Working As A Freelancer? Here’s What You’ll Want To Know About Workers’ Compensation

Thanks to the rise of the "gig economy," a growing number of Americans are turning to freelancing as a way to earn a living. Currently, 53 million workers -- or 34 percent of the U.S. workforce -- are freelancers, with that number set to rise to 40 percent by 2020. Working as an independent contractor means operating under a different set of rules, especially when it comes to workers' compensation benefits. If you want to know how your status as an independent contractor affects your eligibility for workers' compensation benefits, read on.

Most Workers' Comp Laws Don't Cover Freelancers

Most state laws require employers to have workers' compensation insurance that covers both wage-earning and salaried employees. For independent contractors, however, those rules don't apply. Unlike wage-earning or salaried employees, independent contractors are not directly employed with the company in question. As a result, the typical independent contractor isn't considered an official part of the company's workforce. This means that independent contractors aren't covered under the same workers' compensation protections that are afforded to official employees.

The distinction between an employee and independent contractor might not be apparent at first glance. After all, it seems like independent contractors are performing many of the same duties as an employee would. However, there are several important differences that help distinguish freelancers from their salaried and wage-earning counterparts:

  • Independent contractors are usually hired under contract and forgo the formal hiring process that many official employees undergo.
  • Unlike employees who earn a set salary or wage, independent contractors are normally paid per assignment.
  • Independent contractors normally provide their own work equipment instead of using equipment provided by the employer.
  • Independent contractors are not directly supervised, able to select their own assignments and, in most cases, maintain their own working hours.
  • Most independent contractors are hired to perform a single job and often work for more than one company.

These distinctions are crucial, as most states abide by these and other criteria to distinguish independent contractors and official employees for workers' compensation purposes.

A Possible Exception to the Rule

It's not unusual for some companies to blur the line between an independent contractor and employee. This can happen if a company wants the benefits of hiring a freelancer but without paying for the benefits normally afforded to salaried and wage-earning employees. It's why many states follow the strict criteria mentioned above that helps distinguish independent contractors from official employees.

If you're hired as an independent contractor, but you're being directly supervised by a superior employee and directed to work on-site exclusively using the company's equipment, then you're not being treated as an independent contractor. The state workers' compensation board may consider you an employee, for all intents and purposes and, as a result, you may qualify for workers' compensation protection under your employer.

If you're a freelance worker whose status as an independent contractor comes into question due to the above scenario mentioned, you may want to speak to an experienced attorney and your local labor board.

Self-Insurance for Workers Compensation

Although you might not be eligible for workers' compensation coverage with the company you're freelancing for, you may be able to purchase your own coverage. A growing number of insurance companies are offering liability coverage specifically for independent contractors. This liability insurance typically provides coverage for bodily injury and property damage. Some policies may also cover damages arising from contract disputes, false advertising and libel claims and finished products or projects that cause harm.

Having your own workers compensation coverage means you won't have to rely on your own personal health insurance policy, which may not cover certain incidents that workers compensation coverage would normally take care of. For more information, contact a lawyer by visiting a site like