Workers compensation insurance

[glass99]

If you have people working for you on a 1099 basis, is workers compensation insurance required? I had assumed that it only kicked in for W2 staff, but my insurance broker is saying its not as simple as that.

Is my broker just trying to sell me more insurance I don't need? I am a small consulting engineering office.

 

[Ron]

No. There might be an implied coverage depending on your state laws. Check on them. I run a consortium where everyone is paid on 1099 basis; however, I maintain worker's comp and prof liability for the consortium.

 

[berkshire]

This is a very thorny path. Check with a lawyer. If everybody is a true independent contractor and you do not control their hours or work assignments, you may scrape by in some states but not others. Ask yourself , what happens if a contractor slips , falls and breaks something on your premises while at work ?
B.E.

You are judged not by what you know, but by what you can do.

 

[glass99]

Ron + Berkshire, thanks.

My guys occasionally go to construction sites on my behalf, so I guess there is some risk of an accident.

 

[RacingAZ]

I just went thru with this question recently. It depends on your State. In AZ, if you can be considered a sole proprietor business, it's not required by State law to have worker's comp but you may get one, if you prefer. If you have 1099 contractors, you make each one of them sign a worker's comp waiver explicitly stating that they are their own business (sole proprietor, LLC, whatever business structure set up they have), performing work as such for your company.

The waiver allowed under AZ State law is to get your 1099 contractors to waive their rights to worker's comp coverage and benefits under your company if they are indeed real 1099 contractors per the IRS definition.