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I do web programming for various people on 1099s. Over the last two years, I've been working for one company fairly consistently. They are on the west coast, and I'm on the east.

I was recently asked by said employer to purchase my own workers compensation insurance. The reason being, his company (originally a one man shop) has now expanded to a full LLC with a few W2 employees, and a couple contractors (like me). He has workers compensation for his employees that are local to the business location (which he provides), but it doesn't apply to me, who is on the other side of the country. He's concerned that he'll be fined for not having workers compensation for me, in the event something were to happen to me while doing my work remotely.

I'm not really sure what to make of this, as I've never had to do similar things in other contracting positions.

I'm in New York and the company is in Oregon.

Does anyone have advice on this?

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  • If you are on a 1099, and you are basically an employee, then yes he is correct to worry. The IRS has been cracking down on this practice. Are you an employee or not? That is the question. It appears that your "employer" is worried about this as well, which is not a good sign. To ensure that you are not classified as an employee, I suggest that you set yourself up as an actual business, and file the correct paperwork in your state, an LLC is probably best. If you do so, you can just decline to cover yourself for workman's comp. – daaxix Feb 24 '15 at 19:56
  • Could you add in a small parenthesis about what 1099s are? I expect this would be helpful for non-US readers. Thanks! – halfer May 5 '16 at 20:35
  • @halfer: en.wikipedia.org/wiki/Form_1099 – lesscode Nov 11 '16 at 15:16
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My husband was required to do this when he was an independent TV installation contractor for Sears. Considering what your job entails, the insurance will not be terribly expensive (because you aren't doing any physical activity that is prone to on-the-job accidents).

I have also (as a tech writer contractor) had a liability insurance requirement when working for a very large corporation.

You may want to ask this client to speak to his lawyer (or ask if YOU can speak to his lawyer) to find out if the CA regulations apply to you as a VENDOR.

You may have to set yourself up as a business entity (if you have not already done so) so your relationship with this client is a vendor and not a "contract employee" one. And you may want to consult a lawyer yourself.

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    Yes, single member LLCs and sole proprietorships/partnerships often do not have to carry workman's comp...I have never encountered any law that states that vendors have to have the insurance...it is clear that his "employer" (client) is worried about the OP being classified as an employee, which he very may well be. – daaxix Feb 24 '15 at 19:59
  • The requirement to carry workers comp is based on the state you or your employees reside in and varies by state consult accountant the equivalent of department of employment and labor for your state and they can provide you with specifics – Mike Beeler May 17 '15 at 5:08
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While you are at it also grab some professional indemnity insurance ..

As a contractor you get paid more, but on the flip side of the coin you have to pay for the costs of running your own business.

And as for workers comp it's cheap for us it people and the day that the ceiling collapses for whatever reason you are covered

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