Do I need workers' comp for 1099 subcontractors?

Yes, when the sub can't prove its own coverage. In NCCI states, the standard policy, form WC 00 00 00 C, charges premium for anyone doing work that could make your carrier pay a claim, using the contract price when there are no payroll records, unless you prove the sub secured its own workers' comp. A 1099 settles nothing. A current certificate of insurance, or a state waiver where one is accepted, usually does.

Updated September 29, 2026. Written by Andre Beukers, principal at Redoubt, a commercial insurance agency in Salt Lake City, not a government office.

Doesn't a 1099 mean they aren't my employee?

No. A 1099 reports a payment to the IRS, and even the IRS says to "look at the entire relationship," not the form. Each state applies its own workers' comp test. New York's Workers' Compensation Board notes that alleged subcontractors have been found to be employees after they were hurt and filed claims against the general contractor.

Why am I being charged for 1099 subs on my audit?

Because the policy charges for them, and the bill comes at the audit after it ends. Part Five of the NCCI policy bases premium on your employees and on "all other persons engaged in work that could make us liable." Without payroll records for them, "the contract price for their services and materials may be used."

State law is why the carrier is exposed. Utah Code 34A-2-103(7) treats a contractor's workers and subcontractors as employees of the business that hires them when the work is part of its trade and it keeps supervision or control. Florida Statutes 440.10(1)(b) makes a construction contractor liable for the employees of any sub that has not secured coverage.

Does the sub's certificate of insurance (COI) take them off my audit?

Usually, yes. The same policy paragraph "will not apply if you give us proof that the employers of these persons lawfully secured their workers compensation obligations." A certificate for the sub's own workers' comp policy is that proof. Utah Code 34A-2-103(7)(e) agrees: a sub is not your employee if you obtain and rely on a valid certification of its coverage.

A certificate only helps if it shows the sub's own policy in force for the work you paid for. The North Carolina manual, for one, asks for "satisfactory evidence to the carrier that the subcontractor has workers compensation insurance in force covering the work performed for the contractor." Check the policy with your state's coverage lookup; the Utah Labor Commission links its lookup from its employers page.

Some owner-only subs buy a minimum-premium policy that excludes the owner just to produce a certificate. Ask your carrier before the job whether it accepts one.

Can a 1099 sub with no employees skip workers' comp?

In some states the owner can, through a waiver or exemption, but you still need that document from the sub. In Utah, a business with no employees can get a Coverage Waiver from the Labor Commission ($50, one-year term), and 34A-2-103(7)(e) lets you rely on it like a certificate. The Commission can revoke it if the business becomes ineligible during the term, so check its status before each job.

Florida Statutes 440.10(1)(c) requires a corporate sub with an exempt officer to give the contractor a copy of the certificate of exemption. New York's CE-200 "CAN NOT be used to show another business or that business's insurance carrier that coverage is not required." A waiver covers the owner only; helpers the sub brings are uncovered and can land on your policy.

What should I collect from each sub before they start?

Get these before the sub's first day.

A certificate showing workers' comp, with you as certificate holder.
The sub's exact legal name, matching your W-9 and checks.
Policy dates covering every day the sub works for you.
The work state listed on the sub's policy.
Or a current waiver or exemption, where your state accepts one.
A fresh certificate at each renewal.

What if my sub has no coverage and no waiver?

Expect the pay on your audit at the rate for the class code that fits the work. Your options: the sub buys its own policy, you price the premium into the job, or you hire the person onto payroll. Which fits depends on the business, the worker setup, and your state's current rules.

Side by side

What each document does at your audit

Usual carrier treatment. Your carrier and your state's law decide the final answer.

What the sub gave you	What it proves	Usual audit result
A W-9 and a 1099	That you paid them.	Pay or contract price added to your premium.
A current certificate, right entity and dates	The sub secured its own workers' comp.	The sub's pay stays off your audit.
A certificate for another entity, or missing job dates	Coverage that doesn't reach all the work.	The uncovered part can be charged to you.
A Utah Coverage Waiver valid on the job dates	An owner-only business waived benefits.	Owner's pay stays off; helpers are not covered.

Sources

Where these answers come from

Statutes, state agencies, and rating bureaus. Requirements depend on the business, the worker setup, and the current instructions of the state agency, so check the source for your state before acting.

NCCI Workers Compensation and Employers Liability Insurance Policy, WC 00 00 00 CPart Five: remuneration of other persons, contract price, proof of the sub's coverage, final premium, and audit. Copy hosted by the North Carolina Rate Bureau.Utah Code 34A-2-103Subsection (7): statutory employer rule, and reliance on a sub's certificate or coverage waiver.Utah Labor Commission, Workers' Compensation Coverage WaiversWho can waive, the $50 fee, the one-year term, revocation, and status verification.Utah Labor Commission, EmployersLinks to the coverage verification and waiver status lookups.Florida Statutes 440.10Subsections (1)(b) and (1)(c): contractor liability for uninsured subs, and collecting evidence of coverage.New York Workers' Compensation Board, Identifying an Independent ContractorCarriers assess general contractors for subs without proof of their own policy.New York Workers' Compensation Board, Certificate of Attestation of Exemption (CE-200)The CE-200 cannot be used to show another business or its carrier that coverage is not required.North Carolina Rate Bureau Basic Manual, Rule 2: Premium and PayrollRule 2-H: evidence of a sub's coverage, the sub's class code, and how much of a labor-and-material price counts. One state's manual, shown as an example.IRS, Independent Contractor (Self-Employed) or Employee?Worker status turns on the whole relationship and the right to control, not the form filed.

The next question

Workers’ compensation insurance: every question, every stateThe hub: the 51-state requirement table and the nine buyer questions.Already charged for a subcontractor at audit?Build the subcontractor schedule and dispute a Utah audit charge.Utah workers' comp waiverEligibility, the application, and verifying a sub's WCCW.Utah DOPL workers' compCertificate or waiver for a Utah contractor license application.What is a ghost policy, and is it enough?The minimum-premium policy an owner-only sub buys to produce a certificate.Do I need workers' comp if I have no employees?For the sub's side: exempt owners who still get asked for proof.Why did my workers' comp audit raise the bill?What the audit checks and what to have ready.

By state

Workers’ comp requirements in every state

Each state page gives the employee threshold, the owner and officer exemptions, the penalty for going without, the rating bureau, the market, the enforcing agency, and the exemption filing, each with its statute or agency source.

Frequently asked questions

1099 Subcontractors FAQ

Is a certificate of insurance enough proof?+

Usually, if it shows workers' comp for the legal entity you paid and covers every day of the job. Confirm it in the state's coverage lookup.

How much will an uninsured sub add to my audit?+

The sub's actual payroll if you have records; if not, the carrier can use the contract price. Some state manuals count only part of a price that includes materials. That is multiplied by your rate for the class code that fits the work.

What if the sub's coverage lapsed in the middle of the job?+

The days without coverage can be charged to you. Ask the carrier how it treated each period.

Talk to Redoubt

Send us your sub list before the audit

Text Redoubt the subs you use, what each one does, and the certificates or waivers you have on file. We will point out the gaps a carrier is likely to charge for and what to ask each sub for.

Text us your sub list Call 385-375-7655

This is general insurance information, not legal advice or a coverage determination. Statutes, agency instructions, policy forms, and the facts of the business control.