A coworker of mine and I are planning on going into business with eachother. We
already have a number of people interested in hiring us. We have always worked
as hourly wage earners and so have never had licenses or insurance. My
understanding is that for jobs under $30k (I’m in NC), we don’t need a GC
license. But what about workers comp? If we’re basically working as subs, do
we need to supply workers comp? Are the homeowners responsible if we do
not have workers comp? If we wanted to have our own workers comp coverage,
how would we go about getting it for the first time? Call our insurance companies?
Register as a LLC, get a GC license, join NAHB, and blah blah blah? How much is
necessary when just starting out?
Thanks for any input.
Replies
around here if you have one employee you must have workman comp. If you do not have workman comp, you do not work, no permits, no license, no nothing
nuthing but happy thought.
In PA you need wc if you have any employees. I don't cause I sub out everything I don't do myself. Here you don't need it if you are partners only for employees. I'd check with my insurance company. We also don't have GC license here so all I had to do to start was file my "doing business as" name and get liability insurance.
Good luck hanging out your shingle!
Greg
Not true gwerner,
Here in pa, if someone, anyone hurt while working on your job who is not covered by their employers comp is injured you most likely will be held liable as the GC.
So if for example you hire a sub, who does not have comp, and he, or someone subbing from him is hurt. It will be your butt if a claim is filed. If you have no employees, and all of your subs carry comp, you may be ok.
I have not had a chargeable accident, but have had many dealings with the State Workmen's Insurance Fund, to know this for a fact.
If your talking about the guys who work for you by the hour, for a good portion of the year, that are "subs" and only carry their own liability, you are really rolling the dice. Trust me on that one.
As to the original question about getting comp, it is very difficult for a small company to get a policy, let alone keep it, at least here in PA, which I understand is unusual with regard to the fact that the state oversees comp rates.
Your state may be different, talk to an agent.
Tom
I'm here to help the humans.
All the various companies that I sub work out to have liability and comp policies( I keep up to date files on all of them). I've never had a "sub" that worked for me by the hour, but I know a lot of guys around here that do and I always wondered how they got away with it. I've always enjoyed working by myself anyway.Greg
Here is WA it's as simple as calling the state work comp people and signing up. No money up front, no tricks, no qualifying, no nothing.
Me: we're new in business and need coverage
Them: what do you do?
Me (choosing from a list): wood frame building construction
Them: OK, go ahead, we'll send you a form to report your new employees on and another to report your hours on.
When I was in CA I believe there was a minimum premium and the rates were HIGH.
If your assets outweigh your liabilities you need wc. However, from an ethical standpoint you should have it to protect someone in case of an accident. Apparently it is optional in some states. I know it is in Kansas. In Kansas the premium is estimated based on the payroll and adjusted at the end of each year. It is paid in advance. The premium is based on a percentage of the payroll and varies depending on the type of work. Construction work is some of the highest to insure. You may wish to tell subs that can't furnish you a certificate of insurance, that they are covered under your policy and you will have to deduct that percentage from their bid. If they work by the hour you have already taken that cost into consideration. Many uninsured subs will take care of minor injuries at their own expence but if incapacitated for life will fall back on you. Any assets you have will be theirs.
Slow reader?
;-)
Forrest
Just joined and looking through old threads.
just joined?
How much did they get you for dues?
comfun.... SOME places WC is optional
but ALL places , the liability is always on the employer
the only way you can get away from the liability is with WC... WC assumes the liability
even guys who claim the workers are Independent Contractors ... find out how personal injury lawyers make a living
it doesn 't take much to convince a judge and jury that the "Independent Contractor" parapalegic confined to a hospital bed for the rest of his life was really an employee
and , most lawyers worth their salt can pierce almost any veil erected to try to protect personal assets...
guys who have people working on jobs without WC are really playing Russian Roulette
Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
what does your assets and liabilities have to do with needing WC?
If you're going under the assumption someone is going to come after your assets and you must protect them, that's not a very strong argument. Even if you are in a place where you are not REQUIRED to have comp insurance on your employees they can still come after the employer, regardless of what your balance sheet looks like "they" can still bankrupt you put you out of business and go after future earnings.
Also, in Kansas, Workman's Comp is not optional it is mandatory for an employer to cover his/her employee's.
