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Am I an exempt employee?

On Behalf of | Aug 18, 2020 | Workers' Compensation

Employers do not have to provide workers’ compensation coverage for all workers. Certain workers are exempt from coverage, but the state has strict guidelines for what constitutes an exempt worker. 

According to the Washington State Department of Labor & industries, if you receive a 1099 instead of a W-2 for tax reporting, this is not enough to meet exemption requirements. Your employer must make sure you meet the other requirements by running you through some tests. 

Personal labor test

Your employer will not have to cover you with workers’ compensation if it does not control what you do and you either have your own employees under your control or you provide special equipment and the expertise to operate it. If you pass this test, then your employer does not need to do anything further to show it is not liable for your insurance. 

6-part or 7-part test

If you did not pass the personal labor test, then your employer must run you through the 6-part or 7-part test. You must meet all conditions of the test, which is seven if you work in construction and six for all other occupations. 

Like the personal labor test, one of the conditions you must meet is that your employer does not control your work. The service you offer cannot be part of the usual business, performed outside of the business or you must pay all the costs for the business from which you perform the service. 

You also must maintain your own accounting to manage income and expenses. Another condition is you have an account with the Department of Revenue or another state agency. 

You are in an independent trade, profession or occupation or you have your own place of business that you deduct on your taxes. In addition, you file a schedule of expenses with the IRS. 

The seventh condition, applying only to construction, is that you have an electrical contractor license or registration as a contractor.