CONTRACTORS INSURANCE TIPS
Independent Contractors and Roofing Insurance
“The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result, not what will be done and how it will be done. An independent contactor would list himself or herself as self-employed when filing taxes. Furthermore, an independent contractor would receive no benefits, including workers’ compensation from the company that generates his or her salary.
Roofing insurance includes workers’ compensation and general liability policies. Independent contractors can’t be covered by workers’ compensation without violating their status as self-employed by the IRS. Significant government penalties befall an employer when an employee is wrongfully designated as an independent contractor. However, general liability policies allow sub-contractors to be covered because that type of policy protects against damage to customers or their property due to the work of the roofing crew, which includes the tasks done by independent contractors.
Keeping the line correctly defined between an employee and an independent contractor requires diligence. You need to make sure that you don’t give any considerations to independent contractor that you do an employee.
The don’ts for an independent contactor encompasses a hefty list:
- Don’t pay federal or withholding taxes. Use invoices to pay an independent contractor like you would a vendor.
- Don’t give independent contractors benefits like insurance and vacation.
- Don’t pay for an independent contractor travel or business expenses.
- Don’t offer training to an independent contractor.
- Don’t supply a company title or business cards to an independent contractor.
- Don’t supply materials or equipment to the independent contractor unless absolutely necessary. Make the individual supply as much of the equipment and materials as possible.
- Don’ give independent contractors any company manuals or handbooks.
- Don’t include independent contractors in company meetings or social affairs.
- Don’t involve yourself in the hiring or firing of an independent contractor. Have all employment issues handled by a third party.
Incorporated Independent Contractor
Many of the don’ts can be eliminated if you work with a sole proprietor, who has an incorporated business. With an incorporated independent contractor, all payments can be made to the company rather than the individual. Likewise, insurances, vacation time and other business expenses can be absorbed by the corporation owned by the independent contractor.
Leased employees can be utilized when the job opening does not require an individual with highly specific qualifications. Like an incorporated independent contractor, monetary compensation for work is done through the leasing company. Other business transactions, such as vacation, insurances and business expenses are also handled by the leasing company.
Your roofing insurance includes your general liability and workers’ compensation policies. Make sure that when you use an independent contractor that you discuss with your agent the general liability coverage available for that worker. You need also to have written proof that the individual, corporation or leasing company has the individual covered by workers’ compensation.