cag..... i'm not sure if i understand your position,..........""""""""Even if you are in a place where you are not REQUIRED to have comp insurance on your employees they can still come after the employer, regardless of what your balance sheet looks like "they" can still bankrupt you put you out of business and go after future earnings.""""" but here is a basic description of the liabilities under WC.... this is from wikipedia<<<<Workers' compensation (colloquially known as workers' comp in North America or compo in Australia) is a form of insurance that provides compensation medical care for employees who are injured in the course of employment, in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence. The tradeoff between assured, limited coverage and lack of recourse outside the worker compensation system is known as "the compensation bargain." While plans differ between jurisdictions, provision can be made for weekly payments in place of wages (functioning in this case as a form of disability insurance), compensation for economic loss (past and future), reimbursement or payment of medical and like expenses (functioning in this case as a form of health insurance), and benefits payable to the dependents of workers killed during employment (functioning in this case as a form of life insurance). General damages for pain and suffering, and punitive damages for employer negligence, are generally not available in worker compensation plans.Employees' compensation laws are usually a feature of highly developed industrial societies, implemented after long and hard-fought struggles by trade unions. Supporters of such schemes believe they improve working conditions and provide an economic safety net for employees. Conversely, these schemes are often criticised for removing or restricting workers' common-law rights (such as suit in tort for negligence) in order to reduce governments' or insurance companies' financial liability. These laws were first enacted in Europe and Oceania, with the United States following shortly thereafter.>>>>>Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
It's probably a good idea for all independent contractors to have an indemify clause in bold on the front page of the sub agreement.
Jim--In Colorado it depends on the degree of your involvement and ownership of a business. If you are the main man then you can waiver it in your contract. I've structured contracts that include WC and cost more. Another page accepts the waiver.
To get it means a heavy interview with the carrier and if you have a carefully structured safety program there is a discount.
The premium usually depends on how far you can fall. Never work any higher off the floor than a mud bucket and premiums fall.
My CPA carries it on himself. For a guy that drives to an office, works, takes lunch, and drives home the cost was peanuts. WHY? On rare occasions he would drive to a client's business with tax returns, etc. He figured if he got slammed into in the car he was going to make out like a bandit. Hasn't happened.Some HO want you to carry an umbrella liability policy so if you screw up their house they are covered (say you sawsall into a wire and start a fire). Getting all this in place is why you get paid the big bucks. Keeping smiling. Tyr
a little late getting back to this discussion.
My position was your balance sheet has little to do with whether one should have WC. Maybe I misunderstood the post I was replying to. It seemed to me the poster was making a point that if you have "nothing to loose" there's no point in having it. I would disagree with that.
I do understand what WC is for and what it covers.
In Kansas wc is not required by the state if the annual gross payroll is less than $20,000. 00, also there are exceptions for Agriculture. WC is an option for everyone in any state, but not necessarily a legal option. If you don't believe this put an ad in the help wanted and see how easy it is to hire someone. It's only after an accident occurs that you will begin to have problems. Regarding assets and liabilities, if you have no assets(cash or property) and are sued you have nothing to lose. Most people don't realize that household help also requires you to have wc. Homeowners insurance policys are not required to cover household employees. This includes babysitters working in your home, people mowing your yard, maids, etc. You are also legally required to withold payroll taxes and social security unless of course they can fit the legal description of an independent contractor and then you may be required to send them a 1099.
Check with your (or any) insurance agent. I'm a sub and have no employees, but I have to carry WC and liability. They audit me and give most of my money back yearly if all of my subs also carry WC and liability. If not, I'm charged to cover them. I know it varies from state to state, so you need to talk to someone locally. Good luck.
Around here ,. the owner of companies and their famliy are not required by law to have workers comp.
However all of our employee including my family members have workers comp. its not worth the risk and now that we are established with a good track record, the costs arent terrible, its just part of the overhead
Also some bank jobs and state jobs require everyone to have it evn though state law says we dont need it
A problem I had was getting workers comp for the first time while being a LLC, because the insurance company had no-one to sue if they needed to to reclaim moneies, they called it security, so I had to sign as personal gaurantee
If you need an employee look into temp agencies, they will cover "their" workers and iall of thier costs and fees may cost you less then getting workers comp as a small "company" . Alsoyou can use your track record with the temp agency and their workers comp to show as your track record when applying for your own workers comp, at least we were able too.
check you r laws,your insurance agent and check with an attorney, I assume you will be using one anyway to draw up the LLC and partnership.
Opened my own business here in NC a little less than a year ago. For myself, I'm set up as an S Corp, I don't need WC, and as far as I have found out one cannot get WC to cover oneself. However you can get a 'ghost' policy, which is mostly refunded at the end of the year. With increasing 'liability' worries, if you plan to sub for a GC he'll probably demand you have that 'ghost' policy. I wound up getting it when I hired an employee, understood I didn't need it for only one employee, but would not risk not having it, ben hurt myself as an employee. Hope that helps a bit, it's a lot to think about and take on going out on your own. For my 2 cents worth partnerships are very risky and very few survive. All the best.
Let's not confuse the issue with facts!
kinda related. Four years ago yesterday. I got hurt when somebody drop their end and some equipment landed on me. Breaking arm and knee. Then 911 happen and my workman comp company went bankrupt. Now they say, nothing I can do about it. So I have a disability and just have to tough it out. Pick a workman company. Pick one that can handle the load.
nuthing but happy thought.
Check your health insurance. My partner and I did not have WC for 10 years (we are architects that do a lot of site work) and believed that our health insurance would cover an injury. A friend of my partner (another architect) was hurt during work and his health insurance would not cover it. The company stated that it happened at work and WC should cover it. We checked with our heath insurance and they said the same thing. We got WC.