We are having a very technical and difficult problem to solve involving workman's compensation for independent and sub-contractors.
First of all we have a staff of about 15 people and pay workman's compensation for all of our staff including our maintenance and construction staff.
We also have a lot of vendors, some of these vendors are independent or sub contractors or 1-man shows. Our cleaner for example works by himself as an independent contractor as well as a few people who are "handyman" and do turnover and make ready work for us.
We make all of our contractors carry liability insurance. It is hard enough to find someone who has that. Almost non of these contractors carry workman's compensation because as an independent contractor they are not required to by the sate of Missouri, but any insurer we find for r employee's workman's compensation is telling us they are going to charge us workman's compensation for all of these subcontractors if they do not have it. This doesn't even seem legal for them to do as they are not required to carry it. My question is how do people typically deal with this issue? Telling people they have to have workman compensation would cause us to lose 3/4ths of our vendors (who again are not doing anything wrong.)
Every growing landlord or contractor will run into this issue eventually. It's not just MO, but most states are set up with the same Work Comp laws.
Besides making it mandatory for each to carry their own insurance, here are a few solutions some of my clients use,
1) Have the 1 man show purchase a work comp policy with "if any" payroll and exclude themselves from the policy. Then reimburse them for the premium. This takes the burden off of your policy, reduces your overall yearly cost.
2) Have your policy pick up the work comp coverage for your low risk vendors. Such as independent leasing agents, janitorial etc., but require the higher risk trades like roofing, carpentry, to carry their own policy. Each state has different work comp rates per trade, which is referred to as a Class Code, so you really need an agent to go thorough your payrolls and the current rates to determine which vendors you will require to carry and which ones you will not.
3) have your policy pick up all of the exposure and premium, but withhold the cost from the vendors payment. Example, you need to pay the painter $1000 for July work and the work comp rate is $12 per $100, then you pay them $880, ($1,000 - $120 work comp fee). This is an option but a pretty big administrative burden.
I counsel on this exact senerio 1-2 times a quarter. I can tell you all of these answers usually generate many additional questions, so PM me is you would like to discuss further. Id be happy to help.