My Workers Are 1099 in DE: Do I Need Comp?

If your Delaware workers are paid on a 1099, that label does not decide whether you need workers compensation. Delaware looks past the paperwork: for most work it applies a control test to decide who is really an employee, and for construction it uses a strict three-part test that presumes a worker is an employee unless you can prove otherwise. If your 1099 workers are really employees under the right test, you need to cover them, and in construction calling employees contractors is separately illegal.

Who this is for: Delaware owners who pay some or all of their workers on a 1099, including contractors, roofers, trades, and shops that use freelancers.

The short version

A 1099 does not settle it; Delaware decides employee status by the real relationship, not the tax form.
For most industries Delaware uses a common-law control test that looks at who directs the work.
Construction has a stricter three-part rule (often called the ABC test) under the Workplace Fraud Act.
Workers who are really employees must be covered, whatever their tax form says.
A general contractor can be made to answer for an uninsured construction subcontractor's injured workers.

The test Delaware uses outside construction

For most businesses, Delaware applies the common-law right-of-control test, which looks at the whole relationship and asks whether you control not just the result of the work but the way it gets done. It weighs things like who directs the methods, who supplies the tools, how the worker is paid, and whether the worker runs an independent business. Someone can be your employee even if you both signed a contractor agreement and send a 1099.

Factor	Points toward employee	Points toward contractor
Control over how the work is done	You direct the methods and steps	They decide how to do it
Tools and equipment	You supply them	They bring their own
Set hours and location	You set them	They set their own
Other clients	They work only for you	They serve many clients
How they are paid	Hourly, like a wage	By the job, with their own invoice

The stricter rule for construction

Construction is different. Delaware's Workplace Fraud Act, which applies only to the construction industry, presumes anyone doing construction work for pay is an employee unless the business proves all three parts of a strict test: the worker is free from the company's control, the work is outside the company's usual business or done by a registered contractor away from its sites, and the worker is genuinely in business for themselves. This three-part rule, which some people call the ABC test, is much harder to clear than the general control test, and it is why so many misclassified construction workers turn out to be employees.

What it costs to get this wrong

Misclassification is where the money and the risk collide. If a 1099 worker who is really an employee gets hurt, you may owe the claim and have no policy to pay it, which strips the protection comp normally gives you. In construction, Delaware also treats deliberate misclassification as its own violation under the Workplace Fraud Act, which carries penalties separate from the workers comp rules. And when you hire construction subcontractors, a general contractor can be treated as the responsible party and made to cover an uninsured sub's injured workers, so the safe move is to confirm every sub carries coverage and to collect and keep a certificate proving it. A solo sub with no employees may not have to cover themselves, which is why many carry a low-payroll policy, sometimes called a ghost policy, just to produce that certificate.

A Delaware roofing example

Illustrative, not a quote. A Delaware roofing company pays six crew members on a 1099 and treats them as contractors, but it sets their schedules, supplies the equipment, and tells them how each job is done. Because this is construction, the Workplace Fraud Act presumes those crew members are employees unless the company can clear all three parts of the strict test, which it cannot. So the company likely needs to cover them, and labeling them contractors could bring a separate misclassification penalty. We help sort genuine independents from workers who are really employees, get the employees covered, and collect certificates from the true independents. See our workers comp for roofers page.

Real questions Delaware owners ask

Do I need workers comp for 1099 contractors in Delaware?

It depends on whether they are really employees. Delaware uses a control test for most work and a strict three-part test for construction, not the tax form, so a 1099 worker you direct usually must be covered.

Does a 1099 or a signed contract make someone a contractor?

No. Delaware looks at the real relationship, not the paperwork. If you control how, when, and where the work is done, the worker can be an employee for comp even with a 1099 and a signed contract.

I heard construction has a stricter rule. Is that right?

Yes. Delaware's Workplace Fraud Act covers only construction and presumes a paid worker is an employee unless the business proves all three parts of a strict test. It is much harder to clear than the general control test.

What is the penalty for calling employees contractors?

In construction, misclassifying workers is its own violation under the Workplace Fraud Act, with penalties separate from workers comp. And an uninsured worker who is really an employee can leave you paying the claim yourself.

Am I responsible for an uninsured subcontractor's injured worker?

You can be. In construction a general contractor can be treated as the responsible party and made to cover an uninsured sub's injured workers, so confirm every sub carries coverage and collect a certificate.

Do solo subcontractors need their own workers comp?

Not always on themselves, but many carry a low-payroll policy anyway so they can give you proof of coverage. Getting that certificate protects you from being stuck with their injury.

How do I tell a real contractor from an employee?

Look at control. A real contractor decides how to do the work, uses their own tools, sets their own hours, serves other clients, and bills by the job. The more you control, the more they look like an employee.

Why Delaware owners choose Morrow

We shop the right market for you. In Delaware you buy workers' comp on the open, competitive market from any private insurer licensed in the state, because there is no state fund, and if no carrier will take you the DCRB-run assigned risk plan is the guaranteed backstop, so we can shop your rate freely and still have a fallback for hard-to-place work.
We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.

Related Delaware guides

Every Delaware business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.

This guide is general information, not legal advice. Delaware rules and penalty amounts can change, so verify current requirements with the Delaware Department of Labor's Office of Workers' Compensation or a licensed advisor before you rely on them. Last updated: July 2026.