A very common question for many small business owners is “How can I tell if I have an independent contractor (1099 contractor) or employee, and do I need to cover them under my workers compensation insurance?”  This question is often born from the need to minimize costs and liabilities for the business owner.

In the state of Washington, the Department of Labor and Industries has published a guide that lays out the test used to determine if an individual is a contractor or employee.  There are seven questions that need to be answered in order to make an accurate determination.

These questions fall into two categories:

1. Does the individual bring more than just their labor? (2 questions)
2. Is the individual an established business working outside your direct control? (5 questions)

In Part 1 of our 3 part discussion of independent contractors we will focus on the first category.

The first part of this test asks if the individual brings and directly supervises their own crew or does the individual hire and supervise additional crews?  If the answer is yes, than the evidence says the first part of the test has been passed.  The second part of this test is, does the individual bring heavy or specialized equipment with them?  Examples would be a landscaper who brings her own excavators or tractors.  A landscaper who brings his own pruning shears does not qualify, as pruning shears are considered normal, required tools for the job. Tools such as these are typically supplied by the employer to their employees.  In both cases, the individual or crew must be working outside of the direct supervision of the business or business owner.  If either one of these requirements are not met, evidence says you have an employee and not an independent contractor.  Employees must be covered by the employers workers compensation insurance.

In the next part of this conversation, we begin our conversation on the second part of the of the L&I’s Independent Contractor Guide.

https://www.lni.wa.gov/IPUB/101-063-000.pdf