If your New York workers get a 1099 but you control how and when they do the job, then yes, you probably still need workers compensation for them, because New York looks at the real relationship, not the tax form. Calling someone an independent contractor does not make them one, and in construction the test is stricter still.
Who this is for: New York owners who pay workers on a 1099 and want to know whether those workers actually need to be on a workers comp policy. Workers comp pays medical bills and part of lost wages when a worker is injured on the job.
The short version
- The label does not control: a 1099 does not by itself make a worker an independent contractor in New York.
- The general test: for most industries New York uses a right-of-control test that weighs how much you direct the work.
- Construction is stricter: the Construction Industry Fair Play Act treats a worker as an employee unless a strict three-part test is met.
- Trucking has its own rule: commercial goods drivers are presumed employees unless a similar strict test is met.
- Contractor liability: a contractor can be forced to pay benefits to an uninsured subcontractor's injured worker.
How New York decides employee versus contractor
For most businesses, New York applies a common-law right-of-control test. No single factor decides it; the question is whether you control the details of the work or the worker runs an independent business. New York does not use a broad ABC test for most workers comp cases, so do not assume a simple three-part rule applies unless you are in construction or commercial trucking.
| Points toward employee | Points toward independent contractor |
|---|---|
| You set the hours and methods | The worker sets their own schedule and methods |
| You provide tools and materials | The worker supplies their own equipment |
| The worker is paid hourly or by salary | The worker is paid by the job or the project |
| The worker only works for you | The worker serves multiple clients |
| No separate business | Own business name, insurance, and tax filings |
Construction and trucking are different
In construction, the Construction Industry Fair Play Act (Labor Law Article 25-B) flips the default: a worker is presumed to be an employee unless all three prongs are met, meaning the worker is free from your control, performs work outside your usual business, and runs an independently established trade of the same kind. Most site laborers do not clear all three, so they count as employees who need coverage. Commercial goods transportation has a parallel rule under Article 25-C, presuming drivers are employees unless a strict test is satisfied.
Why this matters even for true subcontractors
Under New York law, a contractor whose subcontracted work is hazardous can be made to pay workers comp benefits to an injured employee of an uninsured subcontractor. In other words, if your sub does not carry coverage and their worker is hurt, the bill can land on you. That is why general contractors collect proof of coverage from every sub before work starts. See contractor insurance and licensing.
A quick New York example
Illustrative, not a quote. A roofing company in Rochester hires a three-person crew and pays them on 1099s, assuming that keeps them off the workers comp policy. Because this is construction, the Fair Play Act presumes the crew are employees unless each one is truly running an independent roofing business, which they are not. When one falls and breaks an ankle, the company is treated as their employer for comp, and because it went uninsured, it faces penalties and a possible direct lawsuit. Had it carried coverage and rated the crew as employees, the claim would simply have been paid.
Real questions New York owners ask
All my New York workers are on 1099s. Does that mean I do not need workers comp?
Not necessarily. New York looks at the real relationship, not the tax form. If you control how and when the work is done, those workers are usually employees who must be covered.
How does New York decide whether my 1099 workers really count as employees?
A common-law right-of-control test. It weighs factors like who sets the schedule, who provides tools, how the worker is paid, and whether they run an independent business. No single factor decides it.
Is construction treated differently?
Yes. The Construction Industry Fair Play Act presumes a worker is an employee unless a strict three-part test is met. Most construction laborers do not meet all three prongs, so they count as employees who need coverage.
What about drivers who haul goods?
Commercial goods transportation has its own rule under Article 25-C that presumes drivers are employees unless a strict test is met, including an extra multi-factor test for a claimed separate business entity.
My subcontractor is truly independent. Am I still exposed?
You can be. New York can require a contractor to pay benefits to an injured worker of an uninsured subcontractor on hazardous work. That is why contractors collect proof of coverage from every sub before work starts.
Could a payroll audit reclassify my 1099 workers?
Yes. At the annual premium audit, an insurer can treat uninsured 1099 workers who function as employees as covered payroll and charge premium for them, so it is better to classify correctly up front.
Would a bare-bones policy that covers no owner pay (a 'ghost policy') cover my 1099 crew?
A ghost policy is a minimal policy that covers no owner pay, often bought so a solo contractor can show a certificate. It does not cover a hiring firm's 1099 crew, so it is not a substitute for covering real employees.
Why New York owners choose Morrow
- We shop the right market for you. New York is an open, competitive market: you can buy coverage from any private carrier the state authorizes or from the state-run New York State Insurance Fund (NYSIF), so Morrow shops multiple insurers to find the best fit instead of leaving you with a single option.
- 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 New York guides
Every New York 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 New York (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 is a ghost workers comp policy?
- Roofer workers comp in New York
This guide is general information, not legal advice. New York rules and penalty amounts can change, so verify current requirements with New York State Workers' Compensation Board or a licensed advisor before you rely on them. Last updated: July 2026.