…Then you, or your worker’s comp carrier, could be on the hook.
The Michigan Worker’s Compensation Act protects a worker whose direct employer does not have worker’s compensation insurance coverage. Under MCLS § 418.171 a “principal” can be found responsible for worker’s compensation obligations to a subcontractor’s injured employee if the subcontractor does not have worker’s comp insurance.
Any “employer subject to the provisions of” the Worker’s Compensation Act is a “principal.”
A Section 171 principal is commonly referred to as a “statutory employer” because, by statute, it is treated as the claimant’s employer. A “statutory employer” can bring an action against the uninsured subcontractor for indemnification.
The Worker’s Compensation Act is broad. It applies to most businesses with employees. Any business subject to the act risks being held as a statutory employer if it hires another company that does not have worker’s comp insurance – even if they got a certificate of insurance beforehand.
Make sure to have your own WC policy that will cover in case you wind up being held as a statutory employer.