Workers’ Comp and Misclassification of 1099 Independent Contractor in Nevada

In the State of Nevada, 1099 contractors, aside from those working in construction, are not covered under the state’s workers compensation laws. This means if a 1099 independent contractor gets injured on the job, workers’ compensation insurance will not provide coverage for things like medical expenses or lost wages. With that said, there are situations where an employer may misclassify an employee as a 1099 contractor, whether by mistake or on purpose. When this happens, there can be hefty fines, penalties and other legal ramifications the employer faces for misclassification of independent contractor in Nevada.

Misclassifying an employee as a 1099 essentially means avoiding paying taxes, workers’ comp premiums, and other costs associated with having a W2 employee. Sometimes this is done inadvertently by the employer simply misunderstanding the rules and criteria that make someone a legitimate 1099 independent contractor. Other times, employers knowingly misclassify to try to avoid those additional expenses, which is illegal and considered fraud against workers’ comp requirements for 1099 independent contractors in Nevada.

There are specific laws and guidelines outlining Nevada workers’ comp requirements and what classifies someone as a legitimate 1099 contractor, as opposed to an employee. When those guidelines are violated through misclassification, it opens up the employer to major penalties and fines.

What Classifies Someone as a 1099 Independent Contractor in Nevada?

The State of Nevada has a clear set of criteria that must be met for a worker to legitimately be classified as a 1099 independent contractor, rather than an employee. Unless the person is a foreign national legally present with proper documentation, and they have a business license, insurance, and other requirements, they must meet at least 3 of the following:

  • The worker has control over the means, manner, time and result of the work performed, not the employer.
  • The worker is not required to work exclusively for one employer, unless restricted by law or contract.
  • The worker is free to hire employees to assist them.
  • The worker has a substantial investment of capital in their business, such as equipment, workspace, etc.

If the worker does not meet at least 3 of those criteria, they would be classified as an employee under Nevada workers’ comp requirements, not a 1099 contractor. Simply calling someone a “contractor” is not enough to make it legitimate.

The rules are in place because misclassification of independent contractor in Nevada is a violation of workers’ comp laws and labor laws. When an employer does not properly cover employees and follow workers’ comp requirements for 1099 independent contractors in Nevada, it puts the burden on the employee if they are injured, and it allows the employer to avoid their tax and premium obligations.

Proving worker status can be complex, as there are gray areas. But in general, if the worker is economically dependent on the employer, they are likely an employee that the employer needs proper workers’ comp coverage for based on Nevada workers’ comp requirements.

Why Would an Employer Misclassify an Employee as a 1099 in Nevada?

In some cases, employee misclassification happens unintentionally in Nevada due to an employer misunderstanding or overlooking some of the qualifiers for 1099 independent contractor status. The criteria is complex, so they may mistakenly consider someone a contractor when they should be classified as an employee.

However, misclassification often happens purposefully as well, as a way for the employer to avoid paying payroll taxes, workers’ compensation premiums, and other costs associated with having W2 employees on staff. By misclassifying employees as 1099 contractors, even when they do not meet the necessary criteria, the employer can try to reduce their overhead expenses related to workers’ comp requirements for 1099 independent contractors in Nevada.

Of course, intentionally misclassifying workers is illegal and a form of fraud. Employers may try to claim ignorance, but the state is cracking down on this violation of Nevada workers’ comp requirements. There are major penalties for those found intentionally misclassifying to evade their obligations.

What Do I Do if I am Charged with Misclassifying an Employee as a 1099 in Nevada?

If you are an employer who has been charged with or alerted to misclassifying an employee as a 1099 contractor in Nevada, whether it was an honest mistake or not, the first step is to work on rectifying the situation right away.

If you have already been alerted by the state about an investigation into a suspected misclassification of independent contractor in Nevada, you’ll want to fully cooperate and follow the steps outlined to get into compliance with proper workers’ comp requirements for 1099 independent contractors in Nevada. By taking accountability and showing you are working in good faith to fix the issue, you may be able to reduce potential penalties.

If you discover the misclassification issue yourself before being caught, you’ll want to immediately reclassify the workers properly and get them covered for workers’ compensation insurance based on Nevada workers’ comp requirements. Voluntary self-reporting and cooperating is treated better than continuing the violation.

Being found to have misclassified employees as 1099 contractors in Nevada can open you up to owing back taxes and premiums, facing audits, monetary penalties and fines, and potential criminal prosecution in egregious cases. The consequences increase based on frequency and number of workers affected, as well as if it was intentional fraud or an honest mistake.

Need Workers’ Comp Insurance in Nevada?

If your business needs to purchase proper workers’ compensation insurance for your Nevada-based employees to comply with state workers’ comp requirements, NPN Brokers can help. Even if you have faced prior penalties or other complications related to misclassification issues, we can get you covered.

Our team of experienced brokers can provide you with a workers’ comp quote within minutes and have your coverage issued in as little as 24 hours in many cases. Simply fill out the request a quote form on this page or give us a call at (561) 990-3022 to get started.

We understand workers’ comp requirements for 1099 independent contractors in Nevada as well as for W2 employees across industries. Let NPN Brokers be your partner for all your Nevada workers’ compensation insurance needs.