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• FAQs

Less than 3 employees?

If you have less than three employees you are not required to carry the insurance, but you are still responsible to provide the same benefits to an injured employee, out of pocket.

Who Counts?

When counting number of employees you count regular employees, fulltime and part time, to determine if you have the three needed to make the coverage mandatory. Part time counts as one just like fulltime.

Are you Incorporated?

If you are incorporated you count yourself as one of the employees. Everyone is an employee of a corporation, although corporate officers can elect not to be covered by Workers Compensation Insurance. Even if you elect to exclude yourself from the coverage, you still count as one employee when determining if you have the three needed to cause the coverage to be mandatory. If you want to be excluded from coverage you have to ask that this be done and then you have to execute the required paperwork to get it done. (When a corporate officer remains covered under the policy, the maximum payroll used for him/her is $39,000 {previously $26,000} for premium cost calculations. The minimum is $11,700, {previously $7,800}).

Or Not Incorporated?

If you are not incorporated you are not an employee so need not be included in the head count. The workers Compensation policy does not cover you and your pay is not included in calculating the cost. You can, however, elect to be covered under the policy and include $19,600 {previously $15,700} of payroll for you in calculating the premium, (regardless of your actual pay). You have to ask that this be done and execute the necessary paperwork.

How is the cost for Workers Compensation calculated?

It is based on payroll. An individual rate is taken times your payroll to determine the premium.

Classification:

Each of your employees is classified according to his/her job duties, to determine which rate best reflects the hazard of their job duties. This rate is taken times their payroll to get the premium for each class of employee.

Multiple Duties:

An employee who has multiple duties that spill into more than one class will be assigned to the highest rated class into which he/she falls. If you keep separate payroll records for each duty he/she performs so that you can show the exact payroll for each class of duty when this employee was doing the task, then you can split the employee's payroll between classes so it all does not get lumped into the highest rated class.

Audits:

Each policy is initially issued based on approximate payrolls and then an audit is done at the end of the policy term to get actual payrolls. If the payrolls come out less than the original estimates you will get a return premium. If they come out more, you will owe an additional premium.

Overtime:

Overtime pay is included in the audit, but is reduced to straight time pay rate. If you paid time and a half for overtime, 1/3 is taken off that payroll before including in the audit.

How do Sub-Contractors affect the cost of your Workers Compensation?

Sub-Contractors who carry there own Workers Compensation coverage, and provide you with a current certificate of insurance while on your job do not increase the cost of your policy. Those that do not carry their own insurance or do not provide you with a certificate of insurance will have the following affect on your cost:

How do I handle Sub-Contractors with no certificate of insurance?

If you used a subcontractor who did not provide you with a certificate of insurance showing that he carried his own coverage, then the amount you paid him is included as your payroll in the job duty class that this sub falls into based on his work duties. If he provides you with a payroll record breaking out how much he paid to his employees while on your job, then this figure will be used on your audit instead of the total amount you paid this sub.

Do I need a certificate from Sub-Contractors with less than 3 employees?

Generally, a sub contractor will present you with the argument that he has less than three employees so does not have to carry Workers Compensation coverage. If the State can't make him carry it, neither can you. Wrong! The State holds you liable for injuries to the employees of uninsured subs just as though they were your employees. This is why you are charged for them at audit. Your insurance company had the exposure for the loss. If you work an uninsured sub, hold back enough money to cover the charge for him on your audit, based on the rates for his class, not yours.

Do I need a certificate from Sub-Contractors with no employees?

Another argument presented by the uninsured sub is that he doesn't have any employees. The State doesn't hold you liable for injury to him, just his employee, of which he has none. So, your insurance company didn't have any exposure to the loss. It has been established through court decisions that if a sub is engaged in the same trade as the contractor who hired him, then the sub will be considered an employee of that contractor for Worker Compensation benefits. This interpretation has evolved in an attempt to stop contractors from "pretending" that their employees are independent subs to avoid the Workers Compensation laws. It has had a far-reaching affect on audits. If you hire uninsured subs engaged in the same trade as you, hold back enough money to cover your audit additional premium.