California Law requires a business with employees to carry a workers’ compensation policy, in the event that such employees are injured while on the job. Businesses which don’t comply may be penalized and fined by the California DOI.
In the past, business owners have been fined for being unknowingly non-compliant. In most cases, they were under the impression that they hired an independent contractor, and believed they were exempt from coverage. However, just because an individual is 1099’d doesn’t necessarily mean that they are considered an independent contractor.
So how does one know if a worker is considered an independent contractor or employee? There are a few key differences between the two.
- Has a continuing relationship with an employer.
- Normally is furnished significant tools, materials, etc. by the employer.
- Can quit at any time without incurring liability.
- Must comply with instructions about when, where and how to work.
- Is trained by the employer.
An independent contractor:
- Does the same work for others that is done for you.
- Has own tools and equipment and can hire, supervise and pay assistants.
- Can make a profit or suffer a loss.
- Sets own hours and work schedule
- Has a business license.
Based on the information above, if you have an individual that falls in the employee category and is not accounted for on a workers’ compensation policy, it is highly recommended that you consider picking up an “if any” policy.