the job.
For example, let’s say you own a roofing company with employees. One day on the job one of your employees falls off a ladder and injures their back. As a result of this injury, they have medical treatment from a doctor and miss three months of work.
You may need to make a claim under your workers’ compensation insurance to pay for these costs. Since independent contractors are not employees though, they aren’t covered under these plans.
Insurance Coverage for Independent Contractor Injuries
Although an independent contractor is not covered under workers’ compensation, they can still sue you after an injury.
In the example above, you may be at risk of a lawsuit from that independent contractor. For example, the independent contractor may allege you were negligent in operating your company. He may also claim that his injuries are a result of your negligence.
You should have commercial liability insurance coverage for contractors. That way you have the coverage you need if an incident arises in your business.
Wrapping Up: Are Independent Contractors Covered by Workers’ Compensation?
When asking, ‘Are independent contractors covered by workers’ compensation?’ the short answer is that they aren’t.
Despite this lack of coverage under that form of insurance, it shouldn’t discourage you from utilizing the services of independent contractors at your business. Just be sure that you speak with an insurance agent or other professional about how to best protect your company.
Check out our blog post section for other great tips and tricks to help you operate a safer and more efficient business!