HOAs Should Never Utilize Unlicensed and/or Uninsured Service Providers

A common mistake made by HOA directors and/or management personnel is the belief that the association does not need to carry workers compensation insurance if they do not have employees. Under state laws, a homeowners association is subject to being held liable for “employment related injuries” if an unlicensed and/or uninsured service provider hired by the association, who the association believed to be an independent contractor, gets injured during the course of providing the services to the association.

The status of a service provider as either an “independent contractor” or an “employee” has substantial ramifications to a homeowners association. When a service provider is deemed to be a true independent contractor, the association does not have the same workers’ compensation insurance and tax withholding responsibilities that it has for employees. Furthermore, the association has less exposure for damages caused by a service provider’s negligence when the vendor is an independent contractor as opposed to an employee.