Workers’ compensation insurance provides financial support for medical expenses, lost wages, and other costs following a workplace accident or on-the-job illness. It’s mandatory for employers to take out a policy in every US state except Texas. And 36 states plus Washington D.C. require it for companies with at least one employee.

Full-time, part-time, and even seasonal employees are covered by workers’ comp. But in most cases, a company’s workers’ comp policy doesn’t protect independent contractors, sole traders, sole proprietors, freelancers, or gig contractors. To make sure you and any employees you might have are protected following a workplace accident, you might need to take out your own insurance policy.

Why do companies hire independent contractors?

Hiring an employee costs companies a great deal of money. That’s because:

  • Employees are usually entitled to workers’ compensation coverage
  • Employers must pay payroll taxes for employees and contribute to their state’ unemployment insurance program
  • Employers must comply with a complicated mix of federal and state laws regarding their employees

To keep costs as low as possible, some companies prefer to hire independent contractors to do the work of regular employees. They might even provide contractors with a 1099 tax form so the contractor can declare non-wage, salary, and tip income as miscellaneous income to the Internal Revenue Service (IRS) for tax purposes. That said, some states require employers to provide workers’ comp for 1099 contractors.

When are independent contractors covered by workers’ compensation?

Workers’ compensation insurance is intended to support employees. But there are times when an independent contractor’s work for a client company is almost indistinguishable from employee status. In such cases, a contractor might qualify for workers’ comp, and their client company may even be penalized for having misclassified its workers.

There are five major factors that determine whether an independent contractor should be considered an employee:

  • The right of either party to discharge a contract
  • The amount of control the employer has over how the contractor does their job
  • The amount of control the employer has over where the job is done
  • Whether the employer provides tools and materials
  • How payment is provided

Of these, control over the contractor’s duties has the greatest impact in determining the relationship. In a legal dispute over whether the employer is required to provide workers’ comp benefits, a jury might also consider:

  • Whether specific training has been given, as this shows that the employer has exercised greater control over how work is performed
  • How much instruction the employer gives the workers
  • Whether or not the worker is expected to collaborate with others
  • Whether the worker is allowed to subcontract other companies
  • Whether the employer pays for business expenses

If you’ve been classified as an independent contractor but are actually part of a traditional employee-employer relationship, you might be entitled to workers’ comp. Reach out to Phalen Law today to discuss your case, and we’ll help you determine whether you’re eligible to file a workers’ comp claim.

Buying your own workers’ compensation insurance

While precedent exists for workers being misclassified, in the vast majority of cases an independent contractor simply isn’t covered by their client’s workers’ compensation policy.

One option is to write into your initial contract that your client is responsible for buying workers’ compensation coverage on your behalf. But this extra expense might discourage them from hiring you.

The best way to ensure you’re covered in the event of a workplace accident or illness as an independent contractor is simply to buy your own insurance policy. Your client might even ask that this be included in your contract to protect themselves in case you try to file a claim against them.

Be aware that personal health insurance policies don’t usually cover work-related injuries or on-the-job illnesses. You’ll need to purchase workers’ comp or a similar insurance policy that specifies these particular incidents. And since these policies are unlikely to cover other liabilities, you might want to consider general liability, error and omissions, commercial auto insurance, and other such policies as well.

Some states require workers’ compensation for high-risk construction jobs such as roofing, even if you don’t have any employees. And if you do hire others to work for you, you’ll probably be required to take out your own workers’ insurance policy to make sure they’re protected.

The average cost of workers’ compensation in the US is around $45 per month. You can offset these costs by factoring them into your quote.

Do you need workers’ comp insurance if you only hire subcontractors?

Some states require that you take out a workers’ compensation policy when you hire subcontractors, even if they’re covered under their own policy. And remember, if you’re misclassifying employees as subcontractors – intentionally or otherwise – you could be at risk of heavy fines and legal proceedings!

Think you’ve been misclassified as an independent contractor?

Independent contractors aren’t typically covered by a client company’s workers’ insurance policy. So they need to take out their own work-related insurance or ask the client to do so on their behalf as part of the contract agreement. But if you’ve been denied workers’ compensation as an independent contractor while fulfilling the exact same role as an employee, contact Phalen Law immediately.

We’ll assign you a trained and experienced workers’ comp lawyer to listen to your case and establish whether you have grounds to make a claim. If you do, we’ll work with you to gather all the necessary evidence and provide expert legal defense if the case goes to court. By working with Phalen Law, you give yourself the best possible chance to receive the compensation you deserve following your workplace accident.

Give us a call or fill out our Free Case Evaluation form to get started.

Picture of William L. Phalen

William L. Phalen

For 30 years, Bill Phalen has been representing families and workers whose lives have been devastated by workplace injuries, reckless drivers and the negligence of others. When tragedy needlessly strikes – because of the irresponsible behavior of an employer, corporation or an insurance company – Bill Phalen is an advocate for the people, always representing David in the fight against Goliath. Bill’s strong convictions have led to successful cases at the Court of Appeals and Kansas Supreme Court.

21:34 06 Aug 23
It has been a long road of recovery, very thankful for all they have done on my behalf, Bill and Melissa thank you for having my back and helping me get through everthing i have gone through in the last few years.
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13:21 28 Mar 23
Very nice employees. William is an awesome attorney if it had an option for 10 stars I would give him 10. I highly recommend him to anyone in search of a great attorney
Dorothy RuebelDorothy Ruebel
05:32 25 May 21
I highly recommend Mr Phalen. He and his staff did a great job! I could not have won my case without them.
Luke EmmotLuke Emmot
14:42 18 Dec 20
I was hurt at work and Mr Phalen took my case on and worked on it for over a year and was able to successfully get me a settlement check for my injuries. Hire him if you’re ever injured on the job!
Kelli StringfieldKelli Stringfield
21:06 01 Jul 19
If you need an excellent attorney around the Pittsburg area Bill Phalen is the guy to go to. Very knowledgeable and pleasant and the office staff is great. I wouldn't go to anyone else!
Levi DeWittLevi DeWitt
16:14 01 Apr 19
I've worked here as a student intern since August, 2018 and I must say that this has been the most enjoyable job I've had to date. Mr. Phalen and the gals working here are a pleasure to be around and work with. They are patient with me every time I'm slow to get the hang of a new task, they are relaxed and easy going but know how to get the job done well. They each put extra effort into all of the work they do for each and every client. Several times they have come in early or stayed at the office late to make sure that they got every done that they needed to prepare someone's case.The people in this office have been a part of this community for a lifetime and working with them has helped me feel as if I was a part of this great community as well.
Thomas HelmThomas Helm
16:52 27 Mar 19
Very Proud to call him my Attorney, very friendly staff, that always keeps me updated on my case and one phone call away to answer any questions. I have been using him for many, many years. I can't Thank him enough for what he has done and still doing for me and my family. But Thank you. Would highly recommend William Phalen.