Insured Solutions
Insured Solutions

What if my client hires a contractor and their employee is injured?

Contracting with an outside company can be a risky proposition for your clients when it comes to workers’ comp. But there are steps that a prepared employer can take.

A WC certificate from vendors or contractors should be in place before any work begins. The certificate covers every worker on site throughout the project.

Injuries are reported to the contractor office and/or risk manager. They speak with the employee immediately to provide treatment directions. Or the contractor sends the employee to the usual treatment clinic, or calls 911, and refers all approvals to the subcontractor and their workers' comp carrier. Often directions to contractor employees are given and/or posted should an injury occur on the job site.

PEO relationships typically exclude coverage of any individual not identified on a reported payroll. So if a vendor/subcontractor is injured and has no workers’ comp insurance, the PEO’s WC policy is not liable in most states since liability is defined under a CSA (Client Services Agreement), which means the client of the PEO (company and/or owners) are liable under workers’ comp.

To cover the bases, PEO clients who (and who utilize smaller 1099 contractors) under a minimum premium policy or “If Any” policy under a different corporate/owner name where checks are written for payment to cover miscellaneous contractors’ employees who may be hurt on their work site(s).

The reason for a separate name is that states prohibit two workers’ comp policies on the same entity and since the 1099 contractors are not employees, they cannot be added to the payroll of the first company as employees under WC.