Do I Cover Workers’ Comp for Independent Contractors?

Workers’ comp insurance can be critical to your business’s financial stability and legal compliance. By securing appropriate coverage, you can ensure your employees have access to essential funds and resources following work-related injuries and illnesses.

But when it comes to independent contractors, where do your responsibilities begin? At SIA, LLC, we’re happy to help you understand this complicated subject.

Understanding Indiana’s Requirements

In Indiana, the requirement for employers to cover independent contractors with workers’ compensation insurance is nuanced and depends on specific criteria.

Independent contractors are typically not considered employees and, therefore, are not automatically covered under an employer’s workers’ compensation policy.

According to Indiana Code 22-3-6-1(b)(7), a person is classified as an independent contractor if they meet the guidelines set by the United States Internal Revenue Service (IRS).

These guidelines consider factors such as the degree of control the employer has over the work performed and the financial relationship between the parties.

If an individual qualifies as an independent contractor under these guidelines, they are not entitled to workers’ compensation benefits from the hiring entity.

How to Ensure Suitable Coverage

Although employers in Indiana are not typically required to provide workers’ compensation insurance for independent contractors, it is crucial for both parties to clearly define their relationship and ensure that the independent contractor status is accurately documented.

Misclassification of employees as independent contractors can lead to legal complications and potential penalties for employers.

Independent contractors should also be aware that they are responsible for their own insurance coverage. They may choose to purchase their own workers’ compensation insurance or other forms of coverage to protect themselves in case of work-related injuries.

We’re Here to Help

Contact SIA, LLC in Kendallville, Indiana, today to learn more about workers’ compensation coverage requirements or to compare personalized quotes.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.