# workman's comp insurance



## Christine (Apr 5, 2007)

Hello again,

I'm trying to find a way around workman's comp insurance as I'm just starting out and can't aford such a large monthly payment. However, I have someone I want to hire but, although he is a subcontractor, doesn't carry his own insurance. 

My insurance agent, who seemed just as unsure as I am, said I could hire him and have him sign a waver? Or hire him as temporary help? 

The policy I am getting is just for general liability.

Will appreciate any and all suggestions 

Christine


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## trimmmed (Apr 5, 2007)

Here's a suggestion Think about becoming someones employee instead of a business owner.


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## begleytree (Apr 5, 2007)

Christine said:


> Hello again,
> 
> I'm trying to find a way around workman's comp insurance as I'm just starting out and can't aford such a large monthly payment. However, I have someone I want to hire but, although he is a subcontractor, doesn't carry his own insurance.
> 
> ...



W/C is based upon your payroll. the more you do and the more payroll you pay, the more w/c you pay. don't understand how it can be that big if you are just starting off.
you don't hire a subcontractor, you contract them like they are another company (which they are) so if you hire him and he has no insurance of his own and works under yours, he is an employee, and you must pay taxes and w/c on his payroll.
imo, i'd talk to someone else about this besides a insurance agent. heck, every time I called my state w/c office, they were always pleased to help and gave me tips on saving money. there are different codes you can and should useon his time. example, if you spend 3 8 hour days removing a tree, but only 6 hours was actual climbing and removing and the rest was cleanup, would you code all 24 hours as tree removal at an average rate of 50% of his payroll? or would you code 8 hours as tree removal and the other 16 as general landscape/labor at 10-15% of his payroll? sure, its an extra record of daily activity you have to keep but until you prove yourself and get offered membership into a group it will save you thousands a year and still accurately cover your employee. once your in a group, you w/c will drop to the point that these records are not needed and you just code your total time as tree removal/trimming operations. 
my advice? call w/c and see for yourself, and don't work one minute without insurance and w/c.
-Ralph


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## treesquirrel (Apr 5, 2007)

Are you willing to lose everything when his/her family sues you if he is killed/disabled?

If so then best of luck! You will need it.

We live in a world where people sue over carpal tunnel syndrome from typing on a keyboard. Change the tool of choice to a chainsaw and consider the risks.


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## ponderosatree (Apr 5, 2007)

Christine said:


> Hello again,
> 
> I'm trying to find a way around workman's comp insurance as I'm just starting out and can't aford such a large monthly payment. However, I have someone I want to hire but, although he is a subcontractor, doesn't carry his own insurance.
> 
> ...



If a subcontractor doesn't carry his own insurance you are required to pay workers comp for him. I wouldn't make them an employee because you have the extra cost of covering their Medicare and Social Security company portions on their paycheck. That can cost thousands of dollars over the course of a year. 

Remember, as a business owner you don't pay workers comp for your own salary. The only way to avoid paying employees workers comp would be to incorporate your company and put them on the board of directors and give them ownership in the company. After everything is said and done going down that route it will probably end up costing you more as you're then obligated to share profits with them, you'll need a bookkeeping and accountant to manage it all, etc. Not worth it. Additionally, workers do get hurt. Even the most careful employee can get hurt so you'd at least have to provide healthcare for them. That's another expense.

Like a previous poster said, if you're starting out workers comp won't cost much. It's relative to payroll.


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## maxburton (Apr 5, 2007)

There is no middle ground between an employee and a subcontractor. You're either one or the other. Even if this guy had his own insurance, if you were telling him HOW to do the work, he could still sue you if he got hurt, because he would be an employee. As squirrel said, you would lose everything. A waiver will do nothing, and your agent should know this. Get WC before you set foot on a property with an employee.


IRS says: "...an individual is an independent contractor if the payer has the right to control or to direct only the result of the work and not how it will be done."


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## ATH (Apr 5, 2007)

Remember also that workers comp laws are state laws. What is true in Cali, is not true in Ohio, what is true in Ohio is unlikely to be true in NJ...


