What's workmans comp gonna cost me?

[Leo Graywacz]

How is "business" defined?
If I'm selling my bird houses on eBay, am I a business?

Does the state know you exist and do you pay taxes?

[David Helm]

Looking at it from a tax situation, employees have to have taxes withheld and require end of year statements. You also get to pay half of their FICA taxes. Independent contractors have to be given 1099's at the end of the year showing their earnings from you. You also have to file. Either way, from a book keeping standpoint you have extra work and extra paying.

[dirk martin]

From a bookkeeping point, and from an insurance point, employees seem like a lot more work and liability, than using Independent Contractors.
Issue a 1099, along with a 1096... Boom...done.

And, Leo...."Yes", to both.

[Van Huskey]

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.

Keep in mind personal responsibility is a two edge sword, though in modern parlance it is often meant only to cut one way.

Again comp is designed to take fault out of the equation, save some situations that state by state have been codified as an affirmative defense such as intoxication of the worker, that's why a blood draw is standard upon arrival of a workplace injury to the initial medical provider.

It seems comp is being viewed as a one way street only for the benefit of the worker but it benefits the employer as well by removing the chance for a worker to sue for the negligence of the employer. It mitigates liability and allows for much more manageable costs. Without comp employers would have much more exposure.

On to the OP. Honestly, there is a lot of misinformation in the thread regarding who can sue whom in all these different hypotheticals, or more accurately who has the chance of recovery if they do sue but it is so diverse I don't feel like trying to deal with each one and state law covers most negligence cases so it leaves possibly 50 different answers plus the basic common law and Napoleonic Code versions. In general insurance companies can't sue "for you" the have no standing in most situations but they do have subrogation rights and you may have a contractual obligation to help them recover their losses if someone else is at fault.

The OP should also check the WC laws in the state he plans to operate in, some states don't require WC for very small operations with say 1-3 employees, this is more prevalent in the South East though, many states require comp even for 1 part time worker but will all have pay thresholds usually by quarter but it is fairly low, usually in the 500-1000 bucks in a quarter area.

If you do hire subs makes sure they have comp or investigate any chance of you having exposure, if they work in their shops and don't have any common jobsite with you it is unlikely BUT depends on the local laws.

The Amish is somewhat of a red herring in that they are essentially a separate workforce that operate under a different set of "rules" and they basically self insure through their community and often have programs like the SBA which exempts them from WC. That said I know of no state that exempts a non-Amish employer who employees Amish workers from carrying comp on them so unless they are independent contractors (meet the common law tests for the IRS along with any state specific tests) a business would probably have to treat them as employees.

I get it, any business expense sux to have to lay out, I am a small business owner and have paid for comp insurance for over 20 years.

[Van Huskey]

Looking at it from a tax situation, employees have to have taxes withheld and require end of year statements. You also get to pay half of their FICA taxes. Independent contractors have to be given 1099's at the end of the year showing their earnings from you. You also have to file. Either way, from a book keeping standpoint you have extra work and extra paying.

I would bet more than 50% of INDIVIDUALS hires as independent contractors in the US would fail to meet either the IRS or state tests. In this case many employers are paying more money than they would for an employee and have liability exposure and serious tax ramifications lurking in the shadows.

[roger wiegand]

As someone who ran several small companies I grew to despise WC. We provided excellent health coverage, disability coverage etc which was great until someone got hut at work (only happened about three times over 20+ years). Then they were thrown into a bureaucratic morass of really lousy coverage, high deductibles, and unbelievable paperwork. I've never really understood why someone with a good health care policy should get dumped into the terrible WC system just because they twisted their ankle at work rather than home. I would cheerfully have paid a higher BCBS premium to cover those rare injuries at work.

[Van Huskey]

As someone who ran several small companies I grew to despise WC. We provided excellent health coverage, disability coverage etc which was great until someone got hut at work (only happened about three times over 20+ years). Then they were thrown into a bureaucratic morass of really lousy coverage, high deductibles, and unbelievable paperwork. I've never really understood why someone with a good health care policy should get dumped into the terrible WC system just because they twisted their ankle at work rather than home. I would cheerfully have paid a higher BCBS premium to cover those rare injuries at work.

That is a valid point on good health insurance, some states allow more freedom than others in choosing doctors and using health insurance as the primary payer there are some tricks for a willing employer to help this happen... The employee would have to at least be evaluated at MMI (maximum medical improvement) by a Comp chosen Dr to determine any permanent impairment/disability (this gets complicated since some states use schedules for all impairments, some leave out the spine, and there are multiple ways to access when the injured part is not scheduled).

There should be no deductible issues with comp, it should be 100% covered care with no employee payments.

The disability insurance coverage should not be impacted although most have subrogation rights. If a private or employer provided disability plan has a higher payout than comp then the disability plan normally is contractually obligated to pay the difference, in the case of a denied claim they pay full benefits but are reimbursed by the comp carrier if the claim is subsequently accepted. There are some disability policies with no subrogation rights but they are rare. SSD (Social Security Disability) also dovetails into the how issue of payment and subrogation if the employee is totally disabled and on occasion SSI could be involved if the worker had not worked enough to qualify for SSD.

I do agree the interaction of health insurance and workers comp could be much better for both the employer and employee.

[dirk martin]

I cannot thank you all enough for all of this information.
I will impact me greatly, as I move forward.