Lower Workman's Comp Costs By Leasing Employees?

MikeTheBuilder

Hello,

I am a custom home builder currently (for the past 2 1/2 years) being forced to use FWCJUA for my workman's comp. coverage. Because of the high premium costs and the incredible amount of quarterly paperwork that is required by them, I am seriously considering using a leasing company to obtain workman's comp. Does anyone out there (custom home builders) use the employee leasing option to cover their workman's comp? If so, I have a few questions...1) Will this affect builder's qualifying business status? 2) Will this affect permitting in any way? 3) Will this affect builder's license status? 4) What if a subcontractor gets injured on the job and there may be an unforeseen lapse in his workman's comp at the time of the injury...would that particular sub impact builder's general liability in any way? Thank you...

aWorkaHolic

Pay the premium and save the headaches. Then shop it for your next years budget.

daArch

Mike,

My wife works WC for One Beacon, and the only thing I have learned is that WC rules and laws are different for each state. Call you state WC board and get the answers pertinent to your state OR call your Independant Insurans broker and talk to an expert - or better yet, do both.

BTW, what state are you in ?

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Grumpy

I don't see how it would be less unless the company specializes in your trade and has thousands of employees so has purchasing power. They are going to need to pay the rates and going to need to cover their over head and need to make a profit so they will need to jack up those rates... So will the rates really be lower?

Susan Betz

We lease. I love it. All tax and worker's comp headaches are gone. Call a leasing company and ask these questions, they're all good.

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RobertCDF

I lease as well. Saves me tons of time and time is money. I would think if the WC lapses that would be the leasing companys fault and would most likely open themselves up to a law suit.

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MikeTheBuilder

I'm not worried about WC lapsing if I decide to go with a Leasing Co. to get workman's comp...I was more concerned about a subcontractor on a job whose insurance may lapse for some unforeseen reason and he may get hurt, my company will then not have WC insurance, only I (personally) will be covered - so if I fall I would be covered.... What happens if one of my subs gets hurt and his insurance has lapsed, he can go after me....If my company is not covered, only me through the leasing company, will he then be going after my general liability? I was also wondering if I would have any problems with licensing and obtaining permits...I am a general contractor and build custom homes in Orlando Florida... I have looked into a few leasing companies and have been told that I would save at least $15,000 a year...

aWorkaHolic

Mike this is just an idea. Maybe you need your Lawyer to draft up a contract for you. A "none sue agreement ". Something that states that if "Sub" has no insurance bla/bla/bla..they can't go after you.Sorta like a non Lien agreement.Then have your subs sign it before doing any work.

Ultimatly it's your responsibility to make sure any "Sub Contractors" insurance/bond/Lic are in order before hiring them.

MWINE

Mike, I'm located in Tampa and found the best payroll company out there -- I called about 15 of them. I had a work comp claim last year in the middle of a large job and thought it was going to put me behind. I was switched to a new ins. company within 24 hours and the great thing about employee leasing --- the claim is not on my company's record. Still 0 workers comp claims to date. I'm also a fairly small company and the initial premium deposit for GL was killing me, with this company there is no premium deposit and the GL and comp is pay as you go. Also, there are no workers comp audits at the end of the year, my comp is calculated exactly and at the end of the year the company does the audit and shows me how much I saved (over $8000 last year -and I wasn't with them the whole year). When I called him the first time he told me that if he couldn't save me money, he would pay me $100. It's worth a call, at least to get your questions answered. The company is Construction Leasing Professionals -- my reps name is Mike 727-953-5913 They are based out of the Tampa Bay area.

airborneSGT

Mike,

Did you ever try a pay as you go workmans comp setup? That is what I have been using. The only problem with leasing is that some places wont allow it. I think my government work will not allow it for example.

