Contractors and Workmans Comp

<p>I'm looking to expand business this year by using contract help. I have been told that if the contractor does not have workmans comp (I have to verify), I have to supply it. I always thought a contractor was responsible for his own insurance and paperwork ie: tax forms.<br>

Does anyone have any experience in this area? I live in NY, dont know if that matters.<br>

Thanks in advance.<br>

Eric</p>

<p>Sounds like what you really want (rather than advice from photographers) is advice from a lawyer that practices in your state. NY's Small Business Administration help desk folks might be able to get you a definitive answer on that. Maybe try reaching out through contact info on <strong><a href="http://www.nyssbdc.org/">this web site</a></strong>.</p>

<p>Check this out: <a href="http://www.wcb.state.ny.us/content/main/TheBoard/BusinessOwners.pdf">http://www.wcb.state.ny.us/content/main/TheBoard/BusinessOwners.pdf</a></p>

 

<p>Thanks, John, Matt. John that link seems to spell it out. However being NY they left it somewhat ambiguous. Looks like I'll need to see my lawyer - it's never easy!</p>

<p>Eric,<br>

Along with photography, I also handle workers compensation for my 9 to 5 job. Most of my business was with construction contactors. <br>

First, unlike most other benefits, workers compensation is madatory. You cannot get around not providing it for your employees. However, if the people/company you contract with does not provide it, your business will be considered a "special employer" and the burdon of insuring them will fall on you.<br>

The best way to avoid this to to insist/mandate that your subcontractors have the necessary coverage and provide the written proof of that coverage. Then you may want to verify the information yourself.<br>

If they do not comply, do not do business with them.<br>

If you are thinking of hiring one or two people as independent contractors rather than employees, you are still responsible to provide benefits if they are injured on the job. The courts have held that the business (you) was the employer regardless of how the employees were hired. You will be responsible for providing medical and lost time benefits if they are injured while working.</p>

<p>This mystifies me, James! <br /><br />So, if I hire a photographer for four hours to shoot my wedding, and use a contract to spell out our relationship ... I'm on the hook for workman's comp if that photographer isn't already paying such taxes him/herself? This seems improbable.<br /><br />How is that relationship any different than a photographer that contracts <em>another</em> photographer for four hours of help?</p>

<p>Matt,<br />I talked to a NY rep today at lunch and he verified that I am liable for workmans comp; even if its just a contract photographer for a day to help with a shoot, or someone to help with post processing. In NY I'm looking at 1800-2000 dollars, a year, just to hire part time help. Financially it makes no sense (at least for a small bus. owner, its great for the insurer). Also, its a felony if there are more than 5 employees, punishable by a $2000.00 fine for every 10 days without insurance.</p>

<p>I'm still a little foggy, here. Does the wedding party have to buy workman's comp insurance when they hire <em>you</em> do to a one-time piece of work for them? If they don't, because that's more like them doing business with another business... what's wrong with you paying for some help from another photographer that is running <em>their</em> own. How is hiring another photographer's services for the day any different than hiring an electrician for the day, to help you string up some lighting gear?<br /><br />I'm not advocating a tap-dance around NY's laws, I'm just baffled, here. Do you already carry workman's comp insurance on yourself? If not, how is <em>that</em> not necessary (and presumably wouldn't be necessary for another photographer, either, when that person sells their own services to customers), but suddenly becomes necessary when you bring in another person as a subcontractor? Yeah, that lawyer is sounding like a great idea.</p>

<p>Talking to a insurance agent, the workman comp dosen't cover you as an owner. So as a individual photographer you don't need to carry it. But, if you contract a photographer, even for a day, who doesn't have workmans comp, since you are considered the employer, you must have workmans comp to cover that employee. If the photographer has it all ready, then you don't need to carry it. This how I understand it-still trying to figure it out.</p>

<p>I'll say! Because... surely the bride and groom, who are hiring a photographer for the day, aren't having to carry workman's comp for the photographer. Nor would they have to carry it for two photographers, if they happened to hire two of them to work side-by-side, I'd expect. This does just seem silly.</p>

<p>A lot of this stuff came into being as a result of less-than-honest employers in the past trying to avoid paying taxes/benefits/social-sec/etc to/for their employees. So now the rest of us get to deal with over complicated rules as a result. Paying under the table = more money for a business owner but more burden on society as a whole when those people tax the system without paying into it.</p>

<p>If everyone could just play fair (or fight to change the system legally rather than cheating), things could be a lot simpler for the rest of us.</p>

<p>From the "Employer's Handbook a publication issued by New York's Worker Compensation Board...</p>

<blockquote>

<p>Independent Contractors and Subcontractors:<br>

<br /> A business cannot require employees working for that business to obtain their own workers’ compensation insurance policy or contribute towards a workers’ compensation insurance policy (see Employees).<br /> However, a business <strong>may</strong> require an independent business that has its own employees to obtain a workers’ compensation insurance policy if the independent business is working as a subcontractor. (An independent business usually has characteristics such as media advertising, commercial telephone listing, business cards, business stationary or forms, its own Federal Employer Identification Number (FEIN), working under its own permits or operating authority, business insurance (liability & WC), and/or maintaining a separate establishment. The independent business has a significant investment in facilities and means of performing work.)<br /> <br /> For example, if Business A contracts with Business B to perform services and Business B is an independent business with its own employees, Business A <strong>can</strong> require Business B to have its own workers’ compensation insurance policy and obtain a certificate of insurance for this policy. This will help ensure that Business A’s workers’ compensation premiums are as low as possible.<br /> If an individual is truly independent, the individual works under his/her own operating permit, contract or authority. In many instances, individuals alleged to be subcontractors have been determined by the Board, acting in its adjudicatory capacity, to be employees when such individuals have been injured and have filed claims against the general contractor. As a result, insurance carriers often assess general contractors premiums for coverage of all “subcontractors” on the job site, unless the subcontractors furnish proof that they have their own workers’ compensation insurance policy. Accordingly, general contractors routinely require that subcontractors provide proof of their own workers’ compensation coverage in order to co-work on the job. This results in many sole proprietors, partnerships, and one or two person owned corporations with no employees who are not otherwise legally required to acquire a workers’ compensation policy, being required to purchase a policy (and include themselves in that policy) in order to work for a particular general contractor. (see Identifying An Independent Contractor)</p>

</blockquote>

<p>Elsewhere in the publication it discusses common and traditional Employer vs. Independent Contractor analysis which is based on assessing factors showing whether or not sufficient control is exercised by the hiring party. The passage above shows that purchasing WC for independents is <strong>NOT</strong> required as a matter of law but that many general contractor's require WC to be secured by their subs <strong>IN CASE</strong> the subcontractor is deemed later by a court to not be a contractor but an employee. In other words, WC is not needed for independent contractors but sometimes the hiring party doesn't want to take any chance and find out later that the contractor was his employee.</p>

<p>See a local attorney for actual advice.</p>