Workers’ Compensation Coverage & Insurance Costs The Difference Between Volunteers & Employees

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With inflation at historic highs, labor and supply shortages complicating even routine projects and maintenance, and budgets tight (and getting tighter), many condo and homeowner associations are looking for ways to control costs and still get needed work done on their properties. 

One common solution is to enlist residents or board members with the relevant skills and resources to carry out work on behalf of their condo or HOA, compensating them by reducing or waiving their condo fees, or by simply cutting them a check. While this may seem like a simple enough workaround, it’s important to be aware that under Massachusetts workers’ compensation laws, remunerating a unit owner or board member for work on behalf of your community - regardless what form that remuneration takes - could mean that person is considered an employee of the association. With that status come considerations associations must take into account in terms of insurance coverage and liability exposure.  

It’s also important to keep in mind that we are not attorneys, nor the insurance company’s claim adjuster. Any and all claims are subject to the applicable law, loss circumstances, suit allegations, and possibly court decision. 

Who is an Employee?  

In this article, we will be dealing with association volunteers; we will not be addressing direct employees, subcontractors or independent contractors. Those three classifications each represent a very separate and distinct type of exposure.   Additionally, we won’t be addressing the possible insurance coverage to an injured volunteer under an association’s General Liability’s Medical Payments sublimit.

So the question is, at what point does a resident or board member who has volunteered to do a project or take on a duty for their Massachusetts condo association become an employee of that association? 


To answer that, we must first look at and understand the definition of the term employee. The Massachusetts workers’ compensation law, MGL c. 152, 1 (4), states that an employee is “every person in the service of another under any contract of hire, express or implied, oral or written.”. Simply put, if someone is working on your behalf, they could be considered an employee.  

For example, having a unit owner regularly check chemical levels in his or her association’s pool as required by local ordinance is a great service to the association, and could save it a lot of money by not having to hire a third-party vendor to perform the duty. If the board has sanctioned the unit owner to do this task and provides nothing in exchange, chances are the helpful unit owner would be considered a volunteer. 

However, if the association provides any remuneration - be it in the form of payment, a reduced condo fee, or other benefit that’s only made available to the person performing the duty - that individual can be viewed as an employee. It is this exposure that opens the association to larger exposures. Not providing a physical paycheck or tax withholding, paying the resident via a 1099 versus W-2 tax form, or not providing the individual with a formal tax form as below minimum requirement does not exempt the individual from being considered an employee. 


Workers’ compensation coverage for employers is mandated by the Commonwealth of Massachusetts and governed by the Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIBMA). Workers’ compensation coverage is mandated so that if an employee is injured, their medical payments and lost wages should be paid by the insurance company. Volunteers are not paid, and are therefore not employees - and are not covered by workers’ comp coverage. Having a Workers’ Compensation policy does not automatically mean there is coverage afforded to volunteers. 

Additionally, any compensation remitted to any person by an association needs to be reported during the annual workers’ compensation payroll audit process. (For those unfamiliar with workers’ compensation coverage, policies are issued based on an estimated payroll, even if originally based on $0 or as referred to as an “If Any” policy, and are then audited after the policy expires to determine the actual exposure, at which point the premium is adjusted. If there was any exchange of goods for services - even reduced fees - the insurance company will send an invoice for the additional premium.


Don’t Go it Alone 

Insurance and liability are complex topics, and it’s important to discuss both with your condominium association insurance broker so that your board members understand your current insurance program and if supplemental coverage should be considered. Some insurance companies will provide “if any” workers’ compensation policies with the Voluntary Compensation Endorsement - but if an association is paying, exchanging, or reimbursing individuals who could therefore be considered employees, that association could be ineligible for the program. 


There are of course costs associated with hiring third party vendors - but it’s important to keep in mind there are also costs and exposures when unit owners are paid to perform those same duties instead. You don’t want to inadvertently create potentially costly exposures while looking to provide your association some much-needed financial relief. Improperly defining a unit owner as a volunteer when he or she is in fact legally considered an employee could be financially devastating in the event of an uncovered workers’ comp claim. 

In a nutshell, for a strong risk management process:


  1. Only hire licensed, insured contractors. Always obtain the contractor’s Certificate of Insurance showing they have at minimum General Liability and Workers’ Compensation in force.

  • Don’t pay volunteers for their work. A resident or board member receiving compensation brings them under the care, custody and control of the association, and could be considered an employee/employer relationship.  Keep them volunteers. 


    David W.D. Haynes is SVP – Specialty Real Estate Marketing Executive Sales Leader with HUB International’s Willmington, Massachusetts office, and can be reached at

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