Why is it important to know whether the person who works for you is an employee or an independent contractor? Because the answer determines if he or she must be covered by your workers’ compensation policy.
According to the Workers Compensation Act, anyone who performs work for you is an employee, unless he or she:
Is the individual "free from control or direction"?
If you answered YES, this person in not free of direction and control and is considered an employee. If you answered NO, then this person is "free from control" so please continue and ask yourself the following:
Is the individual “engaged in an independent trade, occupation, profession or business”?
If you answer YES to all the above questions, the facts indicate the individual is independent, meaning you are not required to cover him or her under your workers’ compensation policy. Need to get a workers' compensation policy? Try a 5-minute insurance quote from Cake.