Does my contractor need workman's comp insurance?

Question

I want to hire someone to paint the exterior of the house. One bidder showed me his workman's comp insurance page.

Another told me that as an independent, he's not required to have it, but he does have $1,000,000 in liability insurance. His "crew" is made up of other independent contractors with similar insurance.

What would my liability be if one of them were hurt? Is it even legal for him to not have workman's comp?

Answer 1

Hah, good questions.  

See, in Texas, you aren't required to have WC at all.  In most other states, as a contractor, if you hire subcontractors, and have no employees, you don't need workers comp by law.  HOWEVER.  Most of the time, those subs are really employees.  But it's pretty irrelevant, because if you hire a worker - independent or not - and they have no workers comp, YOU are on the hook for it!!  Not having a policy doesn't get the end employer off the hook for lost wages and medical payments.

So.  It's possible it's legal for him to not have workers comp, but not probable.  Contractors try ALL THE TIME to "get around" having employees by calling them subs.  Here's a link with the IRS explaination of subs vs. employees:  http://www.peakconsultinginc.com/Article...

If these guys are REALLY subs, then that particular subcontractor can show up whenever he wants - OR, he can send a different guy out to the job site.  If it has to be HIM, and he has to be there at 9am, then he's an employee, regardless of whether or not the guy withholds taxes.

Bottom line - even if he isn't required by law to have workers comp, any injuries he - or his uninsured subs - has, become YOUR responsibility.

And yes, even if he's not required to have it, in every state I've ever worked in, there's a way to BUY it.