All workers in Washington are entitled to workers’ compensation unless they fit strict exemption definitions. Make sure you understand your business' requirements for covering workers, including independent contractors. If your business is found to have workers that should have been reported for workers’ compensation, your business will be held responsible for unpaid premiums with penalties and interest.
Is a 1099 form enough?
No. A 1099 form is a federal form and has no bearing on Washington state workers’ compensation coverage.
Determining who is covered
- Use the tests outlined in the next two tabs.
- Use this eLearning class to help you determine who is covered.
- Call us for help at 360-902-4817.
Independent contractors who aren’t covered for workers’ compensation
- Carefully review the tests outlined in the next two tabs.
- Document how each contractor passes each part of each test.
- Having a UBI number or contractor registration number does not automatically make a worker an exempt independent contractor.
Businesses with covered independent contractors
- Get a Washington state workers’ compensation account by indicating you have workers on your business license application.
- Report your workers’ hours on your quarterly reports and pay your premium payments.
- If you filed any reports without including all reportable hours, amend your quarterly reports.
A worker who provides more than personal labor will meet one of the two statements in the personal labor test below. If your worker doesn’t pass this test, use the 6-part or 7-part test outlined in the next tab to determine if they are exempt from workers’ compensation coverage.
Personal labor test
One of these statements must be true:
- The individual brings their own employees to perform the work, and you don’t control the individual or their employees.
- The individual brings heavy or costly specialized heavy equipment and their expertise to operate it, and you don’t control the individual (Examples: MRI machine, earth-moving equipment, ultrasound machine).
If the worker passes the personal labor test on the previous tab, then you don’t have to continue. If the worker doesn’t pass the personal labor test, then you must use the 6-part or 7-part test to determine if they are a covered worker. When using the 6-part or 7-part test, remember that your worker must pass all 6 parts to be exempt from coverage (7 parts for construction). If your worker doesn’t pass all parts of these tests, you must provide workers’ compensation.
All 6 parts of this test (7 parts for construction) must be true
- Be free from your control or direction.
- Must pass 1 of the following 3 options:
- The service is outside the usual course of business.
- The service is performed outside all of the places of business.
- The individual is responsible for the costs of the principal place of business from which the service is performed.
- Must pass 1 of the following 2 options: The individual:
- Is customarily engaged in an independently established trade, occupation, profession, or business, of the same nature as that involved in the contract of service.
- Has a principal place of business that is eligible for a business deduction for IRS purposes.
- The individual is responsible for filing a schedule of expenses with the IRS.
- The individual has established an account with the Department of Revenue and other state agencies as required.
- The individual is maintaining a separate set of books or records that reflect all items of income and expenses.
- For construction only: The individual is properly registered as a contractor or has a valid electrical contractor license.
- RCW 51.08.180 "Worker"—Exceptions
- RCW 51.08.181 "Worker"—Registered contractor and electrician exclusions
- RCW 51.08.195 "Employer" and "worker"—Additional exception
- Record Keeping and Reporting
- Independent Contractor Guide: A Step-by-Step Guide to Hiring Independent Contractors in Washington State
- Avoid Liability for Your Subcontractor's Unpaid Workers' Comp Premiums