Last reviewed: September 23, 2026
Paying someone as a 1099 subcontractor doesn't automatically mean they're excluded from your workers' comp exposure. Carriers and state agencies look at how the work actually functions, not just what the paperwork says, and a misclassified worker can still end up covered under your policy, at your cost, after a claim.
Workers' comp premium is based on payroll, including payments to uninsured subs treated as employees for audit purposes. If a sub doesn't carry their own workers' comp, your policy can end up picking up the exposure and the premium, whether you planned for it or not.
It depends on the state and the specifics of the relationship, but a common outcome is the carrier treats them as your employee for that claim regardless of the 1099 paperwork, and pursues the claim against your policy.
Collecting a certificate of insurance from every sub before they start work, and keeping it current. A sub without their own workers' comp is a gap in your own coverage, not just theirs.
Does this apply even if my subs sign a 1099 agreement? The agreement matters, but it's not the only factor. How the relationship actually works day to day carries real weight too.
What if a sub says they're covered but I've never seen proof? Get the certificate before they're on site, not after. Verbal assurance isn't documentation.
Send me your current sub list and whether you're collecting certificates, and I'll tell you where the gap actually is.
— Aaron