Liability related to day labor injuries

15 Replies

In regards to using a handyman or simple day laborer for small projects, what can I do to limit my liability? Say if a worker I hire for yard work cuts off a toe, will my property liability insurance cover something like that?  Does anyone use waiver forms to mitigate risk?

I'm always nervous about using day laborers for this reason. 

Property insurance really doesn't cover that, it's a workman's comp issue and it's a really hard thing for small business owners. Technically they're supposed to have their own workman's comp, but good luck finding one with that unless they are a bigger company. Some workman's comp insurers consider any 1099 vendor who doesn't have their own insurance to be under your policy. This is just how we do it for such guys and suck it up that we have to pay their workman's comp. Do you have any employees or workman's comp insurance by chance?

Great question. So, a 1099 person "IS" an employee? This is worth investigation by all landlords.

This "IS" should not be confused by the Clinton definition of "is":)

We find that the most effective 'protection' is to put them through a temp agency you use. 

The extra cost is marginal compared to what could & will inevitably happen.

We had a young kid just start his new business & had a couple of guys working 'off the books' one got hurt & the cost was very high & mounting. 

His defense was "but I had him sign a waiver that if he got hurt he couldn't go to the hospital & claim it as a work related injury". 

The 1099 route may have been an option but here in NY State it's an expensive gamble.

A 1099 person is not an employee so long as you meet certain criteria such as you do not provide them tools, you do not dictate means and methods for getting work done, you do not dictate the hours they work.

In TX we have a form called DWC 85 which you should get signed when hiring an independent contractor.  It offers some protection against WC claims.

That being said, my insurance company still charges me if I hire a contractor who does not carry WC.

In Colorado, employers file an annual worker's comp audit report.  Not only do you report your employees, their salary and the type of work they did, you also report the subcontractors, the amount you paid them and the type of work they did along with some identifying information, such as federal ID number and address.  You almost always pay an additional worker's comp premium after they review this report UNLESS you also include the subcontractor's proof of insurance that they provided you.

You cannot ask a subcontractor to sign a waiver that they cannot make a claim against you if they are hurt on your job, while doing work for you, regardless of whose fault it us.  What you can do is ask them to provide their proof of insurance OR a document that they have signed up for worker's comp, but as the OWNER or PRINCIPAL of their company, they have opted to waive insurance for themselves.

Proof of worker's comp or a waiver of coverage for an owner is required.

Originally posted by @Linda Weygant :

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You cannot ask a subcontractor to sign a waiver that they cannot make a claim against you if they are hurt on your job, while doing work for you, regardless of whose fault it us.  What you can do is ask them to provide their proof of insurance OR a document that they have signed up for worker's comp, but as the OWNER or PRINCIPAL of their company, they have opted to waive insurance for themselves.

Proof of worker's comp or a waiver of coverage for an owner is required.

In general, I agree with what Linda has posted. But there are certain exceptions where a waiver does occur. For example, Amish do not carry WC insurance - it is against their beliefs. 

As @Pat L. posted, a temp agency that gives them WC coverage works. But that would cost you more than hiring them directly.

Originally posted by @Steve Babiak :
Originally posted by @Linda Weygant:

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You cannot ask a subcontractor to sign a waiver that they cannot make a claim against you if they are hurt on your job, while doing work for you, regardless of whose fault it us.  What you can do is ask them to provide their proof of insurance OR a document that they have signed up for worker's comp, but as the OWNER or PRINCIPAL of their company, they have opted to waive insurance for themselves.

Proof of worker's comp or a waiver of coverage for an owner is required.

In general, I agree with what Linda has posted. But there are certain exceptions where a waiver does occur. For example, Amish do not carry WC insurance - it is against their beliefs. 

As @Pat L. posted, a temp agency that gives them WC coverage works. But that would cost you more than hiring them directly.

That's really interesting, Steve.  I haven't run into that particular exemption before.  Does the Amish person still need to show a proof of exemption or waiver of some sort?  I don't know much about the Amish, to be honest.  How would they go about proving they are Amish and that you should allow the exemption?

To clarify the comments on a waiver: an important term to know is "legally enforceable".

Requiring a person to sign a waiver giving up their rights for a WC claim is not legally enforceable.

@John Thedford To be clear, no...1099 workers are not employees (unless you keep them for a while and they "act like employees").  But for WC purposes, it doesn't matter.  As an owner you are ultimately liable for injuries to Anyone working on your property.  So, if they're not covered by someone's WC insurance (and don't have an exemption on file with the state for their self) between them and you, you're on the hook, whether they are an employee, subcontractor, day laborer, etc.

When you're in business like this and you hire someone to provide a service for you, the bar is set high for determining whether they are truly determined to be a contractor. Hiring an individual to do what you want, when you want, how you want, for the price you offer to pay them, etc. is really deemed an employee, in which case workers' comp comes into play (and a lot of tax and other requirements you don't want to deal with). They are not deemed contractors just because you or they say that they are. Best case scenario is you hire reputable contractors, someone who is in business to provide such services to you and others, who you agree to terms with contractually and who carries proof of insurance among other things (and all you need to do is issue them a 1099). Insurance in general is tricky as many people think they are covered for certain things when they are not. And insurance companies look for ways not to pay first. 

@John Thedford I'll add that a 1099 person is NEVER an employee. 1099's are issued to contractors and W-2's are issued to employees. But you must determine if they are a contractor or an employee first before determining if they are a 1099 person or not (and its not black and white but you can find a lot of guidance online about this). So as a landlord, consider who is doing what for you and see if they fall under the category of a contractor or employee and go from there. 

That being said, WC comes into play for all employees as well as in the case of contractors without their own adequate insurance. 

So in summary, I'm liable for anyone doing any type of work on my property who is not self-insured. That eliminates a significant portion of the labor population. I guess that's the world we live in, I can no longer hire a teenager in the summer to cut the lawn

Originally posted by @Keith T. :

So in summary, I'm liable for anyone doing any type of work on my property who is not self-insured. That eliminates a significant portion of the labor population. I guess that's the world we live in, I can no longer hire a teenager in the summer to cut the lawn

Basically    Yes thats correct .   This is one main reason that contractors charge what they do , it isnt cheap being legal 

Originally posted by @Keith T.:

" I guess that's the world we live in, I can no longer hire a teenager in the summer to cut the lawn"

That's what sons are for!  :)