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Who is not covered by a workers’ compensation policy?

On Behalf of | Sep 6, 2022 | Workers' Compensation Defense |

State and federal laws require employees to be covered by a workers’ compensation policy. The requirements will vary depending upon whether the hiring entity is a for-profit business, a non-profit operation or an independent contractor. For an in-depth breakdown of the requirements, go here.

For-profit businesses

Who is covered: This includes employees who are full-time, part-time, seasonal, day labor, borrowed, temporary, or unpaid volunteers. Employees must be also covered for New York State statutory disability and Paid Family Leave.

Who isn’t covered: Coverage for disability or paid family leave is not required for LLCs, LLPs, partnerships or sole proprietorships that have no employees. Owners or members are not considered employees and are not required to provide themselves with workers’ compensation, but they can voluntarily insure themselves.  Owners are only required to have workers’ compensation coverage if the corporation has more than two corporate officers or more than two shareholders, or where the one or two corporate officers do not own all the shares of stock (each owning at least one share).

Independent contractors

Workers’ Compensation coverage is not required for independent contractors, however, simply defining a worker as a 1099 worker or independent contractor in a contract does not control whether a worker is a considered an employee.   In addition, some industries, such as trucking and construction, are subject to Labor Laws which define an employee-employer relationship.   Whether a worker is an employee or independent contractor involves multiple factors. Some of the criteria to constitute an independent contractor include:

  • They have their own Federal Employer Identification Number (FEIN) or filed taxes as a business paid for their services.
  • They use a separate business name and/or establishment.
  • They have appropriate workers’ compensation benefits under their own FEIN and business name.
  • They are under contract to perform work up to certain standards.
  • They provide all equipment and materials to do their job.
  • They are free to accept or decline offered work.

It may be unclear who qualifies

If a business entity or employer is unclear of who is covered or requires coverage, the NYS Workers’ Compensation Board has online resources.  For more complex issues, an insurance defense attorney should be contacted.  If an insurance carrier or claim administrator receives notice of a claim from a claimant who is potentially not a covered employee, the claim should be controverted, and an insurance defense attorney should be contacted to ensure that the necessary evidence is obtained, and that appropriate denial forms are timely filed with the Workers’ Compensation Board.