Workers compensation insurance is required if your business has employees. Commercial contractors must have workers compensation insurance.
What is workers compensation insurance?
Workers compensation insurance covers employees who are injured on the job. It pays for medical treatment, lost wages, disability and re-employment help, if needed.
Exempt vs. Non-Exempt
Ordinarily, exempt contractors are businesses that do not have employees. These businesses do not need workers compensation insurance. Non-exempt contractors are businesses that hire or lease employees. These businesses need workers compensation insurance. (Leased employees are usually insured through the worker leasing company that provides their services.)
In some cases, family-owned companies that do not hire employees are exempt contractors even if multiple family members work for the company. For example:
- Partnerships where all the partners are family members are exempt.
- Corporations where all the corporate officers are family members are exempt.
- Limited liability companies where all the members are family members are exempt.
"Family members" refers to parents, spouses, sisters, brothers, daughters, sons, daughters-in-law, sons-in-law and grandchildren.
Worker leasing is a way for contractors to administer their workforce. In return for a fee, worker leasing companies provide workers and handle their payroll, employment taxes and assessments. They may also offer workers compensation insurance, retirement options and medical benefits.
Worker leasing companies often provide workers compensation for both the leased workers and the contractor’s employees. Alternatively, the contractor may provide coverage for both. In either case, one policy must cover all workers.
In contrast, a temporary service provider provides workers “on a temporary basis.” A temporary service provider is not licensed by DCBS. Temporary workers are for special situations, such as:
- Employee absences or leaves
- Professional skill shortages
- Seasonal workloads
- Special assignments or projects
Temporary staffing requires written documentation that says how long the work will last and describes the special situation that requires temporary help. Without written documentation, all workers are presumed to be leased workers.
A contractor using temporary staffing may have its own workers compensation policy to cover its regular employees. The temporary staffing provider usually provides workers compensation for the temporary workers.
Reporting Workers Compensation Status
Ordinarily, non-exempt contractors must supply all the following information when applying for a license:
- Workers compensation insurance carrier name and policy number or WCD compliance number (if self-insured)
- Oregon Employment Department and Oregon Department of Revenue combined business identification number (BIN)
- Internal Revenue Service employer number or federal identification number (EIN)
Nonexempt contractors that use leased workers (and have no other reporting obligations) do not need to supply the BIN or EIN. The worker leasing company will handle the payroll reporting for the workers.
The contractor may supply its own worker’s compensation insurance policy number or that of the leasing company, depending on which is providing coverage.