An IC who is not covered by workers’ compensation can sue you for damages for personal injuries if your negligence—that is, carelessness or failure to take proper safety precautions—caused or contributed to the injury. You will also be held responsible for the negligence of your employees.
EXAMPLE: Trish, a self-employed trucker, contracts to haul produce for the Acme Produce Company. Trish is an IC, and Acme does not provide her with workers’ compensation insurance. Trish loses her little finger when an Acme employee negligently drops a load of asparagus on her hand. Since Trish is an IC, she can’t collect workers’ compensation benefits from Acme’s insurer, but she can sue Acme in court for negligence. If she can prove Acme was negligent, Trish can collect damages not only for her lost wages and medical expenses, but for her pain and suffering as well.
These damages could far exceed the modest sums that workers’ compensation benefits would have provided. Had Trish been Acme’s employee, it might have cost Acme several hundred dollars a year to provide workers’ compensation coverage for her. But since she was an IC, it could cost Acme tens of thousands of dollars to defend her lawsuit and pay out damages.
Of course, an IC must actually prove that your negligence or that of your employees caused or contributed to the work-related accident to recover any damages at all. So if you were not negligent, the IC may end up losing a lawsuit or decide not to file one in the first place.