Independent Contractors vs. Employees: Who Needs Workers’ Compensation Coverage?

One of the most common areas of confusion for business owners regarding workers’ compensation insurance is the distinction between employees and independent contractors. Understanding the difference is critical—not just for compliance but also to protect your business from costly claims.

What’s the Difference?

At a high level, an employee works under your control and direction—you set their schedule, provide tools or equipment, and guide how the work is done. On the other hand, an independent contractor operates more like a separate business. They control their schedule, typically use their own tools and are paid per project or contract.

Why Does Classification Matter?

Workers’ compensation insurance is generally required for employees. In Florida, for example, businesses in the construction industry must carry coverage if they have one or more employees. In comparison, most other industries require coverage when there are four or more employees. Independent contractors usually aren’t covered—unless misclassified.

But here’s where it gets tricky: If a contractor is injured on the job and is later found to have been misclassified, your business could be held responsible for their medical bills and lost wages. So it’s essential to classify workers properly and keep detailed documentation of contracts and work arrangements.

Can Independent Contractors Get Coverage?

Independent contractors, especially those in high-risk industries like construction or transportation, often purchase their own workers’ compensation policies. Some companies even require proof of coverage before hiring contractors to avoid liability.

Learn More

Understanding the difference between employees and independent contractors—and who needs workers’ compensation coverage—is a smart first step in protecting your workforce and your business. Contact Bennie Brinson Insurance today.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.