Do Contractors and Independent Contractors Need Workers’ Comp?

The label in a contract or a Form 1099 does not necessarily control workers’ compensation status. New York warns that workers under a business’s direct control may be treated as employees and says many subcontractors are covered; it applies fact-specific tests, with special rules for some industries. Other states use their own definitions and exceptions.

Check each state’s employee-classification test and whether the contractor has valid coverage of their own. Before work starts, collect current certificates and verify the legal business name, policy dates, and relevant states. A certificate is evidence of a policy, not an endorsement extending your policy to someone else. A principal may also face an audit adjustment when a contractor cannot document coverage. Ask the insurer how it treats labor costs, certificates, and uninsured subcontractors instead of assuming the contract shifts all responsibility.