# Workman's Comp thread?



## Mick (May 19, 2001)

There seems to be some interest in a thread devoted to WC. Could we get something started on this topic showing what State/Province each post applied to? This would solve the problem of a thread that got deleted because of personal issues. Then we'd have a specific thread to refer people to.


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## AFM Contracting (Oct 4, 2006)

great idea... i dont know much about it but i know i need to learn asap


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## murray83 (Dec 3, 2005)

I agree excellant idea.

I'm interested to see how each state and province sets up their rules and guidelines.


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## Superior L & L (Oct 6, 2006)

*Tip # 1*

When you get comp either go with a self insured program or get it with your payroll service. We are in a group self insured plan though being a member of the Michigan Nursry & Landscape Assoc. The rates are 30% cheaper than though a regular carrier. Also if the number of claims are low for the year everyone get a portion of $$ back. 
When we had a payroll company they also had good rates something to do with more people = less risk (law of averges)


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## Superior L & L (Oct 6, 2006)

*Tip # 2*

Classify, Classify, Classify,

Make sure all employees are in the right classification. Don't have irrigation guys under lawn maint. Put them under plumbing(45% cheaper). The office help classification is about 90% cheaper so don't put everyone in the company under one class. But don't be bad cos if something happen it will bite you in the ass. The worst injury office staff can get is a paper cut not take a finger off with a weed whip.
If your a part owner make sure you sign a exclusion form that way you will not pay on your wages.


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## Mark Oomkes (Dec 10, 2000)

paphilips is correct. The WC through MNLA is excellent. You don't actually receive a refund if there are no claims, but you receive a reduced rate the next year. Our rates have gone down every year so far, despite having a claim for about $200 in '05. Check around all over for rates, they can vary quite a bit. FYI, the MNLA plan is self-insured to a point, there is a 'catastrophic' coverage by a large carrier that will cover the members if there is a really bad year.

As for classifications, he is also correct. But you will have to make sure that you track the time that an employee works under each classification. If you have employees that cross over from landscaping to lawn maintenance, you need to be able to break down how much time the employee spent performing each job. 

If all you do is lawn maintenance, check into the Park NOC clasification. Generally, it is a much lower rate than landscaping. What really torques me is that they classify plowing under Street Sweeping, and that rate is quite high because of the potential for injury based on getting hit on the road. I've argued with my agent that 99.9% of my plowing is private parking lots, but to no avail. I do report my shovelers under the Park NOC, because there is no way I am paying the higher rate for that. 

What else were you thinking, Mick? BTW, great idea.


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## Mick (May 19, 2001)

Hey, I think this is going good, Mark. Anything someone wants to put out there will help somebody. I initially was thinking basics, like when does an employer need to carry WC, who is considered an "employee", differentiating employee vs independent contractor, what threshold of wages is required for carrying WC, how do you go about getting it, etc. See, stuff like classification and keeping track of time each employee spends in an activity is somewhat beyond my thinking simply because I've never really had to worry about it, but is still very useful. Even if we need to differentiate between each State/Province requirements. Then we'd have something to refer people to. The main thing was to get accurate information out there without having to wade through "who did what to who".

So, no matter if you think what you know is too basic, don't worry about it. There will be somebody who is wondering just that. Another thing would be rates for each area and employee classification.


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## murray83 (Dec 3, 2005)

Well in my province your required to obtain workers comp when you have 3 or more employees and I've asked just for fun and they do consider a sub as an employee.

I'm interested in how some are saying that they don't require it if the purchase liability insurance but I always thought that liability covered damage done by your company and didn't include workers comp cases,is that something in the states or were some from the thread started by DBL misinformed?


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## hickslawns (Dec 18, 2004)

Subs are not employees. You need to have a record of their insurance, a copy of their workers comp for their employees, and they need to invoice you. THis protects you for tax reasons (payroll and income tax), workers comp reasons, and insurance reasons. They also need to be operating their own equipment. Make sure you all ask questions before thinking about getting subs. If they use your truck, but you 1099 them, then you are wrong. They are an employee and need to be covered by workers comp. Best thing to do is contact your local workers comp office if there are any questions because a good working relationship with workers comp and setting it up properly will help if you ever have a claim.


