Workmans Comp

[The landscaper]

I came accross a job that requires me to carry wormans comp...
i have a couple questions about that.
1. If i am in a partnership or a one man crew, do i still have to carry it since i have no employess.
2. How much is workmans comp per year.

Thanks Jared

[grnwnv]

I don't know if it's the same in the U.S. as it is in Canada but the reason Commercial jobs require me to have Workers' Comp is so that if I'm injured while working on their property they know I will not be able to come after them for Medical, lost wages etc.

GRNWNV

[jfishenter]

Around 800.00 per year here with 1 full time and 1 part time employee.

[MSL, INC.]

There's a flat fee to start your W/C (its around $800) and that covers you for "X" amount of payroll $$$$. At the end of the yr. the Ins. company does an "Audit" and adjusts your premium. No matter what, though, it costs you that $800 even if your far below the number of payroll dollars allowed.

[hunter]

My worker comp is running 9.87% of payroll. Workers Comp insurance will audit your books at years end to figure out what you will really pay.

[PearceTurf]

All of the above posts are correct. Good advice guys.

I was a premium auditor for 12 years and am still licensed to do it if I want.

Keep in mind a few points:

As a partner or a sole proprietor, you are not an employee of the company covered under your work comp policy. If you get hurt, you cannot file a claim, (see exceptions below).

As a corportate officer of an entity, you are an employee and are automatically covered under the work comp policy ( see exceptions below again).

Whether you have zero employees or not, a company by law can state that they will not use any contractor that does not carry work comp insurance. Although (for example in NC) you are not required by law to carry this coverage, you can be passed over and not allowed to bid by companies that require this type of coverage.

Exceptions: Sole Props and Partners can be given coverage under their work comp policy. It is a flat rate, usually around $25,000 per year. In other words, if you want coverage, they assume that you make a flat rate and use an arbitrary amount like the one shown above. Multiply that amount X the given rate to determine how much it will cost you to carry coverage on yourself. In this case 25 grand X $9.87 per $100 of payroll equals

$2467.50 per year just to have you be covered whether you have any employees or not.

For executive officers: You can sign an exclusion endorsement stating that you do not desire work comp coverage. Once you sign this document, you cannot file a claim against your own policy for injury. If you do elect to keep coverage, you are subject to minimum and maximum wage limitations. In other words, if you pay yourself only $1000 per year in payroll, the insurance company will beef up your numbers to about $12,000 per year (depending on which state you reside). On the other hand, if you pay yourself $90,000 per year, there is a cap on how much payroll/rate they can charge you. In most states, that amount is usually less than $48,000 per year.

So decide which entity you are, decide if you need to be covered...ie other major medical, disability plans, etc.. and decide if it is worth it to you.

To use the same number stated earlier, lets' say your rate is $9.87 per $100 of payroll. If you have one employee and he earns $10,000 per year, you will pay $987 for a years' worth of coverage on him. The $800 minimum charge usually covers nobody unless you have an employee making less than 10 grand. However, spending that $800 per year opens up doors that would normally be slammed in your face. Insurance companies make a fortune off of this. It is called a 'ghost' policy. The insurance company makes $800 for generating a piece of paper to you so you can give a copy of that paper to your commercial clients. The client feels safe in hiring you, the insurance company has no way for a claim to generate, and you get to knock on doors once closed to you. It's a no lose situation for the client and the insurance company (except)....nevermind... there are exceptions to everything. LOL

Hope this helped. Sorry about the length. It can get rather complicated sometimes.

[The landscaper]

Thanks a lot,

yeah its definately really complicated. I think i got most of it though. Basically the minimum is going to be 800 and thats not covering me. That would only be for an employee of mine(which i have none) So to obtain workmans comp being a partnership, the minimum price is going to be around 2500..

let me know if im in the ball park here...thanks guys

[PearceTurf]

If you and another guy are partners, you can still get a policy for about $800, but it will not cover either of you. If the two of you want coverage, it will be the rate of about (let's say $9 dollars) per $100 of payroll. For each of you at the minimum flat rate that would be about right (over 2 grand).

Here is where it gets even more complicated though. If you guys get hurt, you are filing a claim against your own company. Your experience modification goes up and in turn, your rates go up.

As a licensed auditor, I am not allowed to counsel a policyholder. That is what his agent is supposed to do. But since I am not your auditor and we are in a private forum, I will give my opinion without retribution.

Don't cover yourself on a work comp policy. If you have major medical, life, & disability coverages, don't file a claim for work comp against yourself.

Two of the biggest misconceptions about work comp coverage:

One, if I get hurt, I will be on easy street and not have to work and collect a paycheck. This is terribly wrong. First, being hurt sucks and you only get about 2/3 of your regular paycheck in addition to your medical bills being paid. Once you take that first check, you cannot sue the employer for negligence even if they were at fault.

