Employee vs. Subcontractor: Insurance Guide

How you classify your workers directly impacts what insurance you need — and what happens if you get it wrong.

The Key Differences

Factor	Employee (W-2)	Subcontractor (1099)
Workers' Comp	You must provide it	They carry their own
GL Coverage	Covered under your policy	Should have their own GL
Control	You control how, when, where	They control their own methods
Equipment	You provide it	They use their own
Liability Risk	Higher — you're responsible	Lower — if properly documented

Calling someone a "subcontractor" when they're really an employee is one of the most common — and costly — mistakes in landscaping.

●State audits can reclassify your 1099 workers as W-2 employees

●Back-owed workers' comp premiums (often 3+ years) plus penalties

●IRS penalties for unpaid payroll taxes

●If a misclassified 'sub' gets hurt, YOUR insurance may deny the claim

●California AB5 and similar state laws have tightened classification rules

✔Always get a COI from subcontractors before they start work
✔Use written subcontractor agreements that define the relationship
✔If you control their schedule, provide their tools, and they only work for you — they're probably an employee
✔When in doubt, classify as employee. The penalties for misclassification are severe.

Whether you have employees, subs, or both — we'll make sure you're properly covered.