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Showing posts with label SUBCONTRACTORS. Show all posts
Showing posts with label SUBCONTRACTORS. Show all posts

Wednesday, March 3, 2021

WORK COMP WEDNESDAY: Do you use Subcontractors that Lease their Employees?

Florida is suffering from a shortage of skilled trades to use for your construction job.  As this shortage continues, subcontractors are having to find different ways to supply employees.  You as the GC should know that there is an exposure to your worker's compensation policy or to your individual pocket if you do not have a worker’s compensation policy.

Your subcontractor is required to provide workers compensation coverage for all workers on your job site.  If a Subcontractor’s worker is injured and not covered under the subcontractor’s work comp, your company will be liable for workers compensation benefits to the injured individual.  This will lead to significantly higher workers comp costs for you as the general contractor. When you accept a work comp certificate from a subcontractor who uses a (PEO Professional Employer Organization, Southeast or Frank Crum as common examples), it only provides coverage to those employees whose payroll is reported and then processed by the PEO.  The problem arises when you do not know if the workers your sub brings on to your job site are covered under his PEO certificate or not.

We recommend you take the following steps to avoid uninsured workers on your job site.

  • Determine if the Contractor has leased If you are going to accept a certificate from a leasing company, verify that the Owner is covered for Workers Compensation through the leasing company. You can verify this by requesting a copy of his latest PEO billing statement showing his name included under payroll. If not, make sure that the Owner complies with the exemption requirements of the Florida Statute.

 

  • For all Contractors with leased employees, regular contact should be made with the leasing company to determine the identity of the leased employees.   Random checks should be made of those Contractors using leased employees by you or your personnel to determine that the people on the construction site are in fact from the leasing company.  Only those employees leased are covered by the leasing company’s worker’s compensation insurance.  If you find uncovered workers on the site, the Contractor should be immediately dismissed from the worksite.

 

  • Have all subcontractors sign the affidavit below representing that all employees on your job sites are covered under their employee leasing workers compensation policy.

Several contractors that I know have been caught under this loophole for the sub.  Claims of $70,000 to several hundred thousand dollars have been claimed against their worker's compensation policies.  Don’t let it be you.  Use the Worker’s Compensation Employee Leasing Affidavit attached to prevent this exposure to your business.

Worker’s Compensation Employee Leasing Affidavit.pdf 


Contact us for all your Insurance needs! (321)725-1620 


Bob Lancaster Insurance

                                                     Serving Florida since 1964

Wednesday, February 17, 2021

WORK COMP WEDNESDAY: "Are They an Employee or an Independent Contractor?"

 If it walks like a duck and quacks like a duck, then it probably is a duck.

One of the never-ending discussions for the construction industry in Florida is whether a trade, supplier or independent contractor is an employee. Figuring the answer out will help clear it up to at least murky water.

The state of Florida holds the construction industry up to a different standard than other industries in Florida. Medical, legal, manufacturing, and hospitality businesses are required to implement a workers' compensation policy at their practice when they have four or more full-time or part-time employees, including corporate officers. However, companies in the construction industry must have workers’ compensation insurance once they employ an employee, regardless of full-time or part-time status.

Officers of Florida corporations registered with the Florida Department of State, Division of Corporations, can choose not to be covered under the workers' compensation policy. If your construction company is an LLC, you can show, as proof, a notarized statement of 10% corporate ownership.

"I know. You are a general contractor and you subcontract all your work out to subcontractors."

Are they subcontractors or independent contractors? The general rule is that an individual is considered an independent contractor if the payer has the right to control or direct the result of the work and not what will be done and how it will be done. You are not an independent contractor if you perform services that can be regulated by an employer (what will be done and how it will be done). This applies even if you are given freedom of action.

Therefore, the question to ask is, "Does the employer have the legal right to control the details of how the services are performed?" If the answer is yes, then they're not an independent contractor. 

For a simple risk management tool, make sure your subcontractor's (independent contractor) agent sends you a certificate of insurance that shows they have their own workers' compensation. If they say they are a small contractor with no employees but themselves, make sure they give you a copy of their exemption. You should require them to sign an independent contractor affidavit. But beware, carriers are now no longer considering that your subcontractor can earn more than $100,000 by himself. Workers’ compensation carriers are starting to examine those 1099's carefully and may assume there are unreported employees helping your subcontractor.

Below is an excerpt from a carrier's letter, explaining how they will decide.

"Exempt contractors with compensation over $100K during a policy period, must either furnish a WC certificate of insurance or verification of any labor materials used by the exempt contractor for consideration. Failure to provide this information could result in a portion of the contractor's distributions being included in the final audit for the general contractor."

If you have any questions, please feel free to contact us at 321-725-1620 and ask for our Work Comp expert, Elaine. We would be glad to help you review your risk management program and make suggestions!

Contact us for all your Insurance needs! (321)725-1620 


Bob Lancaster Insurance

                                                     Serving Florida since 1964