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.
- 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.
- 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?”
- 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?”
- 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?”
- 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.