Second, work comp does more for the employer than it does for the employee. Take example #1 again, an employee cannot sue for negligence if he considers his injury to be work related covered under a work comp policy. The blood sucking lawyers are winning against the companies that try to jerk you around and not pay anything at all. Those are the ones that lose in the end. If they would just not fight the work comp claim from the start, they could make their life so much easier. But so many people try to claim that they are hurt when they are not. It is a fact that most work comp claims happen on a Monday. How convienent huh? They hurt their back water skiing on Sunday, crawl out of bed on Monday and go to work. Lift a box and scream out in pain.

Stuff like that happens every day!

[The landscaper]

So basically being a partnership, i could pay the minimum 800 and that lets me get commericial jobs which require workmans comp.....but thats about all that 800 is doing for me..getting me in the door to some companies that require it....Sounds like someones making a few bucks of me here...lol

Thanks for all your help pearce turf

[tulsa lawn guy]

Pearce turf,

Great information, thanks for sharing!

One question though...

When I calculated all my expenses for running this business with one foreman, and one helper, I took the hour wage for the two of them together ($20) and simply added 35% to it. I have read in previous posts that this is a fairly good estimate of what it will actually cost you to have that employee.

The question is this... what exactly does that additional 35% cover. I was thinking that it would cover my portion of Social Security tax, workers comp, and applicable payroll fee's. Is this correct?

What are your thoughts?

[PearceTurf]

Hey Guys,

Sorry for the delay in responding but I have been out of town.

The figures of covering employees will fall into two different categories here. One is if you pay them as regular employees. If so, you will have FICA, medicare and all the freebies you will never see again. Somebody has to pay for all the food stamps and free lunches for the poor and the lifetime benefits of the rich. That is us, the working man. That is money we pay and never see again.

The other (and what this thread is about) is employee insurance. An employer can offer benefits such as life insurance, health insurance or 401k or 125k plans if they want, but they are not required to do so by law. But work comp is not a choice if you meet certain standards. You are required by law to carry this coverage in most states with very few exclusions.

So in other words, if you seperate deadly taxes away from evil insurance premiums, both will cost you money, but they are in fact, a cost of being a business owner.

Take the above examples and put it into a math figure.

$20,000 of payroll per year, X the rate of $9.00 per $100 of payroll per employee is equal to : $1800 per year in work comp premium. Now add expense constants and fees and round up to about 2 grand per year for those two guys. This figure has nothing to do with matching FICA or any other taxes. This is just WC premium only. The 35% figure stated above sounds reasonable enough, but I was just talking about the insurance alone. Now take into effect that your Comprehensive General Liability policy will be based on payroll too. It will be much cheaper than WC, but it will cost you money too.

It's expensive to be a business owner and costs can drive people out of business in less than a year if they are not careful. The problem is that there are too many people in this business that don't play by the rules. They are the ones that don't last, but they often get replaced by a new crop of scrubs every year.

What bothers me the most about this green industry is that most people think of us as teenage lawn monkeys. They have no idea how much liability we take on or how much that can cost us. A legitimate businessman pays big bucks to be bonafide. The scrubs come in without the overhead and underbid, thus making the real businessman look overpriced. It is hard to convince some people that we will not run and hide if we break your picture window or run over your child with a mower. We have proper coverage and our phone still works. And as such, I would much rather have a WC policy in effect and pay for an injury, than to have that person sue me for negligence too.

Tulsa, you'll have to give me a day or two to look up the rates for the state of OK to give you a solid rate per $100 of payroll. I know nothing about your state tax rate though. I'll try to help you the best I can, but I'm only certified in NC, SC, and VA so far.

I hope this helped. God hates scrubs and has a special place for them in Hell.

[tulsa lawn guy]

PearceTurf,

Excellent information as usual. It is much appreciated.

I know exactly how you feel about the “scrubs”; I feel precisely the same way. I too have noticed that there is this ridiculous connotation that we as “green industry” professionals are somehow lower class individuals than other types of business owners. Just as you mentioned, this is mostly a result of the many, many illegal operators that bring the rest of the industry down.

Really though… what do you do? I suppose all we can do is inform the customer that we do not operate like “them” and therefore don’t charge like them either… that we have to charge more because we have overhead costs that they’ve probably never even heard of. Hell.. in addition to not paying for things like insurance and business licenses, etc., most don’t even bother to pay income tax…

Very frustrating indeed..

Ok… [off]soapbox[off]

[edrenckh]

Just be thankful you are not in MN. Here WC for landscapers is ~$18 per hundred.

And I just checked for the heck of it, roofers are $78 per $100. WOW.