Well, the short answer is “Yes, 1099 contractors probably do need to be included under your workers’ comp policy.” It's more complicated than that, however. So let's go over some of the details you'll want to get straight.
What are Contract Workers?
Contract workers are people who work for themselves, but perform work for you. You don’t control the details regarding how the work is done, but you still determine whether the work is satisfactory, and when it is to be delivered. Contract workers often work on their own premises when possible. An employee who works for you on a temporary basis is not the same thing as a contract worker. When you’re confused, the IRS website can help you figure out exactly what classification your workers should have.
Statutory Employees
Even if someone works for you on contract, there are certain laws that may deem them an 'employee' if they perform certain tasks. If someone that works for you meets a combination of these conditions, they are considered a statutory employee and you are required to withhold Social Security tax and Medicare tax when paying them.
For example: a life insurance agent who works full-time for just one life insurance company on a continuous basis is considered a (statutory) employee of that life insurance company, for tax purposes.
Statutory Non-Employees
There are other statutes that require certain workers always be independent contractors instead of employees, and these include licensed real-estate agents, direct (e.g. door-to-door) sellers, and some patient companion/sitting workers. Statutory non-employee cases are pretty rare, but it's always good to double check whether your industry is affected by laws like these.
Who Goes Under My Workers’ Comp Coverage?
Whether or not you include someone under your workers' comp coverage depends on two things. First, are they doing work for your business operations? And second, are they covered in case of injury while performing this work? Some 1099 workers will have their own workers' comp coverage. If they can provide proof of this coverage (make sure it's workers' comp, not just general liability), then it's not necessary to include them under your policy. If they don't have their own coverage, then you should include them under your policy to avoid being sued if they get hurt.
If you are wondering about coverage for any of your workers, talk to a trusted insurance agent or broker. They do this kind of thing all day, so they can clear up any confusion you may have.