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## ATH (Apr 5, 2007)

begleytree said:


> there are different codes you can and should useon his time. example, if you spend 3 8 hour days removing a tree, but only 6 hours was actual climbing and removing and the rest was cleanup, would you code all 24 hours as tree removal at an average rate of 50% of his payroll? or would you code 8 hours as tree removal and the other 16 as general landscape/labor at 10-15% of his payroll?-Ralph


They told me that I had to use one consistant code... I'll have to check into that again. That can save a lot while I'm waiting for group waiting.


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## Ironxylem (Apr 6, 2007)

Have you tried a temp agency? People come to me for work. If I think I want them, I have them register at a temp agency. I pay $2.50 premium on their wage to the agency. they work exclusively for me but essentially they are employees of the agency. The agency pays w/c, vacation,unemployment ins.,Canada pention, takes care of taxes and payrole. The workers can't climb though. All i get is a bill for the number of hours. It works out well if your already know the people and you just want they to be protected as well as protecting yourself. also you are not as commited to the help, if you don't need them for a few days,weeks it,s easier.

by the way, i suck at spellin...


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## Husky137 (Apr 6, 2007)

If he is a sub he should have his own insurance, otherwise your liabilty company is going to rasie your premium to include his wages at the end of the year.

If he is a sub and only works for you in the style of an employee, the IRS is going to come after you for withholding.

Finally, if your business insurance agent couldn't tell you these things, find a different agent, because they are leaving you open to suit. Ask him how much Errors & Ommissions coverage he has. He's going to need it.


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## 58hydraglide (Apr 7, 2007)

DITTO x9!!!

Christine, 
If you TRULY want good advice on your situation, take to heart the advice already given. If you have analyzed your labor costs with labor burden, You operating costs etc. AND have a realistic forecast of your sales for the upcom ing year, you will be able to afford W/C. As stated before your W/c is based upon your employees wages. You can be somewhat conservative on that estimate the first go around, because trust me, You WILL get audited once you have sufficient employment history to make sure you are still paying in enough. I personally am a licensed general contractor in michigan in and my W/c rate is DOUBLE of every other category (including steel erectors)
in the constructyion category. So Im hate to tell you this but if you arte going to have an employee, Suck it up and pay insurance. Also remeber this, I am sure that their are business owners on this site that, like me get disgusted with competing against people who do not have proper insurance or simply are not running their business on the up and up.You have 2 choices, try and run without insurance and it Will catch up with you. (also forget about receiving any advice from membewrs here), and you,ll be lucky to last a couple of years. OR get the proper insurance, build yourself a good reputation and your business will prosper for years. The choise is yours! Good luck whatever you choose


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## Christine (Apr 8, 2007)

*workman's comp ins.*

Thanks everyone. All good advice.

I'm just getting up and running here and part of my problem is that Most people with a similar business in my area operate under the radar, while I need to stay competitive AND run my business with the proper insurance.

I am going to get a quote on the WC insurance and talk to my lawyer about making this guy a partner...since I don't need WC to cover myself, I'm guessing I wouldn't for him. That's what I'm looking for, a way to make things easier. BTW he is a family member so trust is not an issue.


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## ponderosatree (Apr 8, 2007)

58hydraglide said:


> DITTO x9!!!
> You WILL get audited once you have sufficient employment history to make sure you are still paying in enough.



In California you are audited every year. With Statefund it's a rather painless process unless you get one of their third-party auditors who really grill you about every little detail.


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## maxburton (Apr 8, 2007)

I get audited every year as well. However, the state employs private subcontractors to do the auditing. So far, they have been incompetent. I could have lied and gotten away with it easily. But don't try it!


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## NORTREE (Apr 14, 2007)

I used to use a friend as a sub-contractor that didn't have his own workers comp insurance.Every year when I was audited I had to pay comp on what-ever I paid him.He used to carry on that if I was giving him a 1099 I didn't need to pay comp on him....he would tell me the Workers Comp people didn't know what they were talking about...He also didn't want to work in compliance with Z133 or A300 standards.The best thing I did was to stop using him!!


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