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## Mick (May 19, 2001)

I'm getting some research together. Since WC laws/provisions vary quite a bit by State, I'm starting with fairly generic information, although it primarily applies to Maine. Feel free to correct information for your area. I am drawing information from several sources, plus myself and I am by no means an "informed source" so always check with your state/province Workman's Comp division.


Workman’s Comp is defined as: a system of laws meant to protect injured workers by assuring them of medical care and wage benefits in the event of a work-related injury, in most cases without regard to how the injury occurred. This is not the same as General Liability which protects the company in the case of damage to others and property. In some States WC is required and some is optional. Some requirements are based on number of employees or amount of annual payroll. These will be the subject of another post.

Penalties for not having required Workman Comp: If an employer fails to obtain required coverage and an accident occurs, the injured employee may either file a lawsuit against the employer in civil court or file a claim against the state workers' compensation system. Monetary exposure to a suit in civil court can be extremely significant to the employer. Stop-work orders and fines can be levied in addition to injunction and assessments against the employer. Employers who try and circumvent the law by going "naked" may also expose their personal assets and other business assets as well. 

Premiums: There are three criteria which the insurance companies generally use to determine the payment of premiums. These are (1) the payroll; (2) the employer classification; and (3) the experience record and number of accidents and severity of injuries included for this employer. 

The first element considered is the payroll and these are determined in blocks of $100 of payroll sums. The second consideration is how an employer will be classified into different categories by industry type. Each classification is designated to pay a certain amount of workers' compensation premiums per $100 block of payroll. Roofers who are at a high exposure to injuries will have a higher experience factor than office personnel who have a low exposure to injuries. 

The last consideration is what is known in the industry as the "experience modification factor" or "experienced mod" or simply the "mod." This calculation applies to policies with more than $5,000.00 in premiums. In determining the experience mod, the individual employer is compared with other employers within the classification based upon the frequency of accidents and severity of injuries. The more accidents an employer has had in the past, the higher the modification rating. 

Waiver for dependent : the parent, spouse or child of a sole proprietor who is employed by that sole proprietor or the parent, spouse or child of a partner who is employed by the partnership of that partner or the parent, spouse or child of a member of a limited liability company who is employed by that limited liability company may state, in writing, that the parent, spouse or child waives all the benefits and privileges provided by the workers' compensation laws if the board finds that the waiver is not a prerequisite condition to employment; 

If a person employs an independent contractor, any employee of the independent contractor is not considered an employee of that person for the purposes of this Act. The person who employs an independent contractor is not responsible for providing workers' compensation insurance covering the payment of compensation and benefits to the employees of the independent contractor. An insurance company may not charge a premium to any person for any employee excluded by this subparagraph

"Employee" includes, if the person elects to be personally covered by this Title, any person who regularly operates a business or practices a trade, profession or occupation, whether individually or in partnership or association with other persons or as a member of a limited liability company, whether or not the person hires employees. Such a person shall elect personal coverage by insuring and keeping insured the payment of compensation and other benefits under a workers' compensation insurance policy. The insurance policy must clearly indicate the intention of the parties to provide coverage for the person electing to be personally covered. The insurance company shall file with the board notice, in such form as the board approves, of the issuance of any workers' compensation policy to a person electing personal coverage. That insurance may not be cancelled within the time limited in that policy for its expiration until at least 30 days after mailing a notice of the cancellation of that insurance to the board and the person electing personal coverage. In the event that the person electing personal coverage has obtained a workers' compensation insurance policy from another insurance company, and that insurance becomes effective prior to the expiration of the 30 days, cancellation is effective as of the effective date of the other insurance. The Superintendent of Insurance is authorized to review for approval, at the superintendent's discretion, an appropriate classification for this class of persons and a reasonable rate

“Independent contractor“. "Independent contractor" means a person who performs services for another under contract, but who is not under the essential control or superintendence of the other person while performing those services. In determining whether such a relationship exists, the board shall consider the following factors: 

