Employee or Independent Contractor

Whether someone who works for you is an employee or an independent contractor is an important question. The answer determinesifhe or she is covered on your workers' compensation policy.

The Workers' Compensation Act states that any individual who performs work for you is an employee unless the individual:
* is free from control and direction in the performance of the service, and
* is customarily engaged in an independent trade, occupation, profession, or business related to the service being provided, and
* has no workers.

Facts of the business relationsh ip will help you to determine the status of employee or independent contractor.

To determine if the individual is "free from control or direction," ask yourself:
* Do I tell the individual when or how to do the job?
* Do I provide tools or equipment?
If the answer is "no" to both questions, the facts indicate the individual is free of control.

To decide if the individual is "engaged in an independent trade, occupation, profession, or business," ask yourself:
* Does the individual have a business name?
* Does the individual carry business insurance?
* Does the individual offer this service to any other business?
* Does the individual submit invoices?
* Is the individual paid by a fixed rate?
* Does the individual supply the tools and vehicle?
* Are the payments made to the business name?
* Does the individual work alone? (If not, he or she may need to carry workers' compensation.)

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