It’s important to know whether workers are considered employees or independent contractors, but it’s not always simple to determine.
Every state is different, but in most states, for a worker to be considered an independent contractor for workers’ compensation purposes, the worker must have:
- Control over how the work is performed
- Ability to realize financial loss or gain based on how a project goes
- Ownership of equipment to complete the job
- Compensation on a per-job basis
These are just some basic criteria, and most states have additional requirements beyond these. More details are available through your state’s department of labor.
It’s worth helping your clients understand right away whether their workers will be classified as employees or independent contractors. This way they know the implications for their workers’ compensation premium up front, rather than after their premium audits.
– Attributed to SFM