Agree...suggest you contact your state labor department, and/or workers compensation authorities if you are in a monopolistic state (like West Virginia or North Dakota).
An IC has no ability to collect workers comp because they are not an employee. It is illegal for an employer to charge employees for workers comp coverage. This is a 4% kickback, as a condition of doing business.
The easiest thing: 40-foot pole. Sounds like Spar wants to have its cake and eat it, too.