Not Having This Insurance Could Cost You Your Business
Painting contractors ask me all the time “Do I need Workman’s Compensation Insurance?”
There are many different situations in which you would or wouldn’t need it so let me explain…
I’m Ron Ramsden, a DYB coach and a painting contractor in Massachusetts.
Workman’s Compensation Insurance:
In general, If someone gets hurt would they be covered?
You could lose your business if you are not properly protected.
I have been in business now for 18 years, I’ve had almost 2 claims.
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Thank God everybody was okay!
but I was so happy because it’s a lottery that I don’t want to win.
I do not want to have to pay out a Workman’s Compensation and I hope none of my employees have to claim it.
Let’s answer a few questions out there.
What is Workman’s Compensation?
Who is eligible?
Who has to pay it?
Do you have to pay it?
We will go through a few things here.
If you work by yourself and you’re working on homeowner’s homes, you do not need Workman’s Compensation.
You need to understand that if anyone gets hurt, you’re probably going to have to make a claim if you don’t have the funds to pay it yourself against someone else’s insurance.
The homeowner must know that you do not have Workman’s Compensation Insurance.
Having a Workman’s Compensation is a cost.
It’s a part of doing business and definitely something that you might want to look into.
If you have one employee, you must have Workman’s Compensation for that employee.
That is the law.
If you hire subcontractors, they must have Workman’s Compensation.
If they don’t have Workman’s Compensation, they’re going to fall under your Workman’s Compensation.
If you have employees and you have subcontractors, you are controlling the safety of your employees.
Sometimes you cannot be on the site when that sub-contractor is working.
If that subcontractor gets hurt and they don’t have Workman’s Compensation, which they are supposed to have, even if it’s in your agreement with them and they haven’t paid it and you are not notified, it is all going to fall on you.
Independent contractors are supposed to carry their own Workman’s Compensation.
It is a must for them.
These are the three things that you are going to have.
In my experience working for a general contractor, every year they require us to prove that we have Workman’s Compensation,.
They get notified if we don’t pay our Workman’s Compensation so that they can be ahead of the curve on that, to make sure that we are fully insured.
If we’re not insured, it will fall on them during their yearly audit.
There are a couple of Workman’s Compensation payment plans.
The most common one which people are familiar with is that you pay a chunk at the beginning of the year.
You get audited sometime during that year and then they usually require you to pay additional funds at the end.
Another way to go is called Pay-As-You-Go.
They basically look at what you’ve paid last week.
They look at your payroll and then this week, they will take out the funds for the Workman’s Compensation.
This payment is much more budget-friendly.
You don’t have to come up with a large chunk of money.
I believe the rule is that you have to be in business for a couple years first before that can actually be looked into.
Pay-As-You-Go is a great plan.
You also have the certified payroll company working with you and your payroll.
The three reasons for the people who aren’t covered under Workman’s compensation are:
If you are a sole business owner, like myself.
I am not in the field with the guys.
I am not covered under the Workman’s compensation, nor is my payroll taxed for this purpose.
Also, volunteers; if you are volunteering at some place, you are not covered by their Workman’s Compensation.
Just be aware of that, there might be some other kind of insurance that is covering you, but you are not on the Workman’s Compensation.
Federal employees don’t get Workman’s Compensation.
I am not a federal employee so I don’t know much about them but I did a little research on federal employees and it turns out they are not covered under traditional Workman’s Compensation.
How is Workman’s Compensation determined?
Workman’s Compensation is determined by job classification.
If you are an exterior painter working on 2nd and 3rd-floor buildings, your Workman’s Compensation is going to be higher.
If you are an interior painter or interior wallpaper, your Workman’s Compensation should be lower.
If you’ve had a claim against you on your Workman’s Compensation, that would elevate your percentage of take out.
It’s a percentage per every $100 paid.
I am roughly about 6% right now, per a hundred.
Depending on your payroll, if I have a $10,000 payroll.
I have a $600 a week Workman’s Compensation bill.
If someone gets hurt, or if someone claims they’ve gotten hurt on a job.
We’ve heard all these stories in the past that someone came to work and then they said they fell.
We are not pointing fingers at anybody.
If tragically I had a person who was taking a shutter off a house while they were power washing it and when he pulled the shutter off, he got attacked by bees, which caused him to fall and he broke his wrist.
It can happen anytime.
It happens, it’s never expected when someone is going to get hurt.
I also heard of a friend of mine who had someone who actually passed away on the job.
He was painting a soffit on top of a roof, small porch roof, backing up as he was painting it.
He has been painting his whole life and he actually just fell off the roof of about 10-12 feet up.
He bumped his head and unfortunately passed away.
How tragic that was and Workman’s Compensation was there, but there was some insurance in place.
As I said earlier, It’s a lottery we don’t want to win, but it is something that we have to have.
These are just some brief tips on Workman’s Compensation, I hope they helped.
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I am helping painting contractors stay out of the bucket, grow their business, and have a great time doing it.
Have a great week!