Contractor Talk - Professional Construction and Remodeling Forum banner
1 - 10 of 10 Posts

·
DGR,IABD
Joined
·
9,683 Posts
Discussion Starter · #1 ·
Does paying a person a salary as opposed to an hourly wage exempt the employer from paying workman's comp?
 

·
Registered
Joined
·
3,265 Posts
In my state owners don't have to have WC insurance, employees do, regardless of pay rate or class. The primary factor for the rate charged is the risk 'classification' of the work that an employee does. Sales, office and administrative classifications typically are charged at lower rates than the jobs that are at the install level. Project Managers may be classified at lower risk levels depending on the amount of time they spend on the job and the nature of influence they have over it. I'm getting a quote from what looks to be a pretty good Agency in Emittsburg. PM me if you want the contact info.
 

·
Registered
Joined
·
10,471 Posts
Here, up to 3 corporate officers can be exempt. I doubt that you would want to make a new hire an officer.
The transition from a one horse road show to a larger business is daunting. You really have to be in a position to hire 5 employees to make it and all that you will be doing is increasing your paperwork for a little more money. You have to be assured that you can expand in the future. With 10 employees, you can hire an office worker to take a lot of the load off of you and your margins will be better.
 

·
Registered
Joined
·
197 Posts
PipeGuy said:
In my state owners don't have to have WC insurance, employees do, regardless of pay rate or class. The primary factor for the rate charged is the risk 'classification' of the work that an employee does. Sales, office and administrative classifications typically are charged at lower rates than the jobs that are at the install level. Project Managers may be classified at lower risk levels depending on the amount of time they spend on the job and the nature of influence they have over it. I'm getting a quote from what looks to be a pretty good Agency in Emittsburg. PM me if you want the contact info.
In my area if there are three or less in your company, you are not required to carry WC. We are also rated on each employees "risk factor", but officers salaries are limited to $15,000 a year ... the rest of their salary doesn't count towards WC.
 

·
Banned
Joined
·
14,078 Posts
mdshunk said:
Does paying a person a salary as opposed to an hourly wage exempt the employer from paying workman's comp?

I assume your question is in regard to regular employees and not owners.

Here in Colorado it makes no difference. A salaried employee or a hourly employee both require paying workmans comp.

The only effect it has is on how benefits are paid out and calculated for someone putting in a claim.
 

·
DGR,IABD
Joined
·
9,683 Posts
Discussion Starter · #6 ·
Mike Finley said:
I assume your question is in regard to regular employees and not owners.
Yes, that is what I meant. I have noticed a trend among some local contractors in that they are starting to salary some of their key people. I figure that there must be a business benefit somewhere in that, but I'm still struggling to figure out what that might be. I know it's not to even out short weeks, because these are busy contractors. It might be to get more work without paying overtime pay.
 

·
Registered
Joined
·
55 Posts
The only benefit to the company to paying field employees salary vs. hourly is to try to avoid the overtime issue. Take caution, a disgruntled employee has a case against an employee who avoids OT rates even if salaried. OT rates do not effect workers comp. here in NJ. You only pay on the base rate not the OT rate. There is something to be said on the employees side for the security that a set paycheck brings. But to me that's like a salesperson who does'nt want to work on commision. I'd take commision any day.

Electro
http://www.yourcostcenter.com
 

·
Registered
Joined
·
10,471 Posts
Here, a salaried person who supervises more than 2 people can be exempt from OT but not WC.
 

·
Banned
Joined
·
14,078 Posts
mdshunk said:
Yes, that is what I meant. I have noticed a trend among some local contractors in that they are starting to salary some of their key people. I figure that there must be a business benefit somewhere in that, but I'm still struggling to figure out what that might be. I know it's not to even out short weeks, because these are busy contractors. It might be to get more work without paying overtime pay.
It's possible that it is to avoid the overtime pay, but not every salaried employee is excempt from the new overtime law. You gotta be a "professional" most of the time to qualify. Construction jobs?

Could be an internal thing that just works out better for the employee and the employer?

Ask some questions to them and let us know.
 
1 - 10 of 10 Posts
Top