Who Is Considered a Subcontractor for Workers Compensation

Their subcontractors may be considered as employees within the meaning of the law on accidents at work. The purpose of workers` compensation insurance is to reduce potential economic factors that can affect an employee`s livelihood and the business. Without workers` compensation insurance, companies can run a high risk of being sued for large sums of money, with high attorneys` fees and composition amounts that can lead to bankruptcy or significant financial charges. If a subcontractor does not have their own salary coverage, their salaries are added to an employer`s payroll. Any increase or decrease in payroll will affect your premium. Patterson pointed out that if you work in a high-risk industry or if your subcontractor does risky work, your premiums could increase significantly. However, there is a way to avoid more premiums for temporary work: an insurance certificate. It is also important to obtain proof of your subcontractors` general liability insurance. Some of the potential risks you take if your subcontractors don`t have coverage are: This certificate protects employers from additional costs.

In addition, subcontractors are protected. If you want to work with a subcontractor, first ask for an IOC. Patterson recommends that no contractor or subcontractor enter a construction site without a single one. In addition, if an independent contractor hires its own employees, it may be responsible for managing workers` compensation insurance, depending on the condition, nature of the work, and other factors. In addition to the additional premium due, uninsured contractors can have a significant impact on your claims history and employee pay rates in the future. Many states have assumed that the general contractor is responsible for the losses of an injured employee of an uninsured subcontractor. In other words, if a subcontractor`s employee is injured on the job and the employer does not have workers` compensation insurance, medical bills and lost-time wages could be covered on the insured workers` insurance policy. Past losses like these directly affect your insurance rates and result in higher workers` compensation premiums. This article explores the most common questions about comp insurance and employee contractors, including: There are three factors you need to clarify when using 1099 employees in your company. First, you need to understand exactly what an independent contractor is.

Second, you need to know the specific criteria that define who is considered an employee under your state`s compensation laws and who is not. Third, you should learn how to avoid misclassifying employees as contractors. Does the employee have the option to refuse work or orders, or does the company prioritize employees` hours of work? It gets a little more complicated if your subcontractor is someone working alone as an independent contractor. If you are a contractor or general contractor and you use subcontractors to perform work on your behalf, the information contained in this document is crucial. The issue of coverage depends on your state and its outsourcing rules: many states, especially California, have a unique twist on the issue. In many cases, subcontractors fall under your customer`s policies if the subcontractor is under the direction and control of your customer. If the subcontractor does not have workers` compensation: In the event of an injury, the subcontractor is covered by your employment insurance policy. In Missouri, employers are responsible for anyone who works on their premises.

This includes employees, contractors, subcontractors and all their employees. Therefore, a subcontractor claim increases your premium costs. It also affects your experience modification factor (E-Mod). The second criterion of the test is whether the contractor brings more than just ordinary hand tools to perform the contract work (and is solely responsible for the management of his employees). Landscape gardeners, painters and installers of flooring are examples of this: all use special tools; Therefore, they do not meet the requirements of this test and are not your employees under the Employee Compensation Act. For specific questions about workers` compensation and other business insurance, contact your local Marsh McLennan Agency representative. Proof of insurance eliminates liability in almost all cases, unless the subcontractor is not properly classified. Learning that you have to pay workers` compensation for a subcontractor if you didn`t expect it – well, that`s a whole other kind of surprise. If you have any questions about whether a subcontractor can be considered an employee, contact your insurance agent. In particularly difficult cases, we can refer you to your state Workers` Compensation Board. Every claim is different. Anyone injured in a job can try to claim workers` compensation benefits, but disputes are resolved by each state`s Workers` Compensation Authority.

Contact us for more information. Each of our clients is assigned a personal agent in our office. Even if your policy includes a premium fee for the use of subcontractors, it is important to review the specific terms as described in the various forms and approval of your policy. .