If an association has any employees, it is required to carry workers’ compensation insurance.  The amount of the premium is generally determined by the total employee payroll.  Generally, independent contractors and non-compensated volunteers of associations are not considered employees for purposes of workers’ compensation.

Examples of employees for which associations are required to carry workers’ compensation insurance are: maintenance personnel, on-site or resident managers, guards, and gardeners assuming all such persons are on the association payroll.

In cases where associations do not have employees but utilize services from contractors, it is still recommended that such associations obtain a workers’ compensation policy.    The reason for this recommendation is that liability for injuries travels “up the chain” from the injured person to the subcontractor to the association.

Thus, if a contractor fails to consistently carry an adequate worker’s compensation coverage for his laborers, the injured worker can file a claim against the association.  And an association that does not have a worker’s compensation policy could end up spending thousands of its own dollars to compensate the injured worker.

For example, if a claim due to injury or death occurs and the contractor employing the injured person does not carry worker’s compensation insurance, the association may be liable for 1½ times the amount of the claim.  Additionally, if the claim triggers an audit, or if a routine audit occurs and the contractor failed to carry adequate coverage, the association may be charged a premium for the period of time that the subcontractor failed to carry adequate coverage.

Based on the above, associations are far better served by obtaining workers’ compensation insurance policies rather than taking chances and hoping their contractors’ policies will not lapse.

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