In North Dakota, calling someone a 1099 contractor does not remove your duty to cover them; the state presumes anyone who performs services for pay is your employee unless you can prove they are a genuine independent contractor. Coverage is bought from the state fund, Workforce Safety and Insurance (WSI), and if a 1099 worker does not truly pass the test, their wages are yours to report. On top of that, a general contractor can end up paying premiums on an uninsured subcontractor's crew, so this is one of the most closely watched areas in North Dakota.
Who this is for: North Dakota owners who pay people on a 1099 or use subcontractors and want to know when those people still have to be covered.
The short version
- North Dakota presumes a worker is your employee, and the burden is on you to prove independent-contractor status.
- The test is the common-law right-of-control test, not the simpler ABC test some states use.
- An exemption certificate a worker holds from another state does not transfer into North Dakota.
- A general contractor is liable for premium, and penalties, on an uninsured subcontractor's employees.
- You verify a subcontractor's own WSI standing to avoid inheriting their premium.
The test North Dakota uses
North Dakota starts from a presumption: each person who performs services for pay is an employee, and whoever claims the person is an independent contractor has to prove it. The proof is the common-law right-of-control test, which WSI applies through a list of about 20 factors. It weighs things like whether the person works for more than one firm, offers services to the public, has a real investment in their own business, can be discharged at will, and stands to make a profit or take a loss on the job. No single factor decides it; WSI looks at the whole picture. A separate, stricter rule applies to the trucking trade: to treat the driver of a commercial truck over 26,000 pounds as an independent owner-operator, every one of the state's owner-operator conditions has to be met.
When a 1099 worker is really your employee
| Worker | Your employee? | What to check |
|---|---|---|
| A helper you direct day to day, paid on a 1099 | Yes, most likely | Control over how and when the work is done points to employment |
| A genuine business serving many clients | Often no | Its own tools, clients, books, and risk of profit or loss must hold up under the test |
| A subcontractor with its own WSI account | No, but verify | Get its WSI certificate of premium payment or letter of good standing before work starts |
| A contractor with an exemption from another state | Does not carry over | That exemption does not transfer into North Dakota |
The general contractor trap
If you hire subcontractors, there is a second layer of risk. North Dakota makes a general contractor liable for the premium, and any penalty, on the employees of a subcontractor or independent contractor that fails to secure required WSI coverage. Worse, a general contractor that knowingly uses an uninsured subcontractor faces an extra 5,000 dollars plus 100 dollars a day. Because only WSI coverage counts here, you cannot rely on a sub's out-of-state policy. The fix is routine: before you sign, collect each sub's WSI certificate of premium payment, or a WSI letter of good standing if the sub has no North Dakota employees, and keep it on file.
A Dickinson example
Illustrative, not a quote. A Dickinson general contractor brings on a framing sub he pays by 1099. Before work starts he collects the sub's WSI certificate of premium payment and saves it. Because the sub runs a real business and carries its own WSI coverage, the general contractor is not billed for the sub's crew. A drywall helper the general contractor pays directly, though, has no business of his own and works under the contractor's direction, so the contractor reports that helper's wages and covers him. See our workers comp for contractors page.
Real questions North Dakota owners ask
If my workers are 1099, do I still need workers comp in North Dakota?
Often yes. North Dakota presumes a paid worker is your employee unless you prove independent-contractor status. If the test is not met, you must report and cover that person through the state fund, WSI.
What test does North Dakota use for independent contractors?
The common-law right-of-control test, applied by WSI through about 20 factors. North Dakota does not use the simpler ABC test. The burden is on whoever claims the worker is a contractor, not an employee.
Does a signed contract calling someone a contractor settle it?
No. North Dakota looks at the actual working relationship against the common-law test, not the label on the contract. A person can be your covered employee even with a 1099 and a contract that calls them independent.
Can I be billed for a subcontractor's workers comp?
Yes. A general contractor is liable for premium and penalties on an uninsured subcontractor's employees. If you knowingly use an uninsured sub, there is an added 5,000 dollars plus 100 dollars a day.
How do I protect myself when hiring a sub?
Before work starts, collect the sub's WSI certificate of premium payment, or a WSI letter of good standing if the sub has no North Dakota employees, and keep it on file. That verification is what protects you.
Does an out-of-state contractor exemption count in North Dakota?
No. An independent-contractor exemption certificate issued in another state does not transfer into North Dakota. The status has to be established under North Dakota's own common-law test.
What does workers comp not cover for these workers?
The state fund pays medical care and lost wages for a covered worker's injury, but it does not defend you in a lawsuit. Stop-gap employers liability added to your general liability policy covers that defense.
Why North Dakota owners choose Morrow
- We shop the right market for you. In North Dakota, workers compensation is sold only through the state fund at Workforce Safety and Insurance (WSI), with no private carriers to shop, so we help you open and run your WSI account correctly and place the stop-gap employers liability and other business coverages the state fund does not include.
- 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 North Dakota guides
Every North Dakota 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.
- Business insurance in North Dakota (start here)
- Workers comp: the owner's overview
- I own an LLC: do I need workers comp?
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- We're a nonprofit: do we need workers comp?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Do I need workers comp for 1099 contractors?
- What workers comp does not cover
- North Dakota contractor workers comp
This guide is general information, not legal advice. North Dakota rules and penalty amounts can change, so verify current requirements with North Dakota Workforce Safety and Insurance (WSI) or a licensed advisor before you rely on them. Last updated: July 2026.