Workman's comp

[TheArborist]

Where do you all do about workman's comp insurance? I don't carry it. Not because I don't want to, but I generally only have one employee and understand that legally I don't have to. At 42% of payroll it is out of price range at my level of business.
I am interested in any thoughts on the topic. Is there an economical way to get coverage. What are other companies doing? Who is a good source to get it from? Is there an understood break point in gross income at which a small business should be expected to be able to afford it?

 

[Canyonbc]

I researched mine through my insurance guy and he ran me some quotes...of course we agreed i didnt because i am a one man show boat.

I would contact your agent, or the web.

Basically though it was a grand up front and then a percentage of payroll goes back.

 

[timber12]

Why dont you need wc if you only have one employee? I generally only have 1-2 guys and we carry comp on them. I have never heard such a thing, I dont have it on myself. If you are serious about owning a tree co then you need to figure out how to afford it or you need to find some sub's that have general liability. Our rate on wc is 33%.

 

[TheArborist]

I didn't say that I don't need workman's comp, but that I'm not legally required to with less than 3 employees. Subs with general liability does not as, I understand it, solve the workman's comp issue. I carry general liability.
I'm not looking for preaching or judgment but discussion. I am serious enough about running a tree business to have been doing it for the last fifteen years.
Sounds like in answer to my gross income break point question your response is - figure it out. Thanks.

 

[fastbub]

I don't think the answer is that simple. I think what he meant by "figure it out" is that that is a cost of doing business. What your rates are, or what you charge the customer, is driven by your cost of doing business. If you are doing business that requires another 1 or 2 employees and you need to carry workers comp on them, that is part of your overhead.

What you charge needs to be based on what it costs to do the job and what you need to take home to live. You can't base it off of what other people are charging OR get work by being the cheapest by not paying some of the expenses that other guys are paying. If you are good at what you do and are good to your customers, you will be able to work for what you need to charge. That CAN include workers comp.

 

[ronnyb]

Work Comp

Can you afford to lose everything if one of your workers sustains an injury? What do you tell your clients when they ask if you are insured? A friend of mine owns his own tree biz, and one his workers was blocking down wood from about 70 feet up. My friend and his groundie were raking up on the other side of the backyard. A piece about 10 inches in diameter ricocheted off a large decorative boulder, shot straight across the backyard, and hit the groundie dead center in the face. Broke most of the bones in his face, most of his teeth, and worst of all-- popped one of his eyes right out of the socket. Dave still has his business, and the groundie was able to get all the surgeries and rehab he needed. Think about what you could lose.

 

[teamtree]

IMO...You better check on the workers comp for North Carolina...if you have employees...regardless of how many 1 or 1000....i believe you have to carry workers comp on them...go to the North Carolina state web site and look under workforce development....I believe you may have been told some bad information. You may not have to provide health insurance which is a totally different.

But one visit to the hospital due to an accident could send you into bankruptcy....i have seen it happen before...when I was a CPA and Financial Advisor.

It is well worth the money....otherwise you are just like the majority in the business making it tough for the guys that play by the rules.

 

[teamtree]

to answer your question on gross income.....it does not matter how much....you figure it into your cost

Payroll $15 per hour +

Payroll tax 7.65% (fed) +

Unemployment Tax 1.0% (3.7% on amounts up to 7000 state & fed - but ck your state)

Workers Comp 25% +

Overhead (training/downtime/meetings/etc.) 50%

= So my costs = approximately 27.55 for someone making $15 per hour so I round up to $30 and that is what I have to have for every hour of billable work

I work through similar equations for all my equipment and then I work up my bids from that

if you come up with a figure that does not allow you to be competitive then I am not sure what to tell you

I do know that most of my competition works 90% of their labor as cash thus avoiding workers comp

It is a tough business to be in if you go by the book all the time but I look for jobs that require me to prove I have workers comp and then I am very competitive.

If it is really true that you are not legally required to have WC because you only have 1 employee, I am moving to North Carolina I would save about 15k a year.

 

[teamtree]

http://www.comp.state.nc.us/ncic/pages/faq.htm

I stand corrected...if I read the FAQ right, he is not required to have workers comp....unbelievable....i am looking for work in North Caorlina as we speak



this is from the Indiana website

Q: How many employees must I have in order to be required to carry worker’s compensation insurance?
A: In Indiana, there are no numerical exemptions. If you have even one employee you must carry worker’s compensation insurance.

 

[appalachianarbo]

From the NC Industrial Commission:

"If you are a sole proprietorship, partnership, LLC, estate, or trust, you are required by law to carry coverage once you have three (3) employees who are regularly employed, in addition to the sole proprietor, partners, formulators of the LLC, executor of the estate, and bearer of the trust. It does not matter if these employees are full time, part time, regular seasonal or family members.

If you are incorporated, including all forms of corporations and those which have non-profit status, you are required by law to carry coverage once you have a total of three (3) people in the corporation. Everyone is included in the headcount, including corporate officers."

I am in sort of the same boat as you. I have no employees but use one guy semi-regularly for cash. I am a very small op. but would like to make him an employee and have him covered by my liability (which I do carry) and worker's comp. I'm looking into it...

 

[appalachianarbo]

Teamtree - You beat me to it!

 

[teamtree]

Ok...now I am confused....if you have a two man operation....what happens if your employee gets hurt? Does he have to have health insurance on himself? If he is covered by a spouse's health insurance they are going to deny any claims if he is hurt in the process of making a living. At least that is the way my spouse's policy works...if I am hurt at work...i am not covered...i have to have workers comp or self-employed health insurance. Very interesting laws you have in North Carolina.

 

[appalachianarbo]

I have that same question. This is not our primary employment. We have medical coverage by our respective primary employers, but if he were to get hurt doing tree work, I'm not sure they'd cover him. I guess the same worry applies to me. We always joke "If something happens, just drag me to the fire dept (we both work at fire departments), put me in my uniform, and throw me under the truck."

So now I'm curious - what's the easiest way to get worker's comp coverage? Can you go through the govt or a private insurer?

 

[ATH]

So now I'm curious - what's the easiest way to get worker's comp coverage? Can you go through the govt or a private insurer?

You just might get 50 different answers... This is a State issue, so everyone will be a little different.

What applies in Ohio will not apply in NC. Somebody here thougt it would be a good idea for the gubment to run it (because they do so well with everything else), so we all have to bend over and pay for some guy to buy old coins with our cash

Fortunately, we can get into a group which lowers the rate as much as 90% - see what happens when the private market is allowed to have influence!

My suggestion (regardless of State) would be to start with trade organizations...even those remotely related to the tree care industry (lawn care, nursery, home builders, etc...). Most trade organizations help their members with workers comp group insurance, and most are glad to have more members - even if they aren't exactally part of the "core".

 

[TheArborist]

Some great responses, thanks!
Yeah, its a no brainer that I don't want someone I care about to get hurt, or to lose everything in a law suit - full agreement! Certainly that is why I started this thread. The job costing examples were helpful.
The lunacy that NC doesn't require w.c. for less than 3 employees makes no sense to me.
Once again, any of you NC guys have specific sources that you're willing to share. Over the years when I have brought it up with several insurance different insurance people they respond with little motivation or enthusiasm.
Generally, I've been quoted 42% of payroll - payable up front. For my business grossing in the 100,000.00 range and expenses already at 40%, coming up with $12,000.00 up front is simply not likely (and that still leaves me uncovered!).