The employer / employee / contracted “1099” employee is a sticky subject. When dealing with insurance, this is an easy way to cut corners in coverage which will help short term with premium. The problem is that after a loss or in the event of a more detailed audit, there may be huge fines or additional premiums that follow. To clear up some of these questions I have highlighted the IRS’s checklist that determines the employer / worker relationship. This can be very helpful as the situations are not often clear. There is a lot of grey area – I hope this helps!

1. Can the worker hire, supervise or pay others to work with them?
2. Does the worker have an investment in the enterprise?
3. Can the worker profit or lose money from their endeavors?
4. Does the worker work for several clients?
5. Does the worker present themselves to the public as self-employed?
6. Do you provide instructions?
7. Do you provide training?
8. Are the workers services integrated into the general operations of your business?
9. Are the workers services rendered personally?
10. Is there a continued relationship with the worker?
11. Does the worker have set hours of work?
12. Does the worker work full time for you?
13. Does the worker always work at your business location?
14. Do you specify the sequence of services to be performed?
15. Is the worker required to render oral or written reports?
16. Is the worker paid by the hour or week?
17. Is the worker reimbursed for business expenses?
18. Do you provide materials needed to do the work?
19. Can the worker terminate their services without breach of contract?
20. Do you have the right to terminate the workers services at any time?

“No” answers to the first 5 questions and “yes” answers to the following 15 may indicate an employer/employee relationship.

As a small business owner with a corporate structure set as an LLC, the law in Massachusetts does not require you to have workers compensation insurance if you do not have employees. BUT the issue stems from the fact that all contracted employees MUST have their own workers compensation insurance. This could get ugly in the event of a workplace injury.

At the end of the day, it is in a company’s best interest to have a workers compensation policy with the proper classifications and payrolls included. Do not hesitate to contact Chip Gibson at Deland, Gibson Insurance Associates with any questions regarding this. He can be reached at 781.239.7664 or at cgibsonjr@delandgibson.com


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Deland, Gibson: a Trusted Choice, Five Star Accredited independent insurance agency. Established in Massachusetts in 1900, Deland, Gibson is a 4th generation family-run insurance agency that has thrived working as a trusted advisor for its client base. We work with individuals and businesses to lower their Total Cost of Risk. We analyze a client’s direct and indirect costs and implement risk reduction plans to address areas of business, hazard, or strategic risk.