Workers Comp

Date 04-10-2014 02:13

Do you have employees?

When I got my business insurance a few years ago I had to get workers comp which was really odd because as the owner and the only employee if I got hurt on the job it would be really hard to sue the guy in charge.....since he is me. My agent I believe got mine through Cincinnati Insurance, I think. Yes, it is very high, just on my only employee, me..., :lol:

I paid almost a grand a year. Last year however I went online to the state website and I paid $100 and filled out a simple form to be considered exempt. This year when I came back to the business owner world and had to get insurance again I talked with my agent more and asked if there was someway to drop the workers comp and showed my exempt paperwork. She said yes and my yearly rate is finally under the $3000 mark for the first time in, well, since I started the business.

Of course if I hire an employee then I will have to get workers comp. If you have an employee then it is based off of hours worked by the employee I believe, including yourself. Then you have the awesome joy of audits each year. I think the first year is an estimate on hours worked. The next year with your audit it could go up or down depending on actual hours worked. I had two guys work for me for a month and a half, well one for a month and a half, other guy for two weeks. Taxes I had to pay on workers comp and other was $1100 or better. This is the reason I don't have employees anymore and really don't want them. It seems it was really high for years until you established yourself, kind of like your business insurance. No accidents, injuries, blowing things up and you get a better rate, a grace period I suppose. I know my agent didn't have any problems finding it for me but she always looks hard to find the best rate.

You want a high rate, tell them you weld on towers up to 1000 feet tall and see what they say. Lucky for me I avoided it by being exempt this year!! LoL! Get with an independent agent and start having them search around and price check. If it is required on you and employees and you cannot exempt yourself then that is why it is high, they know they got you bent over the barrel. If you want I can give my agent a call tomorrow and see if she can give me some names of companies? Let me know in a pm here or give me a call, my number is in my profile and I'm just sitting around tomorrow adding up receipts for taxes and will use any excuse to get away from that!!

Shawn

I have a friend that has several employees and I swear he said he paid $90,000 for it, I'm pretty sure that's what he said, I about shat myself.

By strother (***)

Date 04-10-2014 02:51

I can exempt myself but have to have it on my two employees. Lowest rate I've been quoted is 25% of payroll my G/L is almost as high. I've said that I would never have employees again here I am playing boss man again. I just want to weld!

By yojimbo (***)

Date 04-10-2014 14:40

Strother,

Have you compared the cost of using a payroll service to run employees for you? The rate they will charge will include all payroll taxes, unemploment and workmans comp plus their markup percentage. If it's only lower wage/lower risk shop work I found it cost effective. Prevailing wage publc work on site get's too expensive and I will sub-tier that to another subcontractor for a lump sum rather than pay an hourly rate to an employee. If you are structured as an LLC there are other strategies to reduce tax costs that aren't too risky if you have the right guy to put in place.

An advantage in using a payroll service is the reduction of liability and unemployment insurance costs. Your unemployment insurance costs [above and beyond your workmans comp costs] will be determined in part by how long you can keep an employee on the payroll. If you let someone go for lack of work you will at some point likely be named as a former employer if/when that dismissed employee ever files for unemployment, at which point your unemploment rates will go up.

I avoid all those costs by avoiding employees. My business is small enough that I can. When I need someone to work on a larger job I use a payroll service or a licensed subcontractor.

By JTMcC

Date 04-10-2014 19:00

Workmans comp is an everyday cost of doing business just like rod/wire, fuel, trucks, lenses and gloves.

If you are using rates that don't include it, you are working toooooo cheap. That'll fly in farm code land but in real welding work it HAS to included in the rates. Otherwise you don't have a business, you're just buying a job. Lot's of people do that and have theirselves convinced they are a "buisness owner".
Large prime contractors will look funny at you if your rates are too low.

Workmans comp is almost always cheaper than disability insurance for an owner, that's why so many (long term) business owners carry it on themselfs.
Think about the future of your family, if you can't include the cost of either good disability ins. or at the minimum state workmans comp, you are cheating death and putting your Wife/Kids at large risk. Especially in a field where people DO get hurt to the point they are unable to work.

A very basic fact.
People who don't have those costs in their quotes/rates are irresponsible, in my opinion. Your family deserves better and nobody gets advance notification that a freak accident is a coming or an idiot equipment operator is going to hit a lever get you a disableing injury, or a choker is gonna let go, or a hydraulic hose will blow, or lighting will strike the pipe/structure, or an earthquake will tumble stuff over, or whatever.

My take only, based on quite a few years of observation of fit, capable, strong men leaving the workforce unexpectadly, and sadly without alternative plans in place.
If I couldn't charge what it takes to secure my family's future in the unlikely event of an unseen catastrophy, I'd just get a job punching the clock for the man. Most welding work involves the possibility that the family will have to at some point continue on for many years without the current breadwinner on earth.
Consider what you'll leave behind if you unfortunately meet your earthly end in the course of your work day. It happens every day : )

JTMcC

By Tommyjoking (****)

Date 04-10-2014 22:46

Is this all within the state of Georgia? WC is at its very worst when your small, few employees. Depending on your states laws you may be better off keeping your employees as 1099 contractors and letting them get state wavier cards. I know you can pull it off in AR don't know about Georgia. The biggest thing I have learned about insurance of any kind is to shop, shop, shop, shop around. I have had way better results from independant agents then contract local "this farm" kinda agents. Sounds like you got a new expense to figure into your bidding. The laws and requirements vary so much state to state you just got to dig in and find your best result. The bad part is they will probably charge you the same minimum small biz fee they charge a guy with 10 employees based off percentages of gross take....fine for the guy with 10 guys to cover but the guy with two is really paying the bigger guys premium.

