Workmans Comp- the company "requires" it.

xairx · Sep 10, 2019

I want to lease on to this one company that requires me to have workmans comp. If I had a driver, I get it- they should be covered. Personally... "I'm good". I can get the policy set up, that's not a problem. I'm just not willing to pay $400 a week for benefits that I will never receive even if I get hurt.

Negotiating with the company is out of the question.

Let's assume I pay myself $1,200 a week (steady). I can technically split it into two checks. I would pay workmans comp on my $400 paycheck, and no workmans comp on my $800 paycheck. That keeps me "in-line" with the IRS. It's an s corp, so I cant just pay myself $100 a week and take a distribution for the rest. This way the company sees i have workmans comp, the IRS is happy, and I'm not losing out on paying full price for a policy that i can technically use as toilet paper.

What's wrong with my plan?

Why am I being "cheap" you may ask? The chances of workmans comp paying out if I get hurt as an owner op are slim to none. Workmans comp is also not required for a business owner by law. Almost every single company you wanna lease on to requires it so they can cover their behind. I'm not in the business of paying for things that cover others, if not required by law.

Long FLD · Sep 10, 2019

Does it have to be true Workers Comp coverage? I have Occ/Acc coverage from OOIDA because the guy I run for wants us to have something on ourselves.

Tug Toy · Sep 10, 2019

Just like the mandatory “unemployment insurance” I have to pay every other week.

brian991219 · Sep 10, 2019

It will not fly, the worker comp will be audited at the end of each year and they will look at your total exposure for payroll not just the part you plan to pay insurance on. Further, they can adjust your WC rate to reflect an average salary for the driver job if they feel you are underpaying your driver (you in this case) or their activities. Salary must be reasonable for the tasks performed.

I have had several WC audits at my shop when I had the towing business and they always were concerned about how much time each employee spent at a specific job task to be sure they were being assessed the correct rate for their exposure. They even required some documentation to prove my tow truck drivers spent more time in the shop as a mechanic ($2 on every $100) then as a driver ($8 on every $100). What was really odd, my tow truck drivers rate was $8 per hundred but my auto transport driver rate was $14 per hundred of payroll. Odd since tow truck drivers have much greater exposure with one being killed on average every 6 days in the US.

If this company is New York based it is a requirement of New York law that all transportation sub-contractors have workers comp, and the state aggressively enforces it. I have some experience with this where New York based my worker comp exposure as a single truck owner operator with my own authority hauling for a New York based company (I was domiciled in PA and a PA based company) on a percentage of my gross, not what I claimed I paid myself. They assessed the company I was contracted to a WC premium based on a projected payroll that was 33.3% of my gross earnings to the truck. This was because New York did not like my PA based WC plan, it was missing a specific endorsement for NY state.

xairx · Sep 10, 2019

Long FLD said: ↑

Does it have to be true Workers Comp coverage? I have Occ/Acc coverage from OOIDA because the guy I run for wants us to have something on ourselves.
Click to expand...

That's what I have right now too. $120 a month. I can deal with that. Its cost of doing business. At $400 a week for workmans comp.... that's just money blown away.

xairx · Sep 10, 2019

Tug Toy said: ↑

Just like the mandatory “unemployment insurance” I have to pay every other week.
Click to expand...

It sure sucks. Were getting milked so people out there can go around and whine they cant find a job for 6 months. Surprisingly they always find one as soon as the benefits run out

xairx · Sep 10, 2019

brian991219 said: ↑

It will not fly, the worker comp will be audited at the end of each year and they will look at your total exposure for payroll not just the part you plan to pay insurance on. Further, they can adjust your WC rate to reflect an average salary for the driver job if they feel you are underpaying your driver (you in this case) or their activities. Salary must be reasonable for the tasks performed.

