Generally, workers who are legally self-employed are not eligible for worker’s compensation benefits. Many self-employed workers are independent contractors (ICs), freelancers and sole proprietors.
Employers of ICs and freelancers are not required by law to carry workers’ compensation insurance. If you are a self-employed worker and you get injured while performing your job, your remedy is to sue the contracting company. This means you have to go through the litigation or arbitration process before you may receive recovery for your injury. Still, self-employed workers may opt to buy their own workers’ compensation policy. Not only will they get coverage if they suffered work-related injuries, they may also expand their client base. Many contracting companies do not hire uninsured ICs and freelancers due to potential lawsuits. So companies compel ICs and freelancers to buy workers’ comp insurance before hiring them.
Sole proprietors may purchase workers’ comp policy to protect their businesses from lawsuits. Lawsuits that may stem from employees suffering from work-related injuries or illnesses. In some instances, independent contractors and freelancers are misclassified by the contracting company. Legally they qualify for the status of an employee. FedEx drivers who were ruled by courts to assume employee status despite FedEx classifying them as independent contractors. As employees, the FedEx drivers are entitled to workers compensation benefits.