If you engage the services of an independent contractor who does not have workers’ compensation insurance, the law may hold you responsible for work-related injuries.

State workers’ compensation laws consider direction and control, as well as the relative nature of the work performed, to determine whether an injured worker is considered your employee and eligible for workers’ compensation benefits under your policy.

If it is determined that you may be held liable for workers’ compensation benefits, Part Five — Premium, C-2 — Remuneration of your policy states that you will pay an additional premium for either the independent contractor’s payroll or the contract price, if you do not have payroll records.

So how do you determine if an independent contractor may be considered your employee?

Our auditors will use this information to determine whether an independent contractor may meet the test of an employee eligible for your workers’ compensation benefits.

May be considered your employee

Criteria	Test	Verification – if any
Insured furnishes materials, tools, equipment	Direction & Control	Invoices, written contract
Insured has the right to control the details of the work	Direction & Control	Written contract, interviewing
Insured sets the hours and place of work	Direction & Control	Written contract, interviewing
Insured has the right to terminate employment	Direction & Control	Written contract
Payment method is by the hour, week or month	Direction & Control	Invoices, written contract
Services are provided on an ongoing basis	Direction & Control	Disbursements, invoices, general ledger, written contract
Independent contractor is economically dependent upon the insured	Relative Nature of the Work	Disbursements, invoices, written contract
The same type of labor is performed as the insured’s regular business	Relative Nature of the Work	Interviewing
The work is the same as that normally performed by employees of the insured	Relative Nature of the Work	Interviewing

May be considered an independent contractor

Criteria	Test	Verification – if any
Insured does not furnish materials, tools, equipment	Direction & Control	Invoices, written contract
Insured does not control the details of the work	Direction & Control	Written contract, interviewing
Insured does not set the hours and place of work	Direction & Control	Written contract, interviewing
Payment method is by the contract bid proposal	Direction & Control	Invoices, written contract
Independent contractor has the freedom to select helpers	Direction & Control	Interviewing
Independent contractor is engaged in a business or profession of his own	Relative Nature of the Work	Ads in Yellow Pages, Web site, business license, tax ID numbers