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Do you run a business? Do you have employees or contractors – or both?

You may arrange to hire someone as a contractor – benefits are easier relationship, reduced overhead (health insurance, taxes, and other costs).

This isn’t legal advice. We want to raise awareness of the distinction and how it may impact your business and your coverage. Here is some information to get you started.

Employee vs Contractor

The State of Minnesota lists five questions whose answers are used to determine whether a person is a contractor or an employee.

  1. Control – “Does the business or the contractor control the means and manner in which the services are performed”. This generally means who controls where, when and how the work is done.
  2. Discharge – “Can either party sue for breach of contract or can the firm or worker terminate the relationship at will without incurring any legal liability?”
  3. Payment – “Does the firm or the worker dictate the value placed on the services provided? Is the worker paid by the job or in a regular and routine manner?”
  4. Investment – “Does the firm or the worker furnish any car or truck, tools or equipment, and/or materials or supplies necessary to perform these services?”
  5. Premises – “Does the firm or does the worker control the premises where these services are performed?”

What can you do? First, become familiar with these considerations. They may have considerable impact on how you manage and grow your business.

Second, know that employees need to be covered under the employer’s general liability (GL) or workers’ comp policy. Contractors need to have their own insurance coverage. When you hire a contractor to work for your company, he should show you his policies and preferably put you as an additional insured on his policies as well.

Need to discuss questions and options? Email us or give us a call.

Post Author: Steve Sarantos

Steve Sarantos spent his first 20 years after education, working in the auto industry, retail, and importing from the orient. Most of the positions were sales, or negotiating with vendors, which gave him a wealth of experience working directly with people and what it takes to make things work for both parties.
When he decided to go into business for himself, insurance seemed like the perfect venue. Help people with something most knew very little about, get the right product for the right price. Everyone has to have it in or form or another, so all you have to do to be successful is be honest, keep your promises, and offer people what they want. Someone to talk to about insurance that will give them choices and straight talk.
After starting Reliable Insurance Network from scratch in 1996, it is now a thriving family business with clients in MN, WI, and AZ. Reliable Insurance Network continues to refine it's processes, use technology to stay flexible, and let clients work with them in whatever way is comfortable for them, and provide top companies and rates along with superior service so everyone is happy.