What type of my
employees do I have to insure under Workers'
Let us say you have different types
of employees and contractors utilized for a wide variety
of tasks, projects, and services. At what point, you
may wonder, do these associations cross the line of
establishing an employer/employee relationship? Is it
strictly full time w2 payroll employees? Do permanent
part time w2 payroll employees qualify? What about
diem' employees who work on a project basis or 1099
contractors? Do they have to be included? The list of
questions and scenarios goes on and on with
possibilities. Let's run through a few scenarios which
will help to clarify real world situations for you!
both my w2 payroll full-time and part-time w2 payroll
have to be included in Workers' Compensation coverage?
By law a business with employees
must be added to coverage. There are possibly
exceptions if the employees have partial ownership or if
they are sole proprietors.
Are my 1099 employee contractors
eligible for coverage?
Workers' Compensation is not
specified purely by W-2 payroll status or 1099 payment
as 1099 employees may still require Workers'
Compensation as well. W-2 & 1099 are forms of payment
and does not determine an employment relationship.
What does determine if there is an
employer/employee relationship and we must include an
employee on insurance?
You have to ask yourself a series
of questions first and critically analyze your
relationship, the duties, and control.
If the 1099 employees qualify for the
following they must be covered under the WC as well:
- Do they solely work for your
- Does the employer provide
training or materials to perform their job functions
(computer, car, reimbursements, etc).
- Is it a specific project or an
- Does the 1099 worker work out of
their own office or out of the employer's office?
- Does the employer or 1099
employee determine their hrs worked and when projects
If you answered yes to ANY of the
above questions you may have to add the individual to
The notion of 'direct and control'
comes into play. If the employer has the right to make
decisions in the above areas that affects the contractor
they are considered an employee.
What about out of state employees?
You may have recently hired out of
state employees or opened up a new office in another
state. There are certain Workers' Compensation
insurance companies who license in many or majority of
states. We can help you with these out of state
employees who you may be having difficulties with in
your current coverage carrier.
What happens if I don't purchase
Workers' Compensation for these employees?
Ignoring the Workers' Compensation
is a serious situation in California. There are large
fines from the State Regulation and you can be held
liable for the full cost of the medical claims any
injuries and any lawsuits. It is a much better decision
to purchase the coverage and provide the security for
your employees and yourself.
Penalties for not offering California Workers Comp
How to get the best Workers Comp rate
Different approaches to Workers Comp