Workers Compensation For Independent Contractors Explained

​Workers' compensation insurance is a policy that benefits those who suffer work-related injuries or illnesses. It is also beneficial for employers because they will not be shouldering the bills if any work-related injury occurs. Distinguishing Independent Contractors from an employee is crucial for an employer for determining who benefits workers' compensation coverage. However, the misclassification of employees is often intended by employers who want to avoid paying employment taxes. As employers, these misclassifications should be avoided because it will result in costly fines and penalties in the future.

Classifying Independent Contractors
Worker classification is important because it determines the type of employment insurance applicable and social security and taxes to be paid. It is a little more complicated for independent contractors since they are not covered by workers' compensation insurances. Here are some criteria for determining if an independent contractor is indeed exempted.

• If a worker has their own crew and is responsible for sending out instructions, then they are independent contractors.
• They bring specialized tools to the workplace.
• They have an established business location.
• They have their own bookkeeping records.

Avoiding Fines From Misclassifications
Your hiring process policies will also protect your business. Even before a contract takes into effect, human resource personnel should have already properly identified the workers' classifications. If you are hiring a subcontractor, get proof of coverage and verify that workers' compensation insurance for his crew is updated. This will save you from being liable for unpaid premiums. In addition, proper documentation should also be prepared such as signed agreements to avoid confusion and future lawsuits. Keep in mind that any violation will lead to expensive fines and penalties.

Risks of Workers Compensation Violations
Acquiring legal consequences such as felony charges is the major risk of violations from workers' compensation laws. This is the reason why workers' compensation training is also important even before a business starts to operate. Another risk is that your business operations may be suspended due to unforeseen events resulting from the employer's negligence.

Conclusion
Proper employee classification is vital in the risk management program of your business. Negligence will result in inefficiency in providing moral obligations in protecting your workers as well as costly expenses. So to avoid troubles, a broad knowledge of the coverage of workers' compensation is important.

At CSIS Insurance Services, Inc., we aim to provide comprehensive insurance policies that make your life easier. We want to help you get the insurance that fits your needs. You can get more information about our products and services by calling our agency at (888) 501-2747. Get your free quote today by CLICKING HERE.