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Is Workman’s Comp Required for Self-Employed Individuals?

Workman’s comp, also referred to as workers’ compensation, is a type of insurance policy that covers medical expenses and lost wages for employees who are unable to go to work because of a work-related injury. Nearly every state requires businesses or employers to purchase workman’s comp for their employees. Aside from covering necessary expenses, this coverage is given to the injured employee with the understanding that they are waiving their right to sue an employer should the former become injured while carrying out their work duties.

Typically, workman’s comp is used in an employer-employee setup. However, those who are self-employed or are classified as independent contractors can choose to avail of workman’s comp for personal coverage. Some people often mistake health insurance as the same thing as workman’s comp, thinking that one or the other will suffice for injury coverage. However, there is a very distinct difference between these two types of policies: workman’s comp applies only to injuries sustained in the workplace or while working; health insurance, on the other hand, applies to non-work-related injuries. Thus, self-employed workers or independent contractors can still benefit from having a workers’ compensation policy on top of their health insurance.

Self-Employed vs Independent Contractor

Further to distinguishing terms, self-employed workers and independent contractors are also two different things. Though they may appear to mean the same because of the nature of their work, what distinguishes them from each other is the type of person they work with or work for. Independent contractors rarely work directly with customers; rather, they do jobs for others. Self-employed workers, on the other hand, tend to be the opposite as they often work directly with clients.

Are Self-Employed Individuals Required to Have Workman’s Comp?

While states generally require businesses and employers to get workman’s comp for their employees, specific laws in each area can make workers’ compensation regulations somewhat confusing. For instance, some states consider subcontractors as employees while others do not. This can then lead to different workman’s comp regulations per state. An example of this is workman’s comp in Minneapolis, wherein employers are not required to get workers’ compensation insurance if they only work with subcontractors.

In the case of self-employed individuals, most states have generally adopted the law that workers’ compensation can be entirely optional if self-employed individuals don’t have any staff working for them. But if you’re self-employed and have hired staff, you’re usually responsible for getting them workers’ compensation coverage even if you, as a self-employed individual, are considered exempt. Further, if you’re an independent contractor like a roofer working in California, the state’s workers’ compensation law requires you to have a policy whether you have employees or not.

The bottom line is that individual state laws play a big role in determining whether workman’s comp is mandatory or not. Generally speaking, it isn’t required for self-employed individuals, but there are always exceptions. The best way to know this is to work with an experienced lawyer such as those from Osterbauer Law Firm to avoid fines and penalties resulting from failure to comply with state regulations.

Should You Get Workman’s Comp Even If You’re Self-Employed?

Though workman’s comp isn’t usually required for self-employed individuals, there are still many advantages you can gain when utilizing this policy. Here are some of them:

  • You can protect yourself: Keep in mind that any individual, regardless of the nature of their work, has the potential of being injured while on the job. Having a workman’s comp policy will help mitigate both financial and health-related consequences of your work-related injury, allowing you to focus more on your recovery.
  • Buffer huge financial blows: One thing that makes a self-employed setup attractive to many individuals is that they don’t have to work for someone else. However, the downside is that they don’t have an employer or company that can cover them for work-related injuries. Since self-employed individuals are personally liable even for work-related injuries, the costs for treatment and lost wages can be insurmountable, especially if their startup business or service is still small. With a workers’ compensation policy, you can buffer huge financial blows that can arise from work-related injuries.
  • Avoid costly legal procedures: If a self-employed individual gets injured while working with another business, they might want to sue that particular business to get them to cover medical expenses and lost wages. However, this is an extremely expensive process and can drag on for a long time. With a workers’ compensation policy, you don’t have to go through this procedure and instead have a less stressful option.
  • Convenience and compliance: As mentioned, individual states have different laws regarding workers’ compensation. Just to make sure that you’re not breaking any laws, getting a worker’s compensation insurance policy can be the best course of action. Since some businesses do require this from individuals they’ll work with, you can save yourself the trouble by getting one anyway.
  • Peace of mind: Of course, any kind of insurance policy you have in place helps put your mind at ease. This can be true for those working in high-risk industries that expose them to dangerous work-related situations. With workers’ compensation, getting a work-related injury isn’t something you’ll constantly dread since you have a policy that covers you.

Protect Yourself

To recap, workman’s comp isn’t usually required for self-employed individuals and independent contractors. However, exemptions depend on the state law that governs your business. Though this type of policy might not be mandatory, it’s never a good idea to assume that you should just skip getting one. A wiser course of action would be to keep yourself informed about the related laws in your state. If you happen to be in Minnesota, working with Osterbauer Law Firm can let you find out about the regulations in place about workman’s comp in Minneapolis and St. Paul. With experts by your side, you’ll be able to properly protect yourself, secure your business, and avoid hefty fines that may arise from non-compliance with state laws.


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