A. Whether or not a contract exists for the person to perform a certain piece or kind of work at a fixed price; 

B. Whether or not the person employs assistants with the right to supervise their activities

C. Whether or not the person has an obligation to furnish any necessary tools, supplies and materials

D. Whether or not the person has the right to control the progress of the work, except as to final results

E. Whether or not the work is part of the regular business of the employer

F. Whether or not the person's business or occupation is typically of an independent nature

G. The amount of time for which the person is employed

H. The method of payment, whether by time or by job. 

In applying these factors, the board may not give any particular factor a greater weight than any other factor, nor may the existence or absence of any one factor be decisive. The board shall consider the totality of the relationship in determining whether an employer exercises essential control or superintendence of the person. 

(alternative in determining IC status)

1. The extent to which the worker has unreimbursed visit expenses. Independent contractors are more likely to have unreimbursed expenses than employees. Employers should not routinely approve reimbursement requests for business-related expenses, because this could be used as evidence of employee status. 

2. The extent of the workers' investment. An independent contractor often has a significant investment in the facilities he or she uses in performing services for someone else. One of the most significant investments is office or work space. employers should not provide tools, equipment, or supplies to individuals who are hired as independent contractors. 

3. The extent to which the worker makes services available to the relevant market. If the worker does the same work for other companies, it's a key indicator of independent contractor status.


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## Mick (May 19, 2001)

Some states allow exceptions to having Workman’s Compensation coverage for employers having fewer than a certain numbers of employees. There are many conditions even if exceptions are allowed and you should look into that further. I have listed those States that allow exceptions and shown SOME of the conditions just for illustration.

States that allow no exceptions. WC is required for any employee:

Alaska, Arizona, California, Connecticut, Delaware, DC, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, Texas, Utah, Vermont, Virgin Islands, Washington, West Virginia, Wyoming and the federal government (under FECA). 

Colorado provides an exception for employers with fewer than one employee.

Fewer than three employees: Arkansas, Georgia, Michigan, New Mexico, North Carolina, Virginia, Wisconsin.

Fewer than four employees: South Carolina and Florida.

Fewer than five employees: Mississippi, Missouri and Tennessee. 

However, there are conditions and these need to be explored. For instance: Kansas - Employers are exempt if they have a total gross annual payroll of less than $20,000 for all workers. Missouri - Employers in the construction industry with one or more employees are required to carry WC. Wisconsin - employers, other than farmers, who usually have less than three employees but who have paid wages of $500 or more in any calendar year for work performed within the state are covered the 10th day of the next calendar quarter.


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## jcesar (Sep 14, 2006)

Here is a link to access the comp laws, by state. Just go to your state, and follow the prompts. It is very useful, if you are just starting out, or trying to eliminate cost.
Hope this helps

http://www.techinsurance.com/ce_workComp.aspx


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## BOSS550 (Jan 19, 2007)

This may sound kind of dumb but I hope it may save someone else some money and being pissed off. A few years ago I took the leap and hired a part time guy. I first checked into the comp rate BEFORE I hired him. It was like $800 a year but as always it is based on payroll. 2 weeks after I hire the guy I get a invoice from the ins co for $1800. I call and say ?? They say "oops, our agent forgot to include paper work fees and he put your help in the wrong classification plus we have a minum fee regardless of payroll. Now I feel I'm getting railroaded so I raised a little cain and they sligtly adjusted the invoice. One week after that I had to let the guy go because he started showing up slightly loaded. 2 weeks after I can him I get another invoice for $800 for ending a contract early for the comp ins. PEOD doesn't begin to describe me. I didn't know what I didn't know and 50+ pages of fine print had everything in there that I agreed to when I signed but never took time to read. Bottom line-- don't assume ins co's are honest, ask lots of hard nasty questions if you have them, don't be afraid of hurting their feelings cuz they don't mind hurting your bottom line, get an attorney to review things with you before you sign stuff. It is cheaper if #$%^ happens this way. 

Mick I think your idea is a great one- especially for guys thinking about hiring help.


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