Catering food trucks have a unique insurance coverage exposure that most insurance carriers do not want to insure. Workers’ Compensation is one of the most important insurance coverages that a food truck owner must purchase for his or her employees. Workers’ Compensation is administered on a state-by-state basis and is required in most states to replace wages and medical benefits for employees that were injured on the job or in the course of employment.

 Workers’ Compensation Guide For Food Trucks

As an owner/officer of your business, you can choose to be included or excluded in your Workers’ Compensation policy. However, you must provide coverage for all part-time and full-time employees. If you have a 1099 Independent Contractor Employee, the contractor must purchase their own Workers’ Compensation insurance which must be included in their contract requirements. Most food truck employees do not qualify as a 1099 employee, but consult your attorney or accountant to clarify. Miscoding an employee as an independent contractor can lead to penalties for non-Workers’ Compensation coverage and non-paid payroll taxes. Failing to provide Workers’ Compensation insurance in most states is a criminal offense that can lead to expensive fines and or imprisonment. California employers can study this site for further information. Employers in states outside of California can turn to their official state’s website.

Workers’ Compensation premiums are calculated by the class code rate (per $100 of payroll) and the amount of gross wages paid to the employee. As a business owner, you must provide an estimated annual wage amount at the beginning of a policy. At the end of a policy, an audit will be performed to determine the actual premium due based on actual wages paid. In order to perform this audit, a business owner is required to provide names of the partners and ownerships, their employees’ names, titles, job duties, actual gross wages and quarterly IRS 941 reports for all four quarters during the coverage period. All employees on the policy must be on payroll and reported on the 941 report.