Hiring Your First Employee? Oregon Contractor Workers’ Comp Guide

Hiring your first employee is a big milestone. It usually means your Oregon contracting
business is growing and you need another set of hands to keep up.

But adding an employee changes more than payroll.

It can change your workers’ compensation requirements, your CCB status and potentially
other parts of your business insurance program.

The key takeaway: If you’re hiring or leasing your first employee,
tell your insurance agent before that person starts working. It’s also a good time
to review whether anything else about your operation has changed since your policy
was originally written.

What does the Oregon CCB require when you hire employees?

The Oregon Construction Contractors Board explains that contractors with employees are generally nonexempt and need workers’
compensation insurance. Contractors using leased employees also need to address
workers’ compensation requirements.

If you’re changing from exempt to nonexempt, don’t assume your CCB record updates
automatically. Review the CCB requirements and make sure your business information
reflects how you’re actually operating.

The Oregon Workers’ Compensation Division also explains that most Oregon employers
need workers’ compensation coverage for their employees.

What Bancorp commonly sees when contractors grow

One of the biggest insurance problems isn’t necessarily something complicated.
It’s simply that the business changed and no one told the insurance company.

One of our agents who specializes in contractor insurance described two situations
we commonly see:

“They don’t tell us they hired an employee. They tell us they are doing something
totally different than what the prior operations were rated for on the policy, or
they have hired or leased an employee.”

That’s an important distinction.

A contractor who originally told the insurance company, “I do residential remodeling and work by myself,” may now have employees,
different operations, more equipment, larger jobs or commercial work.

The insurance policy needs to reflect the business you’re actually operating today.

What else should you review when you hire?

Workers’ compensation is only one part of the conversation. Hiring is a good trigger
to review your complete contractor insurance program.

• Has your payroll changed?
• Are employees driving company vehicles?
• Are employees using personal vehicles for business?
• Have you purchased additional tools or equipment?
• Have your actual contracting operations changed?
• Are you taking larger or different types of jobs?
• Are you now doing commercial work?
• Are contracts requiring higher liability limits?

Your workers’ compensation policy isn’t necessarily the only thing affected by growth.

Does general liability cover an employee who gets hurt?

General liability and workers’ compensation are designed to address different risks.
General liability generally addresses certain third-party bodily injury and property
damage claims, subject to the policy terms, while workers’ compensation is designed
around work-related injuries and illnesses involving employees.

Having general liability coverage should not be treated as a substitute for workers’ compensation when workers’
compensation is required.

What if I use a leased employee?

Leased employees deserve special attention. The Oregon CCB specifically addresses
worker leasing and workers’ compensation requirements for contractors using leased
workers.

Depending on the arrangement, the worker leasing company may provide workers’
compensation coverage. Make sure your insurance agent understands how your workforce
is structured and verify that the appropriate coverage and CCB information are in place.

What about 1099 subcontractors?

Calling someone a “1099 contractor” does not automatically determine whether that
person qualifies as an independent contractor under Oregon law.

The Oregon Workers’ Compensation Division explains that independent-contractor status depends on the actual working relationship,
including factors such as direction and control and whether the person operates an
independently established business.

If you’re unsure how a worker should be classified, consult the appropriate legal,
tax and insurance professionals rather than making the insurance decision based solely
on whether the person receives a W-2 or 1099.

Before your first employee starts, review these items

• Workers’ compensation requirements
• Exempt versus nonexempt CCB status
• Employee job duties and classifications
• Estimated payroll
• Leased employee arrangements
• Vehicles employees will operate
• Tools and equipment employees will use
• Current liability limits
• Contractual insurance requirements
• Any changes in the work your company performs

Your first employee is a business milestone

Growth is a good problem to have.

It also means the insurance program you purchased when you started the business may
no longer reflect the company you have today.

Bancorp Insurance, Powered by OneDigital specializes in insurance for Oregon contractors,
from obtaining the coverage needed for a CCB license to helping established contractors
protect growing businesses.

And as your workforce grows, the broader OneDigital platform can also help with
employee benefits, HR and retirement needs.

Frequently Asked Questions

Do Oregon contractors need workers’ compensation insurance?

Generally, contractors with employees need workers’ compensation insurance. Contractors
without employees are ordinarily exempt, although exceptions apply. Commercial endorsements
and leased-worker arrangements can create additional requirements.

Do I need to tell the CCB when I hire an employee?

If hiring changes your workers’ compensation status, your CCB information should be
updated accordingly. Review the current CCB requirements before the employee begins work.

Do leased employees count?

Oregon CCB guidance specifically addresses leased workers. Contractors using leased
employees should verify the applicable workers’ compensation coverage and reporting
requirements.

Is a 1099 worker automatically an independent contractor?

No. Worker classification depends on the actual working relationship and applicable
Oregon requirements, not simply the tax form used to pay someone.

Should I review other insurance when I hire?

Yes. Hiring is a useful time to review changes in payroll, operations, vehicles,
equipment, job size and contractual requirements so your insurance program reflects
the business you’re operating today.

Insurance coverage depends on individual policy terms, conditions, exclusions and
endorsements. Workers’ compensation and worker-classification requirements depend
on individual circumstances and applicable Oregon law.