WORKERS’ COMPENSATION – WHO WORKS FOR THE INSURED?

Determination of who an employer is covering under the workers’ compensation statutes has always been somewhat confusing, and the more complicated an organization becomes, the more the law may seem complicated.

A somewhat simplified explanation of the statue is that every person working on a project conducted by a general contractor is considered an employee of that general contractor, unless the person is an employee of a subcontractor which has covered the person for workers’ compensation.

However, many problems may occur with small subcontractors operating as sole proprietorships, partnerships or limited liability companies.  First, the partners or members of the limited liability company all can decide by written election whether to be covered by a workers’ compensation policy or not.  Next, if those one-person operations do not elect to buy workers’ compensation, then the subcontractor proprietor or partners are statutory employees of the general contractor.

General contractors should actively review certificates of insurance as to the check boxes for sole proprietors, partners and members of limited liability companies.  General contractors who do not practice this procedure may get a rude awakening at the time of audit.

For the complete article on this subject written by Lewis Melahn, former Director of the Missouri Department of Insurance