Independent Contractors or Subcontractors

Independent contractors or subcontractors are not covered by the insured employer’s workers’ compensation policy, nor is a premium charged for them. However, California laws and regulations are very liberally interpreted in favor of injured workers. If an independent contractor can be shown to have any or some of the elements of an employment relationship, the auditor is obligated to add payments to such individuals to the employer’s audited payroll and charge a premium for them. A few of the elements used to prove an employment relationship are: specific hours of employment, provision of tools, direction of how the work must be done. Some of these elements are codified and some are subjective. The best way to avoid being charged a premium for independent contractors is to insist on a certificate of workers’ compensation insurance, showing the details of the independent contractor’s coverage, before work may even begin. Many employers even require a certificate of insurance from individuals with no employees to establish proof of their independent status. In such situations the contractor can obtain coverage from the State Compensation Insurance Fund. We strongly recommend this procedure.