With the skyrocketing of remote and freelance work in recent years, employers have spent considerable time trying to keep up with the changing landscape and laws. To save money or meet the worker pool’s changing demands, many employers boosted the share of independent contractors on their payroll.
But when all is said and done, that can leave you with questions like, Do I have to pay workers’ compensation for independent contractors? In this post, we provide an answer to this question. We also explore information on Florida’s law about workers’ comp and independent contractors.
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What Is Workers’ Compensation?
Workers’ compensation is a type of insurance policy you take out to cover employee medical bills and lost wages. It kicks in when an employee suffers accidental, on-the-job injuries. Subject to exceptions, the policy comes into play regardless of fault. Employees typically can’t file a lawsuit against your company for a work injury if a workers’ compensation policy covers them.
Florida requires you to have a workers’ compensation insurance policy that covers your employees. But you may not need to if the worker is an independent contractor.
Do You Have to Carry Workers’ Compensation Insurance for Independent Contractors?
Whether you have to pay for workers’ compensation insurance for independent contractors depends on many factors, like:
- The industry that your business is in;
- How the worker receives payment (in some cases); and
- The nature, type, and frequency of work the independent contractor performs.
But, as you may know, just calling someone an independent contractor doesn’t guarantee that that is how the law sees them.
Let’s review how to determine if someone is an independent contractor under Florida law.
Note that federal laws may classify the relationship differently. For our purposes of answering our main question, Do I have to pay workers’ compensation for independent contractors?, we’re focusing on Florida state law in the context of workers’ compensation.
Who Pays for Workers’ Compensation for Independent Contractors?
If you’re in the construction industry, it’s safe to assume that the person who works for you is an employee under Florida law. As a result, you will most likely need to pay for workers’ compensation that covers them.
But exceptions apply. For example, let’s say the worker is a subcontractor who files an exemption or has taken steps to secure coverage another way. In that scenario, you may not need to take out workers’ compensation that covers them.
If you work in this industry, it’s essential to speak with a business attorney to help ensure that you are compliant and not spending more money than you need to.
How to Know If Someone Is an Independent Contractor In Florida
Florida’s workers’ compensation law gives criteria for when someone is an independent contractor. Let’s go over some of that now.
For specific questions on how these apply to your relationship with your workers, talk to a business attorney.
Our attorneys have extensive experience helping employers navigate the complex world of owning and running a business, including meeting their legal obligations.
Criteria Used to Determine If Someone Is an Independent Contractor
Someone isn’t an employee if they meet at least four of the following criteria:
- The person has a separate business and their own equipment or accommodations.
- The individual has a federal employer identification number or is a sole proprietor who does not need to have one under federal and state law.
- The business pays money to another company (versus an individual) for services done by the worker.
- The person has a business account that they use to pay expenses to perform work.
- The worker is free to work for other companies without following a formal process for quitting the job they are doing for you or taking other such action.
- The individual works for you on a per-task basis or by submitting bids based on a contract between you and the worker. (But this doesn’t apply if the contract is an employment contract saying they’re your employee.).
Let’s say that the worker and your relationship with them don’t meet four of the criteria above. Does that mean that they aren’t an independent contractor under Florida law? Not necessarily.
But Florida law has other criteria to determine if someone is an independent contractor. For example, if the worker has control over their work, when they do it, how they do it, and at what price they do it for, they may be independent contractors.
Further, exceptions may apply that exempt you from having to pay for workers’ compensation for an employee.
Because this determination depends on the facts and law applicable to your circumstance, it’s best to consult a business attorney.
Our team can review your existing contracts and help you understand your obligations under Florida law.
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We devote our time and resources to helping businesses of all shapes and sizes. Our team includes founding members Trevor Brewer and Michael Long. Both Trevor and Michael have received the AV rating from Martindale-Hubbard, a rating they have maintained because of their outstanding work.
Past clients describe us as “very ethical and professional” and “a true asset to the legal community.” We’re standing by to help you with your business needs.
If you need help navigating workers’ compensation laws for independent contractors, call us today or contact us online to schedule a consultation.