If a worker qualifies as an IC under your state’s workers’ compensation law, do not provide the IC with workers’ compensation coverage.
If the IC has employees, the IC should provide them with workers’ compensation coverage. If an IC’s employees lack workers’ compensation coverage, it’s likely your own workers’ compensation insurer will require you to provide coverage under your own policy and pay an additional workers’ compensation premium. To avoid this, require ICs to provide you with a certificate of insurance establishing that an IC’s employees are covered by workers’ compensation insurance. A certificate of insurance is issued by the workers’ compensation insurer and is written proof that the IC has a workers’ compensation policy.
Whether an IC has employees or not, you may want to require the worker to have his or her own workers’ compensation coverage. Self-employed people who have no employees are usually not required to have workers’ compensation coverage, but they usually can obtain it. More and more hiring firms are requiring this because their own workers’ compensation insurers may require them to cover ICs who don’t have their own workers’ compensation insurance. (See Workers’ Compensation for more about workers’ compensation issues and ICs.)
Suggested Language
Workers’ Compensation
Client shall not obtain workers’ compensation insurance on behalf of Contractor or Contractor’s employees. If Contractor hires employees to perform any work under this Agreement, Contractor will cover them with workers’ compensation insurance and provide Client with a certificate of workers’ compensation insurance before the employees begin the work.
Optional Language
Workers’ Compensation
If not operating as a corporation, Contractor shall obtain workers’ compensation insurance coverage for Contractor. Contractor shall provide Client with proof that such coverage has been obtained before starting work.