Do 1099 Employees Need Workers’ Comp?

May 16, 2022


Having in-house employees is beneficial, but hiring independent contractors comes with its own perks. 

Not only does it offer more flexibility in staffing, but hiring specialty contractors for your small business can lead to better work at a faster pace. 

In many cases, 1099 workers are more friendly to company finances - paying someone their specific rate instead of an annual salary plus benefits, and other hidden costs, is cheaper. 

Although, your independent contractor may end up costing your business more money than you bargained for if they accidentally get hurt on the job. 

Understanding workers’ compensation laws can help small business owners like you protect your business and offer contract workers help if they get hurt on the job.

Do I need Workers’ Comp for 1099 employees?

In short, no, but we still recommend it.

Employers are not obligated to have workers’ compensation coverage for independent contractors. 

However, each state has its own rules and regulations regarding workers’ compensation insurance. 

For example, the state of Ohio’s Bureau of Workers’ Compensation states that most contractors and subcontractors should consider their own 1099 workers' compensation insurance plan to cover medical costs and lost wages. 

The state’s bureau suggests getting liability insurance or workers’ comp to protect yourself and your workers: 

“If an independent contractor or subcontractor controls the selection of materials, traveling routes and quality of performance of another worker, that independent contractor or subcontractor is considered an employer and, as such, is required to provide workers' compensation coverage for that worker.” 

Should I consider Independent Contractor Workers’ Compensation Insurance anyway?

Accidents happen, and they can occur whether you hire in-house employees or independent contractors. 

If you find yourself dealing with a 1099 employee injured on the job, and you don’t have business insurance specific to workers’ compensation, you may end up with a lawsuit in your lap.

Instead of expecting your contractors to achieve the impossible and avoid all accidents, you can:

  1. Ask them to give you a Certificate of Insurance, which shows they have their own workers' compensation policy in place 
  2. Include your 1099 workers in your own workers' comp policy. That way, they’ll be protected alongside your other employees

Do you want peace of mind when working with contractors?

Let us be your workers' comp insurer. Call or text us at 866-338-8823 for a free consultation or fill out a form to get your instant quote on workers' compensation insurance today. 

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