Can I 1099 an employee to avoid workers compensation? (***CONSULT A LAWYER)

Written By

Brett Pollak

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We are asked this question a lot. Workers Compensation is required by law in almost every state the minute you hire one employee. Before you think of 1099’ng someone to avoid worker’s compensation, I would highly recommend that you to consult with legal consultation to ensure you are not breaking any laws or opening yourself up to a lawsuit.

The qualification of someone as an independent contractor for workers’ compensation purposes can vary depending on the jurisdiction and the specific laws in place. However, there are generally a few key factors that are considered when determining if someone is an independent contractor for workers’ compensation purposes:

  1. Control: One important factor is the level of control that the hiring party has over the worker. Independent contractors typically have more control over their work, including the methods, schedule, and tools they use. If the hiring party exercises significant control over these aspects, it may indicate an employer-employee relationship rather than an independent contractor arrangement.
  2. Independence: Independent contractors are usually in business for themselves and offer their services to multiple clients. They typically have a higher degree of independence and autonomy in how they conduct their work compared to employees.
  3. Financial arrangement: Independent contractors typically have a financial arrangement that distinguishes them from employees. They are often paid on a per-project or per-service basis, rather than receiving regular wages or salaries. They are also generally responsible for their own business expenses, such as equipment and supplies.
  4. Risk and liability: Independent contractors usually bear a greater degree of risk and liability for their work. They may be responsible for any mistakes or errors and typically have their own insurance coverage.
  5. Intent and agreement: The intent of the parties involved and the terms of the agreement are also considered. If both parties explicitly intended to establish an independent contractor relationship and the agreement reflects that intention, it can support the classification as an independent contractor.

It’s important to note that the determination of independent contractor status for workers’ compensation purposes is highly dependent on the specific facts and circumstances of each situation. Laws and regulations can vary, so it’s crucial to consult with a legal professional or contact the relevant workers’ compensation authority in your jurisdiction for accurate and up-to-date information regarding independent contractor classification.

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