Should We Cover Independent Contractors For Workers' Comp?

By Brandy King
Communications Director
Spooner Inc.

Don’t let the 1099 fool you. Just because your company doesn’t send these workers a W-2   doesn’t mean you shouldn’t cover them for workers’ compensation in Ohio. You may be   thinking, “We’re not concerned – all of our 1099ers have a certificate of coverage from   BWC.” Ok, so they knew that they had to manually elect coverage for themselves if they’re   an LLC filing as a sole corp right? It can be more complicated than it appears on the   surface, but we’re here to help you get a handle on it. Keep in mind this is not legal advice. If you have specific situations about classifying workers, you can always reach out to us, but sometimes it’s best to follow up with an employment attorney. Navigating the world of gig workers can be tricky, but just ask Ugicom – it’s best to classify workers correctly from the beginning.

A lot of employers will casually mention that they don’t have to cover certain workers as employees for workers’ comp, because these people are independent contractors. Unless they come and go as they please with no schedule parameters, don’t utilize company vehicles or other property, and you have no say in the work they perform - they may in fact be independent contractors. If you can’t confidently tick all of those boxes, it may be time to reevaluate.

When Ohio BWC performs a payroll audit, they’ll also ask for payroll records on any 1099 employees – and trust us, they’ll have questions. If an employer can’t prove that they don’t control the work being performed, you may end up paying those premiums retroactively. Even if the contractor has provided the employer with a certificate of coverage, it may not amount to much if they didn’t elect coverage properly. Only LLCs filing as S- or C-corps are automatically covered once the policy is issued. Sole proprietorships and partnerships have to take an extra step and elect coverage for themselves. The new and improved BWC application for coverage now explains this caveat in more detail, but that doesn’t help anyone who applied for coverage before 2022.

You can view Ohio BWC’s guidelines on contract laborers here, and there’s even an employer  questionnaire here.

***This article first published on the Spooner Inc. blog at https://spoonerinc.com/should-we-cover-independent-contractors-for-workers-comp