Workers Comp

#1
My workers comp insurance is insane (no claims ever made) and now they want more! I am looking for advice and an agent who can navigate and follow laws but reduce my cost, here in NC. Can I avoid paying WC my sub (stump grinding)? I signed my current policy ignorant and unknowing that I would have to pay my sub's (back / past) WC (@$15K) after the insurance company did an audit. Sounds crazy to back-pay for past, especially if no claims were made.
 

Tom Dunlap

Here from the beginning
#2
When I had my company I found an industrial day labor that worked with me. My 'employees' were actually working for his company and contracted to me.

He charged me 30% of wages to cover all of their employment taxes and WC

I've heard this called 'patrolling'

Before I started working with him I did a lot of research to make sure that it didn't turn out to be a weasel move that might leave me without coverage or
Having to pay again

I had a couple of injury claims that were handled very well. I didn't have to do anything other than monitor to make sure that my employees were taken care of. It was as convenient as buying a chainsaw and needing warranty work done
 

ATH

Well-Known Member
#3
Apparently you 'sub' isn't a truly a subcontractor. Or if he is, you need to contest that finding.

That is something you need to be clear on both for taxes and WC. If the insurance company is right, the IRS and SSA probably aren't far behind.

Did you get a W9 from him and issue him a 1099? Does he own the equipment? Do you pay him by the job or by the hour? Does he work by hours you dictate or do you just give him a deadline for each job and acceptable working hours? Does he get himself to the job site or do you drive him there? Does he also subcontractor the same work for others? Those are some the questions that seperate an employee from subcontractor...
 

southsoundtree

Well-Known Member
#4
Does he use any of your equipment?
Does he take any oversight from you, like a boss, rather than a customer at a business (think of a Dry Cleaners hiring a stump grinding service)?
Do you have a Subcontractor agreement? Contract per job?
 
#5
My stump guy has his own business, equipment, provides his own transpo and has the choice to support me or his many other clients and companies that he supports. Sounds like a sub to me.
 

ROYCE

Well-Known Member
#8
If your in business...get used to W/C. Its based on exposure. So it doesn't matter if you never have a claim...it all depends on the money you pay your employees. I hate it....its hard to project what those expenses will be. Im not looking forward to my audit this year. We have worked a ton. But.....I always tuck some away for this increase in my expense. My W/C is 26%..thats with 0 claims.
 
#9
When you say 26%, your basing that off your employees actual salary right? Not including payroll expenses like social security and Medicare employer pay in. There's basically no workmans comp here as its not required for 4 or less employees. When I've priced it they have normally quoted us at 55 to 60 %. When no one else has it, I don't see any way to take it on and still be able to price work in our market.
 

jed1124

Active Member
#10
When you say 26%, your basing that off your employees actual salary right? Not including payroll expenses like social security and Medicare employer pay in. There's basically no workmans comp here as its not required for 4 or less employees. When I've priced it they have normally quoted us at 55 to 60 %. When no one else has it, I don't see any way to take it on and still be able to price work in our market.
Percentage is based per dollar paid to said employee. I believe we are 34% here. 55 to 60 sounds high but each state is different. I know of guys around me that are at 41%.
 

ROYCE

Well-Known Member
#11
When you say 26%, your basing that off your employees actual salary right? Not including payroll expenses like social security and Medicare employer pay in. There's basically no workmans comp here as its not required for 4 or less employees. When I've priced it they have normally quoted us at 55 to 60 %. When no one else has it, I don't see any way to take it on and still be able to price work in our market.
No, in Vt and NH where we do a majority of our work we pay 26% on the salary of our employees. This includes bonus's as well. So, if I have an employee who makes 100K a year..I pay them 100K then I pay W/C insurance 26K. Then, I pay half of the payroll taxes which include state tax, federal withholding tax, ss tax and unemployment tax. So very quickly that 100K dollar employee is costing me 150K or more.
 

ATH

Well-Known Member
#14
That is probably where they came up with an assumption that you are responsible for providing it for him. Did they just bill you for his workers comp or did they build everybody else he's have contracts for? It may mean insisting that he get his own policy or that you find another grinder...
 

southsoundtree

Well-Known Member
#15
No - he does not have WC.
If he is an owner-operator, he may be exempt from WC, and possibly unable to be insured on WC. Its different in my state, so I don't know details.


One part of a subcontractor being a subcontractor is that they are legally running their company, independently. He may have been legally running it without WC.
 
#16
If he is an owner-operator, he may be exempt from WC, and possibly unable to be insured on WC. Its different in my state, so I don't know details.
One part of a subcontractor being a subcontractor is that they are legally running their company, independently. He may have been legally running it without WC.
Absolutely correct, it seems to vary state by state. In PA an owner operator is not required to carry WC on her/himself though it is smart to have other (more affordable) protections in place. I am currently trying to wade through the WC world as well to put a full time employee on. It has been a challenge the entire way. The first insurance agency say I was dumb to go that way and the other is stalling the process and starting to piss me off! Might be time for a firm kick in the a$$ type email!
 

ATH

Well-Known Member
#17
HIGHLY variable by state. For example in Ohio, we have to buy worker's comp through the State...no private companies. However, owners are not required to be covered, but can be covered if htey want to pay.
 
#18
@ROYCE. It depends on the situation apparently. I have talked to an attorney about it. Depending on negligence or not it falls on the homeowners insurance or the businesses general liability. I don't like the situation but I don't know what I can do about it other than just close the doors. There's no way our market prices will support 55 to 60 % of payroll for the premiums. Our state doesn't require WC until 5 or more employees.
 
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