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Old 09-25-2013, 10:19 AM
otis44 otis44 is offline
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Join Date: Apr 2008
Location: SE KY
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Workers Comp With No or Little Payroll

I am in KY and a one man band with no employees. My business is primarily mowing with the occasional fert, shrub trimming, or mulch job mixed in to existing customers. I really don't push anything except mowing. For the jobs other than mowing if they are too large for me to do myself I might pick up a helper a few times a year, but other than that I have no employees and no payroll.

I carry a 2mil/4mil general liability policy and am operating as a dba. I have a couple of commerical mowing accounts where I work through other people who have the contracts. On these accounts we apply my general liability and they are cutting the workers comp from my check at the rate of 10-11%.

My question is can I purchase workers comp with no full time employees and just pay on what little payroll I do have, or in situations like this is it based on a predetermined amount, and if so how is this determined? I assume 10-11% is a fair rate and really don't want to get into the paperwork and aggravation of carrying comp unless the rate would be cheaper than what I am getting cut now and I could save some money.

Thanks for any advice.
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Old 09-25-2013, 12:57 PM
jlcrox2 jlcrox2 is offline
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Location: Lawrenceburg, KY
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Why are they taking a percentage from you? If you are a sub they shouldn't require anything more than your liability.
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Old 09-25-2013, 02:15 PM
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Mowingman Mowingman is online now
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Yes, you can get workers comp coverage for just yourself. However, here in Texas, the insurance carrier sets an (assumed) minimum on your payroll, you pay yourself. It used to be they would charge on the basis that you were paying yourself $35,000/year, even if you don't. Not sure how it works currently. It can get expensive in a hurry.
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Old 09-25-2013, 03:58 PM
Mark Oomkes Mark Oomkes is online now
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Quote:
Originally Posted by jlcrox2 View Post
Why are they taking a percentage from you? If you are a sub they shouldn't require anything more than your liability.
Wrong, because their insurance will charge them if they are using subs without WC. Or liability.

Check with an agent, this ranks right up there with asking for legal or accounting advice from a bunch of guys on the internet.
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Old 09-25-2013, 04:08 PM
clipfert clipfert is offline
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Location: Eastern PA
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Yes you can get WC on yourself speak to your insurance carrier for your General Liability. You will pay a rate based on a min. salary for yourself. If you should make more that that min. salary you will pay the difference. You will get an annual WC audit from your insurance carrier.
For mowing you should be more on the 8-9% range maybe even lower. You can also go through a payroll company such as Paychex. In this scenario you are only paying based on your weekly or biweekly payroll. Pay as you go rather than a 50% premium payment followed by monthly installments. I guess you need to ask yourself what happens when YOU get hurt. Do you have the money saved to live and pay your medical bills?

That one or two guys you have working every now and then can cost you big if they get hurt, especially operating as a DBA. I know most guys will say its a friend or a family member so I'm not worried about them coming after me. Consider the worst case scenario and someone chops of their hand. Do you think they will just say don't worry about it? You will be liable for all medical expenses and lost wages plus the settlement for losing a hand. Then your state will come after you with fines for everyday they worked for you without WC Ins.

You should consider incorporating or becoming an LLC. Most attorneys will give you a free consultation on what would work the best for you.

When you think of the possibility of the above happening it's really not expensive it's just a cost of doing business.
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Old 09-25-2013, 04:32 PM
otis44 otis44 is offline
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Join Date: Apr 2008
Location: SE KY
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Thanks for the above replies. I do intend to speak with an agent or two about what I should do. I just thought someone here might be in the same boat and could relay how they are handling their situation. If the going rates are 8-10% or more I'll just let the company I am working for cut it from me and they can have the paperwork and associated aggravation.
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Old 09-25-2013, 04:43 PM
clipfert clipfert is offline
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All you are doing is giving them a discount on your services. A pretty big one at that if they are taking a percentage of your gross that you are invoicing them for. Besides that if you of someone were to get hurt on their site you will be hard pressed to recoup any medical exp or lost wages. Their WC policy covers their employees not their subs. Ask your agent he will enlighten you.

Basically what they are doing is covering their end for when they get their WC audit. If they are paying you on a 1099 and they cannot show that you have WC coverage then they must pay the premium on that amount they paid you.
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Old 09-25-2013, 05:51 PM
otis44 otis44 is offline
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Join Date: Apr 2008
Location: SE KY
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Quote:
Originally Posted by clipfert View Post
All you are doing is giving them a discount on your services. A pretty big one at that if they are taking a percentage of your gross that you are invoicing them for. Besides that if you of someone were to get hurt on their site you will be hard pressed to recoup any medical exp or lost wages. Their WC policy covers their employees not their subs. Ask your agent he will enlighten you.

Basically what they are doing is covering their end for when they get their WC audit. If they are paying you on a 1099 and they cannot show that you have WC coverage then they must pay the premium on that amount they paid you.

Clipfert, you have given some good advice and I appreciate it. I don't exactly understand why their policy would not cover me (if it is paid in) regardless of whether I am a considered subcontractor or an employee. I don't know how they are categorizing me, but I receive a 1099 and not a W2so I would say its a subcontractor.

I was involved in the building trades for a number of years and I always kept 3-4 regular employees and a host of subcontractors. I don't recall ever being questioned over who was what. If memory serves me correctly the insurance co's only concern was who performed what task so they could be rated and paid for correctly. (ie; a roofer would have a higher rate than a painter).
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