If we are a small home improvement company and are hiring salesmen as 1099 sales reps, do they have any need for liability and or workmans comp insurance?
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If we are a small home improvement company and are hiring salesmen as 1099 sales reps, do they have any need for liability and or workmans comp insurance?
Asked on March 6, 2012 under Business Law, Minnesota
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
If they are truly independent contractors (go to the Department of Labor and IRS websites and look at their definitions of independent contractors, to make sure of this), then you do not need to provide worker's compensation for them. You should not have to specifically provide them with liabiltiy insurance, but you should have them sign agreements in which they confirm that they are independent contractors and that they will provide their own insurance--and have them send proof of insurance. However, you should still make sure that your business as a whole is adequately insurered (e.g. a general liability and umbrella policy.) You should also, if you haven't done so already, create a limited liability company (LLC) or corporation (such as a subchapter S) for your business, so as to further protection yourself and your family from potential liabilty.
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