Some employers decide to make their employee’s , 1099 employees , often referred to as independent contractors. But just because an employer 1099’s their employees so they don’t have to pay payroll taxes, the minimum wage, overtime, etc.it doesn’t mean they are independent contractors under the worker’s compensation laws.
The most significant question is if the Employer has control over or the right to control the worker, both as the work is done and the manner in which it is performed. Does the Employer control what hours the worker works and how the work is done? If the answer is yes, then worker’s compensation coverage is needed.
Under the California Labor Code it is presumed that a worker is an employee,and subject to worker’s compensation laws. The burden is on the employer to prove that the 1099’d workers are not employees but independent contractors.
There are some questions that an employer can ask themselves to make it clear whether they need to provide worker’s compensation coverage for these workers or not:
Is the worker’s occupation distinctly different from the employer’s business? If not, then the Employer may need to provide worker’s compensation coverage.
Is the work that the worker doing part of the regular business of the employer? If it is, then worker’s compensation coverage may be needed.
Who provides the tools of the trade? The Worker or the Employer? If it’s the employer, then worker’s compensation coverage may be needed.
Is it considered a permanent working relationship? If the work is to be ongoing, permanent, then worker’s compensation coverage is probably needed.
Is the worker getting paid by the hour (day,week,month) or by the job? Someone who is getting paid by the job is more likely to be an independent contractor.
Is there are written contract, outlining the work to be performed and the compensation? A written contract helps support the independent contractor relationship but is not a clear cut determining factor.
Although the control that an employer has over a worker is the most significant factor in determining if a worker is an employee or an independent contractor, an employee-employer relationship can be found if the employer retains pervasive control over the operation as a whole, the worker’s duties are an integral part of the operation and the nature of work makes detailed control unnecessary.
So the best advise we can give, as an insurance agent is, when in doubt carry Worker’s Compensation insurance coverage.
If you have 1099’d employees and are unsure If your need worker’s compensation coverage please give Insurance Agent2000 a call at (925) 827-0510 and we’ll be glad to help you make the determination.