I have had several WC audits at my shop when I had the towing business and they always were concerned about how much time each employee spent at a specific job task to be sure they were being assessed the correct rate for their exposure. They even required some documentation to prove my tow truck drivers spent more time in the shop as a mechanic ($2 on every $100) then as a driver ($8 on every $100). What was really odd, my tow truck drivers rate was $8 per hundred but my auto transport driver rate was $14 per hundred of payroll. Odd since tow truck drivers have much greater exposure with one being killed on average every 6 days in the US.

If this company is New York based it is a requirement of New York law that all transportation sub-contractors have workers comp, and the state aggressively enforces it. I have some experience with this where New York based my worker comp exposure as a single truck owner operator with my own authority hauling for a New York based company (I was domiciled in PA and a PA based company) on a percentage of my gross, not what I claimed I paid myself. They assessed the company I was contracted to a WC premium based on a projected payroll that was 33.3% of my gross earnings to the truck. This was because New York did not like my PA based WC plan, it was missing a specific endorsement for NY state.
Click to expand...

Great information! Thank you!

Well here is the thing... I have an s-corp and I plan on leasing on to the company in question. They pay my s-corp weekly for services performed by my s-corp, that's it. Payroll is on me. WC is on me. Taxes etc. Its the typical owner op scenario.

My s-corp is based in NJ and the company I plan to lease onto is also based in NJ. NJ does not require owners of a small business to carry WC. So per the state law, I'm in the clear. When it comes to an audit. Did you mean an audit by the state or the company you were leased onto? The state can audit me at the end of the year and that's "fine". "Fine" because I cant say NO. If a company I lease onto wants to "audit me" they can go .......... (you get the idea). Audit? Goodbye! I'm not releasing my business info to a private corporation.

Also, my second idea was to get workmans comp policy documents, show it to the company, let them verify, and cancel the said policy.

I'm trying to avoid spending money on stupid useless crap. Monthly WC is higher than my truck payment... it's over $13k a year. Now if the rates were higher and we were all getting $5 a mile it would be the same story but at least the numbers would make better sense.

I'm trying to make the numbers make sense and... WC is ripping a large portion of my profit.

brian991219 · Sep 10, 2019

xairx said: ↑

Great information! Thank you!

Well here is the thing... I have an s-corp and I plan on leasing on to the company in question. They pay my s-corp weekly for services performed by my s-corp, that's it. Payroll is on me. WC is on me. Taxes etc. Its the typical owner op scenario.

My s-corp is based in NJ and the company I plan to lease onto is also based in NJ. NJ does not require owners of a small business to carry WC. So per the state law, I'm in the clear. When it comes to an audit. Did you mean an audit by the state or the company you were leased onto? The state can audit me at the end of the year and that's "fine". "Fine" because I cant say NO. If a company I lease onto wants to "audit me" they can go .......... (you get the idea). Audit? Goodbye! I'm not releasing my business info to a private corporation.

Also, my second idea was to get workmans comp policy documents, show it to the company, let them verify, and cancel the said policy.

I'm trying to avoid spending money on stupid useless crap. Monthly WC is higher than my truck payment... it's over $13k a year. Now if the rates were higher and we were all getting $5 a mile it would be the same story but at least the numbers would make better sense.

I'm trying to make the numbers make sense and... WC is ripping a large portion of my profit.
Click to expand...

The audit is done by the workers comp insurance carrier, not the state or the company you plan to lease onto.

I agree it is crazy to require WC on a 1 man independent since in most states thebowner of the company is prohibited from collecting on a WC claim. In your case a Occ Accident plan makes much more sense, too bad the motor carrier doesn't see it that way.

For me I had to deal with the WC crap when I had the garage and fleet, no issue there, what ticked me off was needing it when I was a one truck company just because I was contracted to a NY based company.

Wish I had a solution for your situation. Be careful if you chose to obtain the WC policy then cancel afterwards. The WC carrier will notify any certificate holders such as the company you are going to lease onto which may cause your lease to be canceled.

brian991219 · Sep 10, 2019

Also, shop around for the best WC rates. I don't know how many offer WC policies in NJ but can say here in PA there are over 300 insurance carriers offering PA workers comp insurance. I was able to find a significant difference in rates between them.

