No Workers Comp = Individual Insurance

Discussion in 'Business Operations' started by Team-Green L&L, Mar 4, 2008.

  1. Team-Green L&L

    Team-Green L&L LawnSite Bronze Member
    Messages: 1,775

    We are proud to be a leader in the support of a new Bill for Congress. We are so tired of contractors "pulling strings" by using 1099 "employees" and them not being covered by any type of liability insurance. 1099 means "independent". Independent means your company policy DOES NOT COVER THEM and if/when one of them gets injured, or messes up something so big you want to turn your back and run, they don't sue you...they sue the property owner. The worst part is that you, as a business owner, may never know that your customer got sued.

    With that said, we have initiated a local ordinance to be signed throughout Cincinnati and the surrounding communities to cover this issue and are pushing for a national Bill in this next 24 months.

    Ordinance as defined:

    Contractors that employ (1) or more "Independent Contractors" must keep a current copy of that contractors insurance policy on record and must make it available just as they would a workers compensation certificate. If they fail to do so, fines and other penalties will be enforced.

    Please review this proposal and if you find it to be as NEEDED as we do please post your response or contact me for a copy of the petition. Your cooperation in this matter is appreciated by the entire industry.
  2. Team-Green L&L

    Team-Green L&L LawnSite Bronze Member
    Messages: 1,775

  3. tamadrummer

    tamadrummer LawnSite Bronze Member
    Messages: 1,102

    Since I am new to the game I am going to ask a newbie question.

    I am bidding landscaping jobs and hiring my friend/mentor as a contractor with me on the job. I am the one bidding and writing the proposals and in the submittal process, I give a copy of my liability insurance and show that I am exempted from workers comp.

    Is this what I am supposed to be doing or is this what the bill you are writing and sponsoring trying to stop? I have tried to jump through every hoop possible to be as legal as possible and want to keep it that way.
  4. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Messages: 4,891

    If your friend/mentor has his own company and his own insurance thats fine. You can pay him as a subcontractor.

    If he does not, then you have to pay him as an employee and you will need to have him covered under workers comp
  5. tamadrummer

    tamadrummer LawnSite Bronze Member
    Messages: 1,102

    He has his own company, he is Incorporated. I am not. I am a SP. He and I do jobs together and I just pay him. I never really thought about what TGLL wrote about.

    He has been at this for 18 or 19 years now full time. He has 6 kids and a wife to feed and he is the only income for them. I have not spoken to him about insurance but I have to assume that given his circumstance, he would be insane not to be insured with the liability he carries on his shoulders with his wife and kids.

    Great post man, I will have to talk to him about this and get the deal out in the air. We just bid on another job for March 27 and I guess I need to know what kind of protection I am bringing to that job.
  6. VBsnow

    VBsnow LawnSite Member
    Messages: 242

    This is not possible to achieve. Honestly, save your money. As an insurance agent, I hope you get a lot of attention drawn to the subject, but it will not work.

    I'll explain why:

    1) Every state had their own insurance laws and commissioner. You will not get a nationwide restriction. You cannot and will not until the system is centralized. You should understand this seeing how Ohio's workers comp is different than other states.

    2) There is already several tax laws in place to address this. In addition, the IRS already spells out in clear terms that these people who work on a daily basis but are paid on a 1099 are still employees. As such, the employer is still responsible for their unpaid taxes. Only novices and idiots still operate such payment schemes.

    3) Insurance companies in most cases cannot deny claims involving uninsured subs. They will charge for them and non renew, but rarely deny the claims. An uninsured subcontractor cannot be specifically excluded in MOST states. Here in VA, only the subs foreman can be excluded from WC claims and then the employer will be held directly responsible. On the GL front, it is covered. This idea that lawsuits return to the homeowner due to the actions of an insured LCO is false. The homeowner may be named in the suit as well but the LCO will not escape responsibility. Assuming it is possible in Ohio, I refer you back to #1. Every state is different and the law makes it this way.

    The biggest problem with LCO's doing business this way is obviously the tax liability. Secondly, people who do this are simply trying to beat the costs of paying employees a comparable wage and avoid having the proper insurance. There simply not professionals. They are clowns and will eventually be recognized as such. What sucks is you have to sit there while you wait and watch them low ball your work.

    The biggest pitfalls from the insurance side is that once you reach as certain amount of subcontractors, which is usually 10-25%, you are considered a 'paper' or 'general' contractor which means your insurance goes up anyways. Once the companies see you are doing this they are going to ask for your 'subs' proof of insurance as well. Once your 'subs' buy this coverage they will want more money from the employer. It is idiotic considering the tax risk and once the insurance catches back up to them, it actually cost more overall to perform this way.

    Again, I appreciate the sentiment and the goal you want to achieve. Just don't let the lawyer take too much of your money to sell you on this pipe dream. You all should work nationwide for change via an trade ORG. One state will not do it. I'm with you and would like to see every one of these offenders buried. Anything I can do to help I will. You would think that legislators would want this to occur. Most of them are lawyers right? Lawyers need insurance companies to get paid, right?
  7. VBsnow

    VBsnow LawnSite Member
    Messages: 242

    If the goverment legislates that a company HAS to carry coverage, that means the goverment HAS to make it available. This is why many of us have state pools for auto and WC insurance because even the people who do not deserve to be covered are required by law to do so. Thus you now have these pools.
  8. Team-Green L&L

    Team-Green L&L LawnSite Bronze Member
    Messages: 1,775

    Thank you for all this food for thought. I must admit that I have began this expedition with some degree of impulse, but I firmly believe in the goal itself. I may have to reconsider the approach before investing a significant amount of time and funds to it.
  9. Team-Green L&L

    Team-Green L&L LawnSite Bronze Member
    Messages: 1,775

    I have been informed throughout this "beginning" of my efforts:

    1099 forms are part of the tax law and have nothing to do with protecting anyone in a risk situation.

    So, as I understand, and I am not a lawyer, if you have anyone on a property your company has signed into contract to service that is not:

    A. An employee covered under your workers comp policy and general liabilty policy;


    B. A subcontractor carrying their own bond, liability policy, auto coverage, and workers comp (if they have employees).

    There is a substantial amount of risk involved that can be litigated and won without much effort. Whether there are loopholes or not, I'm not sure, but I do see the error in law and I am hoping to help in closing that error.
  10. VBsnow

    VBsnow LawnSite Member
    Messages: 242

    "B. A subcontractor carrying their own bond, liability policy, auto coverage, and workers comp (if they have employees)."

    You and your customer are both responsible for ANY injuries on the customers property. Even if you or the sub have no employees, the customer and the original contractor who sub out the work are still financially responsible.

    Back to the original post. I really admire what this guy is trying to do. Cutting of these undercuts who have no insurance at the knees is good fair business. Yo uall should make as much noise as you can. Write your state insurance departments for guidance. Avoid working w/ people that are know to hire scabs. You all know who and where many of them are. A big slap on the back to the original poster for the effort.


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