As your insurer, SAIF is liable for all benefits payable under your policy. In some situations, your workers' comp coverage may extend to the contractors you use. This may happen even if you and your contractor agreed in writing that the subcontractor is independent and no employer/employee relationship exists. That's why you should discuss responsibility for the subcontractor's workers' comp coverage before work begins and injuries occur. This reduces litigation and allows you to accurately assess workers' comp costs when negotiating contracts.
Oregon workers' comp law exempts some occupations from coverage, which eliminates your responsibility to provide this coverage.
You are not responsible for covering a contractor who:
- Employs others and carries his or her own workers' comp insurance with coverage in effect before work begins under the contract. If during the contract the contractor's insurance lapses, you still will not be responsible for the coverage. Check a contractor's coverage.
- Contracts to do a job, with or without assistants, that is not a routine part of your normal business operations. (For example: A restaurant owner who contracts with a person to install kitchen equipment is not responsible for insuring the subcontractor or any assistants.)
- Performs construction work, with or without assistants, and has an active Construction Contractors Board (CCB) license. Check a contractor's CCB license.
- Performs landscape construction work, with or without assistants, and has an active Landscape Contractors Board license. Check a contractor's LCB license.
Note: On jobs subject to the U.S. Longshore and Harbor Workers' Compensation Act , you are responsible for both the contractor and employees, unless the contractor provides his or her own policy with coverage specifically endorsed.
Learn more about the longshore and harbor workers' act.
When you contract for labor that is a normal and customary part of your business, you are responsible for covering the contractor's laborers if the contractor does not have his or her own workers' comp policy at the time you enter into the contract. Your responsibility does not end even if the contractor later obtains his or her own workers' comp policy.
For all other contractor relationships, your responsibility for coverage depends on whether or not the contractor is an independent contractor/business.
Direction and control—a critical element
The degree to which the contractor is under your direction and control is the main test used to determine your responsibility. If you can answer "yes" to all the following questions, the contractor is most likely an independent contractor for workers' comp purposes.
- Does the contractor perform the same services for others, and not primarily for you?
- Does the contractor perform the job without you ever offering restrictions as to how to do the job?
- Does the contractor furnish his or her own supplies used in the job?
- Does the contractor determine his or her own work hours and schedule?
- Does the contractor provide and maintain his or her own equipment and tools?
- Does the contractor advertise?
- Is the contractor paid a fixed "bid" or "contract" amount rather than an hourly, daily, or piecework basis?
- Is the full bid or contract amount agreed on before work commences?
- Is the nature of the work separate in location or duties from those operations and tasks done by you, your employees, or other contractors on the job?
- Is the contractor registered as required by various regulatory or taxing authorities?
- Does the contractor perform the job completely without assistance from you, your employees, or other contractors?
- Does the contractor have the right to employ assistants without your permission in order to complete the job?
- Does the contractor have financial bonding or liability insurance for the work performed?
- Does the contractor pay all state and federal withholding taxes, social security, and other taxes?
- Will you incur liability for breach of contract and payment of remuneration if you terminate the contractor?
- Do you and the contractor have equal rights to terminate the relationship?
Always obtain a current certificate of insurance from contractors who indicate they have a workers' comp policy. Keep these certificates with your records. To verify proof of coverage, search the Oregon Workers' Compensation Division database, or call the Employer Compliance Unit of WCD at 503.947.7814. The dates of the policy should include the anticipated duration of the job.
For construction work subject to the CCB or LCB, obtain the CCB or LCB registration number or photocopy the contractor's card. You may wish to contact the CCB or LCB to verify that the registration is still current.
Make sure the work agreement with your subcontractor is in writing. You must allow the contractor freedom to be an independent business person.
For unusual contractor situations, please contact us and we will assist you in determining the coverage responsibility of a subcontractor.
When you need help
Contractor coverage can be a very complex subject. Never hesitate to contact your agent or nearest SAIF office whenever you need assistance or have questions.