Do Independent Contractors Need Workers’ Comp Insurance in NY?

All employers in New York State, including independent contractors, are required to carry workers’ compensation insurance. The policy can come from the New York State Insurance Fund, self-insurance, or a private insurance carrier. While self-insurance is an option, it is uncommon.

While getting permits, a business must show proof of workers’ comp. However, they can be exempt in some clearly defined circumstances. It’s important to note that in New York, employers are not required to provide workers’ insurance coverage to individuals hired as independent contractors. However, independent contractors may still be considered employees even if they don’t meet the set requirements for an employer-contractor relationship. Here’s more detailed information on this topic.

Can a Business Require a Contractor to Carry Workers’ Comp Insurance?

According to NYS Workers’ Compensation Board, a business can require independent businesses with their own employees to get workers ‘comp insurance if the independent business is a subcontractor.

In What Circumstances Are Businesses Exempt from Workers’ Comp in New York?

In certain situations, for-profit businesses are not obligated to provide workers’ comp coverage. These include:

  • Sole Proprietorship- Businesses owned by a single individual with no employees or subcontractors
  • Partnership with No Employees– Businesses that are partnerships recognized by the New York State laws
  • One or Two Owner Corporation with No Employees– Businesses owned by one or two individuals, wherein the owners possess all the corporation’s offices and stock, and there are no employees or subcontractors

Employees Eligible for Workers’ Comp

For workers’ comp purposes, employees include day labor, unpaid volunteers (including family members), part-time employees, borrowed employees, and subcontractors. The following factors are used to determine whether one is an employee or an independent contractor:

  • Right to control – The level of control and direction an organization or individual exercises over an individual contracted to perform certain tasks is a key factor in evaluating the employer-employee relationship. If an organization or individual controls how tasks are executed, that’s an indicator that the person performing the work is an employee.
  • Work performed is similar to the employer’s primary work – If the work performed is similar to the employer’s primary work, then the individual doing the work will be considered as an employee.
  • Method of payment – Employees are typically paid wages on a monthly, weekly, hourly, or daily basis. Whether the workers are paid through a 1099 or W2 Form is irrelevant when determining whether an employer-employee relationship exists.
  • Furnishing materials/equipment – If a business provides the material or equipment used by individuals performing the work, that indicates an employee-employer relationship.
  • Right to hire/fire – If a business retains the power to hire and fire individuals performing the work, the individuals doing the work are employees.

Why Choose Premier Risk for Workers’ Comp Insurance?

At Premier Risk, LLC, we understand the unique needs of each business owner and can help you secure insurance that suits your situation. Moreover, as an independent insurance agent, we will compare rates and help you find the most cost-effective and suitable insurance options. Contact us today to get started.

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