Temp Staffing, Independent Consultants and Gig Workers – Who Needs Workers’ Comp Coverage?

While Workers’ Compensation coverage is legally required in almost all states in the U.S, only permanent full-time and part-time employees are fully eligible for Workers’ Compensation coverage. However, temporary workers can also access this coverage depending on factors such as state, location, and the employer’s decision.

Temp Staffing Workers’ Compensation

In general, temporary workers are eligible for Workers’ Compensation insurance coverage. However, it all comes down to who is responsible for meeting the expenses related to the coverage. In some states, the employer is required to provide Workers’ Compensation insurance to all workers, including temporary ones. For instance, in the state of California, employers with five or more temporary workers are legally required to carry Workers’ Compensation coverage. However, in other states that’s not true.

Dependent on state laws, employers with fewer than 25 employees, including temporary workers, may not have to purchase Workers’ Compensation insurance for their temporary workers. However, workers in this category are only entitled to the temp staffing Workers’ Compensation coverage if they perform the company’s regular work within the worksite. For instance, while a temporary worker involved in manufacturing products in a manufacturing company may be entitled to Workers’ Compensation insurance, one who performs rare or odd jobs such as painting may not be eligible for this coverage.

Temporary workers deployed by a staffing agency may also get Workers’ Compensation coverage from their respective agencies. In some cases, employers usually liaise with staffing agencies to share the responsibility of providing Workers’ Compensation coverage for temporary workers. Even if the staffing agency is providing full coverage, it doesn’t waive the employer’s requirement of carrying Workers’ Compensation insurance. A temporary worker that sustains a work-related injury at the employer’s premises, can sue the employer for damages.

Independent Contractor Workers’ Compensation

Federal laws exempt employers from carrying Workers’ Compensation insurance for independent contractors because this category of workers is not classified as company employees, and therefore they must pay for their policies out of pocket. Workplace accidents cost American employers billions of dollars every year. In 2019 alone, employers paid more than $170 billion in work-related injuries. To minimize their liability exposure, some employers require independent contractors to carry their own coverage.

Does Workers’ Comp Cover Part-Time Employees?

Yes. Workers’ Comp covers part-time workers provided they are categorized as company employees. Specifically, for a part-time employee to receive Workers’ Comp, they must be on the employer’s payroll.

Workers’ Compensation Insurance for Freelancer (Gig)

According to the National Council on Compensation Insurance, about 30% of American workers work as freelancers, and therefore, fall outside the traditional Workers’ Comp coverage. This is a problem because gig workers are more likely to suffer work-related injuries and fatalities than their conventional counterparts as many jobs in the gig economy are not only physically demanding, they can be dangerous.

For example, gig workers in industries such as construction and farming are particularly susceptible to workplace injuries. To help protect workers in the gig economy, states across the country are beginning to draft and pass bills to help determine workers’ status.  For example, California Assembly Bill 5 (AB5), which was enacted in January 2020, requires companies in the state to reclassify independent contractors as employees, and therefore, offer them Workers’ Compensation coverage.

What Gig Workers Can Do to Protect Themselves

Since freelancers are not eligible for employer’s Workers’ Compensation, they need to purchase their coverage. Other than Workers’ Compensation, gig workers should also carry the right general liability insurance, as well as professional liability insurance policies. These policies will cover the resulting costs in case the freelancer is held liable for a third-party injury or property damage, and professional mistakes respectively. Other insurance policies may also be necessary, depending on what the freelancer does. For instance, if their work involves storing clients’ sensitive information digitally, cyber liability insurance will also be necessary. For further protection, freelancers should:

  • Understand the state laws surrounding Workers’ Compensation insurance for gig workers
  • Read and understand their clients’ employment terms
  • Ask questions about coverage, including whether their clients provide Workers’ Comp for freelancers
  • Insure themselves

Employers and staffing agencies usually share the cost of providing Workers’ Compensation insurance. For more information about tailored Workers’ Compensation insurance solutions, contact our experts at PMC Insurance Group today.

By PMC Insurance Group

Since 1996, PMC Insurance Group has worked to help independent agents grow their client base by offering workers' compensation solutions for a wide array of businesses. As one of the most distinguished workers' compensation wholesalers in the country, we have the tools and resources to help you create coverage programs for small businesses and large accounts.