MWINE

Airborne
I'm currently setup with pay as you go for both workers comp and general liability. I try to stay away from any gov't work, so I'm not sure if there are any limitations. It's so much easier not having to pay out an outrageous premium at the beginning of my policy. I don't ever plan on leaving my agent, they do everything for me. For example, my subs don't fax me their insurance certs, they fax them directly to my rep and he makes sure everyone is covered. He will occasionally stop by our site to bring lunch and gatorade, and to make sure none of my subs are slipping extra employees in (one of them getting hurt will be on me). I would call my agent and find out if there are any restrictions for gov't work, or you might have to call the gov't agency you are bidding with since they would be the ones putting the restrictions in place.
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Mike the builder. I talked breifly to my agent today and I asked him about your situation. 1) no it will not affect your qualifying business status 2) no it will not affect your permitting 3) no it will not affect your license status 4) Just like any other wc coverage, the sub is working under you so he would be covered (this is why I love that my agent collects and manages the certs for me). If you have any other questions I can call him pretty much anytime.

MikeTheBuilder

We start with a leasing company the first of the new year. After we ran the numbers we save $20,000 on our Workman' Comp. I'll let you know how it works out. Right now I'm excited.

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Susan Betz

You saved more than the premium. You saved working hours getting the paper right. The fees they charge are extremely reasonable, given everything they do.

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L. B. Condulet

Many contractors have bad workers comp mods. I know one contractor who killed an employee, little goofs like that can send your comp rates skyrocketing.

So it's not uncommon to take your employees down to Administaff and pay Administaff for your employees. Even with the premium they charge, it's still cheaper because they get a better comp rate.

Plus it insulates you from sexual harassment law suits.

kbsparky

I believe that is called a "Hold Harmless" clause ...

baytobay

Hello Group-

My name is James and I recently opened a general contractor company. I am an S-Corp with (2) 50% owners, GC license, liability insurance. My problem is workman’s comp. I just opened my company in October and I have had a few jobs here and there, but nothing steady as of yet. I am doing what I do best and that is networking to get known in the area and getting contacts with business, suppliers, and others in related fields. I had a leasing company for my workman’s comp (Southeast) which does workman comp and payroll. My problem is they want me to report my hours each week, but I am doing more networking then I am doing actual work, I have several good leads and many jobs lined up with old contact I had prior to retiring from the Military. I have vender packages out and I am trying to do everything as I should.

I am doing all the work myself/Partner till we get more steady work. I will obviously sub out electrical and plumbing work to licensed/insured contractors. I can’t get anyone to cover me (Workman’s Comp) unless I am being leased. If I don’t run a payroll (They take 18% for the workman’s comp, but I am not actually working. I want to stay current, but it’s costing me a small fortune. What can I do as a small just getting started company? I wish I could report my work on a monthly basis for the first year. Not sure what I can do, please anyone have any real advice

thanks

Bahiagrl

James, I am in the same boat as you - I started my company recently and I am using SE personnel for WC coverage. However, it's a killer on cash flow especially when you don't work. I am curious -

Mike the Builder - what was your final solution to your workers comp problem? The larger GC's that I am trying to do business with will not take my WC from a leasing company.

thom

Mike, you are correct in your assumption that your subs will not be covered under your policy.

Hold harmless clauses are meaningless in this situation. Employment law is pretty clear, these guys must be covered.

It becomes your responsibility to insure that every sub has WC during the time he is on your job. You just insist on certificates showing comp before work commences. You do this on each and every job.

The tough part is the one-man shops. In my state, by law, if they don't cover themselves I must cover them. I cannot employ a single person on my job whether employee or sub, without them being covered by comp.

If you don't carry a policy, you can't hire those guys.

greglemire

Who is the company you use?

olligator

Considered SE Personnel vs. FWCJUA coverage vs. a standalone policy and found that we could do the standalone policy after all. The biggest problem was that our payroll wasn't large enough for lots of the voluntary coverage out there. However, although SE Personnel gave is a fair rate on the WC, we would have gotten pounded by their fees on the payroll processing. FWCJUA wanted 124% of the premium for the first year so F-that. After shopping it to death, we found voluntary market WC that worked for us. Although the WC premium from SE Personnel was cheaper than our voluntary market (regular) WC coverage, it's much easier and cheaper for us to run our own payroll, so in the end the regular WC worked out to be much cheaper for the year than employee leasing. The other reason we didn't go SE Personnel was because not everyone accepts the leased employee as being covered by WC.

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