Why he needs to talk to the right people...
Contributor
Why he needs to talk to the right people...
Member
A good bit.Originally Posted by dirk martin
Workers Comp is a compromise between the interests of the employer and the employee.
Without the Comp system in place workers both the employee and the employer would both be responsible fully for their own actions and these would fall under standard negligence law which traditionally had no caps and in certain circumstances might have additional "penalties" in the form of punitive damages. One severe injury to a worker that the employer was deemed by a court to reach the threshold for recovery (under particular state law) could bankrupt a company if uninsured or significantly over the limits of any liability coverage the employer carried.
Comp give the employer a maximum loss which insurance companies can use to determine premiums and gives the worker covered access to medical care as well as some coverage for loss of wages (usually something in the range of 2/3 AWW calculated over the last 52 weeks based on state law) without regard to fault. If a third party is wholly or partially responsible (in the latter case the % of fault would have to meet the state's negligence laws) there is the possibility for the employee to go after them in civil court and if they prevail the comp carrier would have subrogation rights.
The system is actually a decent compromise for all, the employer has limited liability (capped), the worker does not have to prove fault and in most cases doesn't have to go without a paycheck or rely on personal medical insurance for care. All of this results in a streamlined system that avoids the expense of civil court with most claims being handled by adjustment and the few that don't deal with "simple" proceedings in front of ALJs instead of a jury trial which could be highly complex on just the fault issue especially with a larger company that might require the litigation of agency issues.
On the Amish hypothetical they would likely be considered sub-contactors (providing their own tools etc) and would have limited recourse anyway.
Understand this is an extreme simplification of the Comp system but it is a true compromise and from the employers perspective like all insurance it is a mitigation of risk by the spreading of potential liability across many employers and prevents some from catastrophic liability. IMO it is one of the better-balanced systems for all involved.
BTW when Billy cuts his finger off in your shop to you really want to be litigating ever aspect of your shop safety protocols, your choice of equipment, the maintenance level of the equipment, the lighting level in your shop, etc when you find out Billy was just working his college summer at your shop and prior to the injury, was a consensus to be the first round pick in the NBA draft or poised to be a concert pianist, or a surgeon or...
Of all the laws Brandolini's may be the most universally true.
Deep thought for the day:
Your bandsaw weighs more when you leave the spring compressed instead of relieving the tension.
Member
Lots of good advice given here; the way to tell what is good advice is if it sounds complicated and expensive, it's good advice.
Your question has a simple answer and a good answer. The simple answer is that costs vary by job classification and area. Here in Missouri my guys are at about 13% but that includes coverage for the remodeling work we do also.
The good answer is before adding employees, you should take a good look upstream from the workman's comp question and go over your accounting and job costing systems. Figure out how to add payroll and time keeping so everything lives in the computer and not on paper. That may ruffle a few feathers but I've run my business both ways and I wouldn't be in business now without the ability to know to the penny what all my costs are. To do that I use Quickbooks desktop, T-Sheets for time tracking, and Gusto payroll. I can track employees time spent on each customer's work, what they are working on (cutting, assembly, sanding, etc.), and compare what a job costs to my estimate. Gusto pays them with direct deposit, files all my state and federal taxes, pays AP Intego for the workman's comp, and deducts money every week to pay for all of it. I cannot stress enough how much time and headache you can save yourself by diving in and figuring out how to do everything electronically.
Whatever you do, don't pay a guy cash under the table to even set foot in your shop. None of my guys have gotten hurt at work, but I sleep better at night knowing they will be taken care of and I (likely) won't go bankrupt.
Good luck.
Mike
Contributor
I was an Incorporated business, and became an employee of that company. Therefor I was covered by WC. The people I did work for required a certificate of WC & Liability before I started work. People that require this type of documentation usually are no nonsense and pay their bills as agreed and understand that EXTRAS are what happens on jobs. You have to be prepared to open your books and tax filings to insurance auditors. I was a one person company and I got a check with all withholdings taken out. The SEP Pension plan is also a fabulous tool. You can put 25% of your pay in a retirement account. Good luck on your decisions,
Last edited by kevin nee; 03-20-2017 at 8:25 AM.
[OP]
Contributor
Wow...glad I asked.
This makes me REALLY lean towards hiring folks as sub-contractors, to work in their own shops. It may be a bit more difficult, since I have to limit hiring to people that have the needed machinery, but with the money I'm saving by not having all these extra expenses, I could probably help outfit their shops.
Something just seems broken here.
