A new U.S. Department of Labor (DOL) rule regarding who qualifies as an independent contractor took effect in the spring of 2024.

The new rule adopted a new six-factor test for determining whether a worker is an independent contractor. (However, employers must also be aware of their respective state requirements.)

Due to this change, some employers may have questions on whether they need workers’ compensation policies to cover independent contractors. Generally, employers are required to provide coverage for lost wages and medical costs due to work injuries for an employee, but not an independent contractor.

Also, depending on the jurisdiction or contract requirements, workers’ compensation policies for subcontractors may be required from the general contractor in order to secure a job.

Agents can help employers navigate these complexities by checking out our blog, Are your workers independent contractors or employees?

This new DOL rule also underscores the value of breaking out work comp coverage from a group insurance plan. Using SFM provides an extra layer of service and expertise for employers who may find challenges navigating the independent contractor rule and its implications for workers’ compensation.

Read more Agent Agenda articles