Do You Need Workers’ Comp for 1099 Employees?

Workers’ compensation is an essential type of insurance for business owners. It covers medical expenses and lost wages for employees who are hurt on the job. For workers with a W-2 form, it’s cut and dried. They are employees and should be covered by workers’ comp. Then there are independent contractors, also called 1099 employees, after their tax status. Are they actually employees and do they require workers’ comp coverage? That depends on the answers to several questions.

Independent Contractor or Employee?

Workers compensation insurance for 1099 employees is necessary if they meet the criteria to be considered employees. Workers are generally considered employees if they are under the direct control of the employer. This can be determined by the answers to these questions:

  • Can the worker be fired for reasons other than breach of contract? 
  • Is the individual trained or instructed by the employer?
  • Does the employee provide tools, supplies, or other equipment?
  • Does the employer set the hours and determine how the worker performs tasks or does the worker decide how and when they are done?
  • Is the worker free to work for others?

When deciding whether or not a 1099 employee should be covered by workers’ compensation, go through these questions and determine whether or not you have control over the individual, thus making them an employee. If so, they should be covered.