"Employee or Independent Contractor; Do I need Workers' Compensation Insurance?"

A very common question we get here in our agency is "Do I need Workers' Compensation Insurance for this person I occasionally hire to do work for me?" More often then not our answer is yes, because of the guidelines set by New York State.

There are 5 key factors to determining if an Employer-Employee relationship exists and thus Workers' Compensation is warranted.

1) CONTROL How much are you directing the actions of the individual in question? If you are telling the person how to do the work you have contracted them to do and are expecting them to be there doing it at specific times then likely they will be considered an employee. If however, they are operating completely on there own and on there own schedule, simply meeting the agreed to deadline, then they are more likely an independent contractor.

2) MATERIALS Are you providing all the tools and equipment they are using for the job? If yes, that is indicative on an Employer-Employee relationship.

3) PAYMENT Are you paying on a typical payroll schedule, such as daily or weekly (even monthly)? Most independent contractors are usually paid when the whole task is completed, or with a deposit and final payment. If you are paying on a schedule it may be considered an Employer-Employee relationship.

4) SIMILAR WORK Is the work or task similar to the work performed by the hiring business? If yes, this a marker of an Employer-Employee relationship. A person hired to frame a room by a carpenter is more likely to be considered an employee then say an lawyer hiring a electrician to put in a light fixture.

5) TERMINATION Do you retain full rights to hire and fire the person performing the work? A true independent contractor retains some control over how and when the work is performed.


These main factors will be taken in to consideration after an accident by workers' compensation law judge. Based on their findings a determination will be.

More often then not, the judge tends to rule that Workers' Compensation coverage was needed because an Employer-Employee relationship existed; hence our advice is typically that insurance be put in place. After all, it is far cheaper in the long run to purchase the coverage and get credit back from an audit, then to not have it and go through the legal and regulatory costs!

For more information about NYS guideline you can refer to the following link: http://www.wcb.state.ny.us/content/main/Employers/Coverage_wc/emp_empDefinition.jsp