In nearly every state, the majority of employers must have workers compensation insurance. Workers comp policies protect workers who are injured while performing job duties by providing financial assistance after an accident. The inherent risks in specific industries determine the amount of coverage that an employer needs and workers do not have to pay into the policy — they simply file a claim with their employer’s insurer after sustaining an injury.
However, the process is much more complicated for self-employed individuals and independent contractors who are injured on the job.
Self-Employed vs. Employed
For those working as employees, the recruiting enterprise pays the premiums for the coverage policy. This cover costs relating to work-related accidents, including lost wages and medical bills. If you are an independent contractor, sole proprietor, or a freelancer, you are likely considered “self-employed.” Because self-employed individuals are not employed by someone else, they are not covered by another business’ insurance policy.
It’s common for the distinction between “employee” and “contractor” to become blurred. The easiest way to determine your employment status is to consider which form you receive to file your taxes. If you receive a W-2 form, you’re likely an employee; if you receive a 1099 form, you’re likely self-employed.
Getting a Workers Compensation Policy
Many companies in high-risk industries are hiring contractors these days to cut costs. Sometimes these contractors are employed by another business, and sometimes they are self-employed. There are many benefits of working as an independent contractor; losing the benefits of workers compensation coverage isn’t always big deciding factor when someone chooses to become self-employed. In low-risk professions, workers compensation coverage is rarely an issue.
However, individuals who choose to be self-employed in high-risk industries might want to look into insurance policies for themselves. Some employers even require contractors to carry their own workers compensation coverage so that, if an accident does occur, the contractor cannot sue the business for compensation. It’s not always easy to find an affordable and flexible workers compensation policy, unfortunately. Many larger insurance companies do not find much of a benefit in selling small policies for self-employed individuals, but as more Americans begin choosing self-employment, some private companies have begun focusing on this audience. Additionally, states may offer some form of workers compensation coverage through a state-run fund.
Once you have your workers compensation policy, it should operate very much like any other workers comp policy after an accident. While you won’t have to notify an employer of an injury, you’ll still have to notify the insurance carrier and begin preparing for your claim. Keep in mind that the insurance provider may not be required to provide financial compensation simply because you pay into the policy. They’ll likely expect you to provide evidence of your injury and might require you to seek a medical examination.
Contact a Lawyer
If you believe your employment status has been misclassified, or if you’re a self-employed worker who wants to learn more about the policies that are available to you, don’t hesitate to contact a workers compensation law firm Oak Creek, WI trusts today.
Thank you to our friends and contributors at Hickey & Turim for their insight into workers comp and self employment.