Amish men can come and help me in my shop all day and night, and neither I, nor they, lose any sleep worrying about an injury.
I'm a grown man. When I step foot into someone elses shop, I can decide for myself if the shop is safe enough. Why on earth would I sue him, if I got hurt?
But, whatever. It clearly seems that going with the sub-contractor, the way to go....and to hire the Amish, even better yet...people with common sense.
Member
Dirk it's not you that would sue someone for getting hurt in there shop... But your insurance company wouldn't hesitate to sue him to cover the damages. DAMHIK. Been there before.
[OP]
Contributor
Ohhhhhh.
You mean it goes like this?
I go visit my neighbor.
I ask if I can use his tablesaw.
It's a little dark in his shop, but I only need to make 1 cut.
I'm not paying attention while making the cut, and run the blade into my hand.
I rush to the hospital, and Blue Cross Blue Shield is my health ins. carrier, and I file the claim with them, and they cover my injury.
Are you telling me that BCBS will perform an investigation, and THEY will look into suing my neighbor?
Even if I refuse to cooperate with the investigation?
Member
It is not so much about you, or what you would do. We live in a drive thru world where everyone gets to 'win the lottery' - or so many imagine - and a WC claim is gold to some. Personal responsibility, no matter how admirable, is dying.
And yes, your insurer might sue your neighbor - - if not for your benefit, then to reduce the shared cost burden on their other customers.
"Whaaat a country!!" - Yakov Smirnoff.
[OP]
Contributor
Wow.
And so the reason I don't get sued when an Amish gentleman gets injured in my shop, has nothing to do do with his attitude towards responsibility, but everything to do with the fact that he doesn't carry insurance !!
This is opening my eyes.
I've also found out, that when an Amish person comes into my local hospital for treatment of any sort, because the hospital knows the Amish don't carry insurance, they have an "agreement" with them, to perform care at a drastically reduced cost.
Member
I'm not disagreeing with you, but merely lamenting. And not many Amish noticeable around here, so can't speak to their habits and practices.
As for non-insured medical treatment, try it. You'll be amazed. Stories abound of docs who'll settle for 30 cents on the dollar to avoid insurance paperwork. I've a relative who works in a doctor's office, and 60% of the staff is clerical - just to handle the insurance claims and related paperwork.
3-4 years ago, FIL went in for minor (something?). 15 minutes later :: FIL "How much?"; Dr "$1395"; FIL "Can I just pay cash?; Dr "Oh sure, how's $300?" (Not the above doc.)
Look at cosmetic procedures. 99% are not covered by insurance, so docs have made huge strides to reduce costs, both out-of-pocket and patient's down-time. The free market at work beautifully (pun intended).
...What health care crisis? And with that, I'll pull out of this 'TOS dive'.
I wish you smooth sailing with your WC process.
Last edited by Malcolm McLeod; 03-21-2017 at 1:41 PM. Reason: different doc
Member
Just to expand a little on my last post, I looked at a job we just finished and crunched some numbers. The total price was $21,344 for the job, total labor including employer taxes and workman's comp was $7,898, and since I exempted myself from workman's comp coverage the total I paid AP Intego to cover my guy was $370. I get what your saying about fairness and ethics, but I wanted to show just how little money it takes to CYA.
Paying everyone as a subcontractor will not eliminate risk for you and can create a whole can of worms if you're ever audited, have quality problems, schedule problems, and on and on and on. There's plenty of money to be made working with wood and I gently suggest spending a little on an accountant about adding employees or subs and take their advice.
Mike
[OP]
Contributor
Really appreciate the discussion, Malcolm.
I'm having a lot of ah-ha moments.
I understand the need for insurance. Especially health insurance. I'd never dream of going without it, and I've even gone as far as to personally cover family members that don't have it. But, based on this discussion....the Amish are really a work force I desire to hire. They have both the proven attitude of taking responsibility for their actions, and they don't carry health insurance. That's a hard combination to find, but it appears both are needed in order to drastically reduce your chance of ending up in court, when all I'm trying to do is make a bunch of bird houses.
Member
WC is for businesses. Not your neighbor with a TS in his basement.
[OP]
Contributor
How is "business" defined?
If I'm selling my bird houses on eBay, am I a business?
[OP]
Contributor
I see your point, tho.
If I hire someone to produce a product I'm selling, in my shop, I need WC insurance.
If my neighbor kid stops over, asking for some work, to make money to go to the movies, and I have him spread mulch....and then he runs the pitchfork thru his foot....I should have umbrella home owners insurance.
I think I got that right....
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