Payroll and Workmen's Compensation

[Zee]

I have a FL client starting a new seasonal business with 1-full time and maybe 4 part-time employees. It's a desk-job environment. The annual payroll will probably be less than $60,000. FL requires workmen's compensation when there are more than 4 employees. They have been unable to find a workmen's compensation carrier, and have been told that unless they use Paychex/ADP workmen's compensation insurance won't be available because carrier's won't write business for such a small account. I've verified this with a couple of phone calls to carriers. Does anyone have any suggestions? The client was hoping to do their own payroll.

[DTS]

Zee

Zee,

I have a similar situation with one of my clients. I do the payroll for her. She has worker's comp through State Farm insurance. Give them a try and see if they can help.

Dennis

[jainen]

dangerous position

Maybe he can restructure one or more positions to be independent contractors, and get below the state minimum. In fact, my advice to small employers is to hire ALL the workers that way. The threshold of payroll compliance is often too high for profitably using a small number of employees. (I'm usually skeptical of that arrangement so in suggesting it I mean genuine independent contractors.)

Getting below the state minimum is actually a worse solution. It transfers all the risk of employee medical bills to your client. Even though it is a "desk-job environment" there are still many opportunities for injury. For example, a car accident on the way to pick up office supplies, a slip on a wet bathroom floor, an allergic reaction to a customer's perfume--let me tell you that worker's comp has become a very creative industry. As with all liability insurance, the principal benefit is legal representation to protect against bogus claims. If your client finds a way under the Workers Comp rules, he will be on his own in a very dangerous position.

[rosieea]

Getting below the state minimum is actually a worse solution. It transfers all the risk of employee medical bills to your client. Even though it is a "desk-job environment" there are still many opportunities for injury. For example, a car accident on the way to pick up office supplies, a slip on a wet bathroom floor, an allergic reaction to a customer's perfume--let me tell you that worker's comp has become a very creative industry. As with all liability insurance, the principal benefit is legal representation to protect against bogus claims. If your client finds a way under the Workers Comp rules, he will be on his own in a very dangerous position.

There is an additional problem with that solution. In FL, the state unemployment tax auditors are very aggressive and will likely classify such "independent contractors" as employees and assess back UE taxes and penalties.

[sea-tax]

In washington we have a state insurance program. And like someone else stated , here in Washington the Labor and Industries and Employement Security Departments are hitting businesses hard with audits. We have had 5 this year alone . This is a lot considering that we may have only seen one a year for a long time. Main issue looking for is wether corporate officers have been covered or not. In washington a corporate officer must be notified by the corp that they will not be covered. Also the corp must make an election to cover or not cover the officers.

[taxmandan]

Workers comp insurance

Sometimes it helps to tell your liability insurance carrier that your business will go elsewhere if they can't help with WC, they might be willing to find something for coverage. I always suggest they go to an independent agent who would be more likely to find coverage than a single line agent like Farmers or Allstate.

[jainen]

quotation marks

>>classify such "independent contractors" as employees<<

Yes, if you have to put it in quotation marks it won't fly. But you can fix it up the right way if you are careful. Only hire people who have a genuine established service with other clients. That's easy to find for semi-skilled couriers, maintenance crew, and the like. Similarly, para-professionals like bookkeepers, purchasing agents, and research assistants are also easy. Some of these plus clerical workers are best obtained through a temp service, even semi-permanently.

The hardest slots to fill with independent contractors are the ones who most want it -- the creative talent. Artists, programmers, copy writers -- you have to work hard to successfully set them up as non-employees. And sales staff--that's not hard, it's impossible!