Airhorse is correct, hiring an individual as an “independent contractor” does not protect you from lawsuits brought by that individual. In addition, if you are found to have incorrectly hired a person as an independent contractor when they do not meet the criteria, there are potential tax penalties.
Some states require workmans comp insurance and if you are found to have evaded your responsibility to provide it by trying to illegally call someone an “independent contractor” when they are not and that person is injured on the job, there are additional penalties that may come in to play, in addition to responsibility for medical bills and lost wages.
The good news is that if you hire someone as an employee and purchase workmans comp insurance, you are well protected should they be injured on the job. So workmans comp insurance can be considered a worthwhile expense.
