If you have a business that operates in Nevada and has workers that meet the definition of employees, you are required to purchase workers compensation insurance. Nevada is not unique in this regard. In fact, all 50 states have industrial insurance requirements to protect workers from injuries while on-the-job. The various rules, regulations, and statutes that govern workers compensation insurance in Nevada can be found in NRS 616, sections A, B, C and D. As an employer, it is important you understand the basic Nevada workers compensation laws that affect your business.
Let’s examine who is required to purchase workers compensation insurance:
The definition of employee in NRS616A.105 is very broad and includes every worker under the service of an employer including an apprenticeship, a contract of hire. NRS 686 does not distinguish between lawful and unlawful employment. This includes minors, aliens (whether legal or illegal), paid public officers, members of paid board of directors, and certain types of volunteers. There are very few individuals excluded from the list of potential “employees”, as listed in NRS 616A.110.
Essentially, the statute in Nevada intends for every individual that works for another person or entity to be covered by workers compensation insurance.
Independent Contractor Defined
Many business owners are under the mistaken impression that they can call their employees “independent contractors” and no longer need to carry workers compensation insurance. Unfortunately, this is almost always a false understanding of how NRS defines independent contractors.
There are separate rules regarding independent contractors, or subcontractors, for businesses in the construction trades. NRS 616A.210 states:
“…subcontractors, independent contractors and the employees of either shall be deemed to be employees of the principal contractor for purposes of the Nevada Industrial Insurance Act”
If your business meets the definition of a principal contractor then any subcontractor you hire is technically your employee.
For non-construction businesses, the “independent enterprise” rule applies. This section reads (italics and bold added for emphasis):
1. A person is not an employer for the purposes of chapters 616A to 616D, inclusive, of NRS if:
(a) The person enters into a contract with another person or business which is an independent enterprise; and
(b) The person is not in the same trade, business, profession or occupation as the independent enterprise.
2. As used in this section, “independent enterprise” means a person who holds himself or herself out as being engaged in a separate business and:
(a) Holds a business or occupational license in his or her own name; or
(b) Owns, rents or leases property used in furtherance of the business.
3. The provisions of this section do not apply to:
(a) A principal contractor who is licensed pursuant to chapter 624 of NRS.
(b) A real estate broker who has a broker-salesperson or salesperson associated with the real estate broker pursuant to NRS 645.520.
4. The Administrator may adopt such regulations as are necessary to carry out the provisions of this section.
(Added to NRS by 1991, 2392; A 1995, 2136)—(Substituted in revision for NRS 616.262)
For an employee to be considered an independent contractor, they must not be in the same profession or trade as the employer. They must also have their own business license and own or rent property used in their business. Essentially, very few workers actually meet the legal definition of an “independent contractor”. Further, a written agreement between the worker and the employer regarding independent contractor status does not remove the employer’s responsibility to provide workers compensation.
Rejection of Coverage
We are often asked about the legality of business owners rejecting coverage for themselves. In most cases, corporate officers and LLC managers can reject coverage for themselves. A written rejection form must be signed by the officers and filed with the insurance company.
Sole-proprietors are generally exempt from any requirement to purchase workers compensation for themselves. They must, however, purchase coverage for any employees.
Buying Nevada workers compensation insurance entitles an employer to receive broad protection under “exclusive remedy”. This legal protection means that an employee cannot generally sue an employer for work-related injuries. The employee is instead compensated for the injury, lost wages, and disability by the employer’s workers compensation coverage.
If an employer fails to provide workers compensation, the employee may be covered by the Nevada Uninsured Employers Claim Account. The employee may also hire an attorney and sue the employer. In either case, the employer will be held responsible for the cost of the injured employee’s claim. The Attorney General’s office will review the case for criminal prosecution of the employer. Preview Changes (opens in a new window)Administrative fines and penalties will be assessed.
Fortunately, workers compensation insurance is readily available in Nevada. Rates are very competitive, especially when compared to California and other surrounding states. At Safeguard Insurance, we have been providing affordable Nevada workers compensation insurance since 1998. We have the experience and markets to find your business the right workers compensation policy, at a price you can afford. Call us at 702-638-0022 today or visit our workers compensation insurance page for a free quote.
Nevada Workers Compensation Laws
Additional Resources about Nevada workers compensation laws from the DIR: