Employee or Independent Contractor Insurance?
Employee or Independent Contractor Insurance?
hen business owners hire an sole proprietor independent contractor for a job where possible injury could occur, who would be accountable? Your constructions insurance would not cover the contractor under the workers' compensation as under their independent contractor status would stop a claim from going ahead.
As their sole proprietor status does not necessarily mean they fall under the independent contractor heading automatically, it could well be they are classed as an employee, who is not accounted for by the liability insurance.
The legal issues which ensue in determining whether the worker is an independent contractor or an employee is up to a combined effort from 3 state agencies; the IRS, state Department of Labor and the Workers' Compensation Board.
Despite the confusion which arises from a person working either as an employee or an independent contractor, as a rule of thumb you can ask yourself these questions. Does the employer directly control what, how and when the workers employment is?
Having direct evidence of the control of the worker can be found using these questions:
Do your instructions require compliance?
Will the worker be trained by a more experienced employee by going to meetings, apprenticeships and classes?
Will the overall business operation include the worker's service?
Does the company set the amount of hours the worker will complete?
Will the person work full time hours?
Are written or oral reports required?
Are the person's business expenses paid for?
Payment Methods
Will the worker be assigned regular periodic payments such as hourly, daily, weekly or monthly?
Equipment
Are the business premises the area which the worker will carry out the tasks?
Will materials, tools and other equipment be provided?
Any liability from employment terminations
Is there an ongoing business relationship with the person?
Can the worker have their employment ended without liability?
Here are the general terms and conditions of what is an independent contractor and an employee:
Does the person work for other businesses and people at the same time?
Does the worker offer their services to the general public often?
Does the worker accrue a profit or loss which are usually not accrued by other employees?
Does the worker have to invest in items to perform the work which are not normally maintained by staff?
If business assets are sold, will the worker realize a gain or loss?
Is there contractual liability using constructions insurance if the worker stops working suddenly?
The worker's status depends entirely on the specific work which is carried out and the particulars of those assignments. Whether a person is considered an employee for one job, they could quite easily be an independent contractor for another job. The worker's status must then be evaluated depending on the type of job being carried out to be fitting with the liability insurance.
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