On the GL I found that simple mistakes/omissions on the application can make huge diffs in the premium.....almost all agents and most underwriters have a very bad grasp of the welding industry in general, this lack of information costs you money. In general your a welding contractor therefore you are black plague territory, filling out those initial apps and good communication especially if you can talk to the underwriter will reduce that premium significantly. As far as the WC that is really your states bs...... Written safety programs/procedures and "safety training" documented may reduce those hits.

I wish you the very best of luck, I know it is a tremendous headache.

By strother (***)

Date 04-11-2014 00:28

Tommy, Everything you are saying is what I'm experiencing. I went through it with G/L. finally got a policy that is reasonable and based on sales rather than payroll which works much better since my sales are more predictable than my payroll. Problem is My G/L policy won't allow uninsured sub-contractors period end of discussion. So no 1099s. Everybody is on payroll.

By Tommyjoking (****)

Date 04-11-2014 00:41

Well anything I can add is no diff then already said....SHOP SHOP SHOP around. But I bet you will hit a wall of X$ minimum per year with the bs audits annual to get a policy rolling. May be an idea to get quotes telling them 9 employees full time.....and then calling back saying oh we just reduced to two and make a comparison. I dunno brother but just like everything except electric and gas bill I have found its all negotiable...I negotiate my tv, internet, insurance, welding supply, etc. Utilities on my house is the only thing I have ever found to be set in stone....heck I am probably just approaching it wrong. :grin:

WC is going to be a way more data rich insurance risk then say a GL policy....so I figure the standoff will be way more firm....but hey ,most agents work on a commision vs. salary thing anyway.....BE PUSHY!!!! I wish you the very best of luck against legalized extortion.!

By strother (***)

Date 04-11-2014 00:49

I agree with everything you said but its is still frustrating to no end when you build a business from nothing except what that business produced and you need to take it to the next level so you can provide some security for your family but can't because the cost of moving to the next level will just not pay off soon enough. Over half of my business is Farm/Logging/Earth moving Code. The other Misc steel . I'm not sure if that counts as real welding but thats what I've got to work with so just raising my rates enough to off set the insurance costs is not an option.

By Tommyjoking (****)

Date 04-11-2014 01:21

I got the same problem bro....did it all off of a meager 7k in capital...bus makes or breaks off of what it can do in a SHORT time period.

It is one thing to be legal and above board as far as the state....it is another to do what you have to do if it will fly. I am not promoting blowing it off but if the amounts of money involved will allow it dependant on your situation by all means do so! IF not then you know your costs went up by X per man hour and you must increase any bids by AT LEAST that amount.   You may be suprised how easy is it is to increase rates....all you have to do is ask for it and go from there.

I hear ya, trying to fly your own flag it seems the govt is nothing but there to insure you will not make it. The paperwork and red tape is unbelievable....I really wish most folks had a grasp on how difficult the feds are on small business. Till your breaking heavy 6 figures and can afford folks to deal with the paper trail, fees etc....it is a 24/7 endeavor on your part. When you try to grow as you are right now....well here is a stack of ******** to deal with + lets lighten that bank account.   It is an oxymoron of the extreme, your trying to improve your endeavor and hence as a consequence improve the local economy...but hey you must pay a serious dividend/price to help the local economy.   This is what we all as business owners are paying for the rise of unions in the past.....the insurance you must pony up for is a direct result of litigation back in the day.   Problem is the standards are completely oblivious of anyone pulling less then 1 mill a year ( you are small business) that if you are trying a ground up off your sweat your completely screwed from the start. Thing is, I believe if joe blow voter knew what "sues flower shop" had to do to survive...it would change the way they vote drastically.

I dunno strother...it is an obsticle for your growth...you got to work out a way financially to jump over it....easier said then done. BUT it is way better to look forward and take RISKS then pull back and wait for it change.

GOOD luck to you brother.

By lo-hi

Date 04-11-2014 12:00

Most of my work is contractor based. They require a worker comp policy on file. The insurance agent said that I could get a policy to cover myself, but as a sole proprietor or the only officer in my LLC they would not cover me. Something about buying a policy on myself and then making a claim. The cost would be based on 25 per 100. I made my wife book keeper and filed a policy on her. This gets a policy on file and seems to work.

By Dualie

Date 04-12-2014 05:19

a company here locally that was a "far east type operation" that did red iron rather poorly got busted for having 25 clerical workers on their staff and only 2 ironworker's/welders

By Cactusthewelder (*****)

Date 04-11-2014 01:45

Hire them as Contract. Problem Solved !

By Dualie

Date 04-12-2014 05:20

hiring contract workers works to a point but then they are required to have general liability/ and a contractors license also Here in CA anyway

By strother (***)

Date 04-24-2014 16:05

Well finally got workers comp in place. Quotes started at $17K a year to cover 2 employees . Then got down to $3600 for same coverage. I wound up letting one guy go so I only had to cover one employee. $1500.00 a year. I can live with that. The guy I am covering does not weld so the insurance company listed him as a mechanic/fitter which was a lower rate than welder. I exempted myself from coverage and took out a disability policy instead.