Six 1099 "Subcontractors," One Trailer Accident, and a Commute

The facts point strongly to employee status.

Right-of-control factors all cut against the 1099 label:

• Greenworks supplies the truck, mowers, and fuel - the tools of the trade.
• Greenworks sets the schedule (7 a.m. assignment at the shop) and directs the work through a foreman.
• Flat day rate, no opportunity for profit or loss from managing the work, no separate business, no other customers, no employees.
• A certificate of general liability insurance naming Greenworks as additional insured proves nothing about employment status; GL does not pay workers compensation benefits.

Consequences:

• A workers compensation audit will reclassify the six, assess additional premium for up to three years, and add penalties and interest for misrepresentation.
• Ray's injury is compensable. Because no premium was paid, the carrier may still pay and then surcharge the account; a stop-work order and personal liability for Luis are realistic risks.
• The 1099 payments are also an exposure if Ray sues in tort: with no accepted WC coverage, Greenworks loses the exclusive-remedy shield.

Fix: put the six on payroll immediately, report them to the carrier, and use true subcontractors only with a written contract, their own WC policy, and a certificate showing WC coverage.

Probably not, but do not decide it at the scene.

Apply the going-and-coming rule: injuries while commuting to and from the regular workplace are generally not compensable, because the employment relationship has not yet begun.

Here the facts support a denial:

• She is in her own car, not a company vehicle.
• She is not paid until 8 a.m.; the crash is at 7:20 a.m.
• The route is identical every day - a normal commute, not a special errand.

Exceptions that would change the answer:

• She was carrying company equipment or running an errand for Greenworks at the time.
• She was travelling between two job sites (that travel is compensable) rather than from home.
• She was on call or on a special mission for the employer.
• The employer furnished or reimbursed the transportation as part of the job.

Handling: report it to the carrier the same day and let the adjuster take a recorded statement about where she was going, what she was carrying, and whether she had already done any work. In the meantime, her own auto medical payments coverage and her health insurance may respond, and a third-party claim lies against the other driver if one was at fault.

Luis: as a sole proprietor he is excluded from the policy unless he elects to be covered. He can elect coverage, and his premium will be based on his remuneration subject to a minimum and maximum; the trade-off is that electing brings his own injuries inside the exclusive-remedy system and removes his ability to sue third parties in the same way. If he declines, his only recourse for a work injury is his personal health coverage and any third-party claim.

Other gaps to address:

• Uninsured subcontractors. If Greenworks hires a true subcontractor who has no WC and is injured, Greenworks can be pursued at common law rather than through the exclusive-remedy system. Require a certificate of WC insurance on every sub, every year.
• Corporate officers and family members. Whether they are automatically covered, excludable, or must elect varies by state and by entity type - confirm before the audit, not after a claim.
• The general liability policy excludes injuries to employees covered by WC, so it will not fill any of these holes.
• Documentation. Keep the election forms, certificates, and subcontractor agreements in the file; a disputed claim is won or lost on those documents.