All WC plans have a base formula that each state requires based on a occupation code but the individual insurance company can then adjust the experience modifier and other portions to get you a better premium per hundred of payroll.

Lastly, WC is a unique animal in that your first year is kinda like paying on an honor system then when the come to do the payroll audit to set the rate for next year they can hit you with a premium adjustment for the year you just completed and demand immediate payment if they determine your payroll exposure was greater that what was reported. This happened to me one year and it was awful.

xairx · Sep 10, 2019

brian991219 said: ↑

The audit is done by the workers comp insurance carrier, not the state or the company you plan to lease onto.

I agree it is crazy to require WC on a 1 man independent since in most states thebowner of the company is prohibited from collecting on a WC claim. In your case a Occ Accident plan makes much more sense, too bad the motor carrier doesn't see it that way.

For me I had to deal with the WC crap when I had the garage and fleet, no issue there, what ticked me off was needing it when I was a one truck company just because I was contracted to a NY based company.

Wish I had a solution for your situation. Be careful if you chose to obtain the WC policy then cancel afterwards. The WC carrier will notify any certificate holders such as the company you are going to lease onto which may cause your lease to be canceled.
Click to expand...

You had exactly the same situation as me now when you were leased onto the company in NY.

Great point on the last paragraph... If they notify them I'm out of the game and chances are they probably will.

I gotta find a way around all this somehow. At the end of the day I can hit $6k a week but after everybody is done taking their cut I'm not left with much to hire a driver. How the hell do people grow in this industry is beyond me. I should have opened a gas station instead... 40 cent markup per gallon on diesel depending on the area.

xairx · Sep 10, 2019

brian991219 said: ↑

Also, shop around for the best WC rates. I don't know how many offer WC policies in NJ but can say here in PA there are over 300 insurance carriers offering PA workers comp insurance. I was able to find a significant difference in rates between them.

All WC plans have a base formula that each state requires based on a occupation code but the individual insurance company can then adjust the experience modifier and other portions to get you a better premium per hundred of payroll.

Lastly, WC is a unique animal in that your first year is kinda like paying on an honor system then when the come to do the payroll audit to set the rate for next year they can hit you with a premium adjustment for the year you just completed and demand immediate payment if they determine your payroll exposure was greater that what was reported. This happened to me one year and it was awful.
Click to expand...

Thank you for the heads up. I'm faithfully paying my estimated taxes and crossing my fingers here that I'm paying enough. I'm actually overpaying a little to be safe. If I get WC and get hit with a $5k adjustment I'd gave to raid my maintenance fund which is just ridiculous. Surest way to be out of business in no time is to not have a maintenance fund...

I will shop around and see what I can come up with. Looks like paying a portion every week depending on payroll is the safest way about it. I'll see... unless I can cheat the system. Last time I checked a business owner could not collect on WC in NJ. I feel like I'm being cheated more by paying than not paying being aware of that fact.

Log in or Sign up

Forums

Find Trucking Jobs

Workmans Comp- the company "requires" it.

xairx Light Load Member

Trucking Jobs in 30 seconds

Wait, employers can't reach you!

Long FLD Road Train Member

Tug Toy Road Train Member

brian991219 Road Train Member

xairx Light Load Member

xairx Light Load Member

xairx Light Load Member

brian991219 Road Train Member

brian991219 Road Train Member

xairx Light Load Member

xairx Light Load Member

Trucking Jobs in 30 seconds

Wait, employers can't reach you!

Log in or Sign up

Useful Searches

Find Trucking Jobs

Workmans Comp- the company "requires" it.

xairx Light Load Member

Wait, employers can't reach you!

Long FLD Road Train Member

Tug Toy Road Train Member

brian991219 Road Train Member

xairx Light Load Member

xairx Light Load Member

xairx Light Load Member

brian991219 Road Train Member

brian991219 Road Train Member

xairx Light Load Member

xairx Light Load Member

Wait, employers can't reach you!