Whenever you hire a contractor or subcontractor—even for just one day—it pays to plan for the worst. What happens if the hired worker gets injured?
Each state has laws that govern workers' compensation coverage as it relates to hiring contractors. In some states, independent contractors are automatically covered under workers' compensation. Other states require employees to be covered, but not contractors.
Know the rules in your state before you hire contractors. If you have any questions. We're here to help.
Hiring Contractors in California
Hire licensed contractors who carry their own workers' compensation insurance.
Under California law, an individual who hires a contractor to perform services for which a license is required, may become the "employer" of that contractor if the contractor did not have workers' compensation insurance at the time an injury occurred. This risk also extends to other employers of the uninsured contractor.
Require every contractor to:
- Submit a valid contractor's license prior to performing work for your business; and
- Submit proof of the contractor's workers' compensation insurance.
Tip: Use the California state's website, www.cslb.ca.gov, to verify a contractor's valid licensing. Click on "Check a Licensed Contractor." Then enter the contractor's license number and check the status of the license.
Independent Contractors vs. Employees
Can a contractor file a claim on your workers' compensation policy?
It depends. If you pay a contractor who is required to have a license and the contractor is not licensed, that contractor is your employee, according to California labor law.
If you hire an independent contractor (who is not required to have a license), answer these questions to determine whether to treat that worker as an employee:
Who supplies the tools? Where is the work performed?
If you supply the tools and the work is performed on your premises at your direction, this person may be an employee so you should include payments as payroll.
Are the services provided an integral part of your business?
If the answer is yes, the person is likely an employee so include payments as payroll.
How do you pay the person?
Paying a worker by the hour, commissions or piecework indicates an employee/employer relationship. If paid by the job, this indicates an independent contractor and payments should not be included.
Does this person work for other businesses in the same capacity?
If the answer is yes, this is probably an independent contractor and payments should not be included.
Hiring Contractors in Florida
Before you hire a construction industry contractor or subcontractor, require a certificate of workers' compensation insurance or a valid exemption form (where applicable).
For questions regarding exemption status, contact Zenith or the Division of Workers' Compensation at (850) 488-2333.
Before you hire a non-construction industry contractor or subcontractor, require a certificate of workers' compensation insurance or a duly sworn and notarized affidavit of independent contractor status (as amended by SB50A effective 01/01/04).
For questions regarding independent contractor status, contact Zenith or the Division of Workers' Compensation at (850) 488-2333.
Before you hire a subcontractor from the United States Longshoremen's & Harbor Workers' industry, require a certificate of workers' compensation insurance that includes specific coverage for USL&H workers' compensation.
Always make sure you have the proper documentation before work begins. This can save you from paying fines and/or extra workers' compensation insurance premiums. You are responsible for paying any additional premiums on subcontractors who fail to provide this information.
