contractor vs employee:
The cost of getting it wrong!
you employ an individual that is determined to be a worker
instead of an independent contractor, you are the employer
and responsible for providing workers' compensation coverage.
Employers that are not in compliance with workers' compensation
coverage laws are liable for penalties two times the amount
they should have paid in premiums or $1,000, whichever
is greater. The penalty for every additional incident
of noncompliance is $250 per day for each day of noncompliance
with no limit on the total fine. After a third offense,
the employer is referred to the Department of Justice
to pursue a court ordered injunction. Further violations
will result in a contempt of court judgment with possible
If a subject worker is injured while employed by someone
that does not have workers' compensation insurance, the
worker may still be eligible for benefits. The claim is
referred to an agent for processing. In addition to penalties
assessed for noncompliance, the employer must reimburse
all claim costs and the claims processing administration
fee. There is no protection under a corporation or limited
liability company because officers, members, or partners
are separately and individually liable for the costs.
Furthermore, a noncomplying employer is subject to civil
action in addition to workers' compensation benefits if
the injured worker files a civil suit. There is no exclusive
remedy protection if the employer does not have coverage
at the time of injury.
required workers' compensation insurance is vital to an
employer's business. The cost of not providing workers'
compensation coverage can be high. Employers that are
out of compliance with workers' compensation law are liable
for penalties of two times what they would have paid in
premiums or $1,000, whichever is greater. Upon additional
occurrences of non-compliance, the penalty is $250 per
day for each day out of compliance with no maximum amount
which can be assessed. After a third offence, the employer
is referred to the Department of Justice to pursue a court
ordered injunction. Further violation will result in a
contempt of court judgment with possible jail time.
If you have questions about this webpage, please contact
Linda Repp, 503-947-7665.