Every business owner who has misclassified a worker believed they'd done it correctly. They had a signed agreement. They issued a 1099. The worker wanted it that way.
None of that decides the question.
Classification turns on the actual working relationship — who controls the schedule, who supplies the tools, who directs how the work gets done, whether the person can work for anyone else. State agencies apply their own tests, and they apply them after something has already gone wrong.
Why it matters for coverage: if a "contractor" is reclassified as an employee after an injury, you may be facing a workers' comp claim on a policy that never listed them, plus back premium, plus penalties. Your general liability policy generally won't fill that hole — bodily injury to employees is excluded, and now they're an employee.
This week: Take your contractor list and ask one question about each name: do I control how and when they do this work? If yes, get a real opinion before an auditor form one for you.
John Crist
Prestizia Insurance
Author, The Prestizia Protection Playbook