Workers Compensation Insurance and Independent Contractors

| Business Insurance, Workers Compensation Rating.

Workers compensation and independent contractors

When talking to business owners in Las Vegas about workers compensation insurance, we often hear the comment, “all of my workers are independent contractors.  I don’t need to carry workers compensation insurance”.

The reality is simply this:  your workers likely do not meet the definition of an independent contractor and you do need to provide workers compensation insurance.   Every year in Nevada, the Workers Compensation Fraud Unit prosecutes hundreds of business owners for not providing workers compensation insurance to employees.   Fines, penalties, and incarceration are very real outcomes for business owners that intentionally defraud the workers compensation system.

Nevada law makes does make a few exceptions for workers in certain industries or occupations.    NRS 616A.110 clarifies that the following types of workers may NOT be considered employees:

  • Casual labor (outside the scope, trade, profession of his employer),
  • Theatrical or stage performers,
  • Musicians (casual such as special events, weddings, etc.)
  • Certain domestic, farm or horticultural laborers,
  • Voluntary ski patrolman,
  • Sports officials (e.g. referees, judges, umpire, scorekeeper, etc.)
  • Real estate broker or salesman,
  • Certain direct sales solicitors (see NRS 616A for clarification).

Outside of this narrow list, anyone that works for your company, and is not an independent enterprise, would be considered an employee at least for the purposes of workers compensation insurance.    Contractors are held to an especially strict standard when hiring sub-contractors.   NRS 616A.210 states that “…subcontractors, independent contractors and the employees of either shall be deemed to be employees of the principal contractor for the purposes of the Nevada Industrial Insurance Act…”.   This means contractors must be especially diligent in verifying that subs have an active workers compensation policy.  Otherwise, injuries to employees of the sub-contractors are the responsibility of the prime contractor.

If you currently use “independent contractors” we strongly encourage you to contact the Nevada Department of Business and Industry – Industrial Relations and discuss with them whether you are in compliance with NRS 616.   Conversely, you may contact a labor law attorney.   It would be time and money well spent to determine whether your independent contractors are actually employees. Understanding workers compensation and independent contractors is critical to ensuring your business is protected and compliant with Nevada law.

For a no-obligation proposal on your Nevada workers compensation insurance, please call us at 702.638.0022 or complete our short quote request form.   We can provide you with quotes from several “A” rated workers compensation insurance providers including Guard, Amtrust, Employers, Acuity, Hartford, Travelers, and FirstComp. Our mission is to provide you the right policy at the right price!

Image Copyright: Kurhan/123rf.com