One thing that all employers should be aware of is that each state has their own set of rules regarding worker’s compensation, so if you have employees in different states, it’s best to inform your broker so you will have the proper coverage for your employees. When discussing options with potential or current clients in regards to worker’s comp coverage, it becomes clear that this type of Orange County business insurance coverage is not what they would like to spend any time discussing, but it is important initially to get the proper coverage to prevent unwelcome surprises down the road.
Once we present the client with the quote, complete with all the codes the employer will require for the coming year, the record-keeping that will be required of them, along with the time element, many employers just look at us and inform us that it’s just easier for them to 1099 their employees, so they won’t be required to carry any Orange County, CA worker’s comp insurance at all. At this point, we inform the client, it is just not that easy, since carriers are really cracking down on what constitutes an independent contractor these days. All Worker’s Comp carriers have very strict guidelines on what constitutes an independent contractor.
Here is a guideline on what constitutes an Independent Contractor and what constitutes an Employee:
- 1) They have their own tools, and they can hire, supervise, and pay assistants.
- 2) Their schedule is their own; they decide the timeline to complete the project.
- 3) The work they are doing for you is the same as they perform for others.
- 4) With every project, there is a risk of making money or losing money.
- 5) They have a business license.
- 1) Their relationship is one that is continuous with the employer.
- 2) They can quit at any point and will not face any liability for doing so.
- 3) Their schedule is set about where, how, and when they go to work.
- 4) All their materials and tools are supplied by the employer. They just show up.
- 5) All their training is supplied by the employer
Now, this is only a guideline, and each worker’s comp carrier will have their own rules with regard to how independent contractors are classified. We advise that your company contact the carrier and request a clear set of guidelines from them regarding the use of independent contractors, so your company will not have any surprises when you receive your worker’s comp audit or invoices.