Employees and Subcontractors: Nail Down the Real Differences

Photo by Life Of Pix

Many times, we need to determine whether someone is an employee or a subcontractor. Under a general liability policy an employee is not eligible for benefits. In general, employees are only covered under workers compensation for injuries.

Sometimes it is difficult to determine whether someone is an employee or a subcontractor. This is particularly problematic with a sole proprietor who has no other employees. This is common for small businesses such as a painter working for a business.

Control Over the Work

One of the first most important things has to do with control over the individual. If a business hires a person as a subcontractor, it will be important to determine whether the employer directs or controls how the work is done. If the employer tells the person when they can work, where the work should be completed, and how the work should be completed, that can be interpreted as significant control over the worker. If tools or equipment are provided to the worker that provides even more indication that the employer has direct control over the work. Finally, if the worker has expenses that are reimbursed by the employer, that is also an indication that the individual is an employee rather than a subcontractor.

Who’s Footing the Bill?

Financial control is also an important consideration. If the employer is providing financial outlay for materials or equipment, that could indicate that the individual being hired is an employee rather than a subcontractor.


The actual relationship between the employer and the individual being hired will also play a role. Written contracts are important. Verbal contracts can be interpreted widely when it comes down to whether an individual should be compensated under workers compensation versus under a general liability policy. Written contracts are much easier to interpret and can clarify whether a person is an employee versus a subcontractor.

Not all situations are created equal. As a liability adjuster it is important to gather as many facts and documents as possible that will clarify these issues. When an individual person is employed by a business it is imperative that and insurance company takes a cautioned approach as to whether that individual is considered an employee or a subcontractor.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.