Re: Some NY WC questions - Posted by Frank Chin
Posted by Frank Chin on August 03, 2007 at 03:56:01:
I had 8 employees for the firm I had, and under NY law, the “owners” are exempted from mandatory coverage, but can “elect” to buy the coverage. I found no prohibition against an owner of a company working by himself buying coverage, though he is EXEMPTED from having to get it. In fact, I had to sign a form “electing” not to have the coverage. In my research, I found a site, which I unfortantely did not bookmark, that recommeded that owners of busimesses doing work themselves that occasionally hire 1099 contractors to get a policy, “elect” to get themselves covered, so they can then add the coverage for others.
Oddly, in NY State also, exemptions to required WC coverage includes, among others, RE agents, priests, and clergymen.
Currently, I’m discussing this WC issue with my insurance agent, and the technical point centering around what “nominal” compensatiom I have to report for myself to past muster. In my current setup, I pay myself from other entities, and the management company is just a “pass thru emtity”, which collects a management fees from these others, and just pays benefits.
After the accident at my business, I learned that the owners can be held personally liable for WC claims even if the business is incorporated, if they don’t carry WC coverage. Conversely, the employee CANNOT sue the employer of with WC coverage.
I also learned that state law requires insurance companies to include WC coverage for “owner occupied” homes, which is not available for NOO properties. The fact that the state requires WC for OO homes seems to me that there are WC issues for NOO homes as well. I asked if the policy can be enhanced to include WC coverage, but advised it is not available.
This point was important enough for me to verify that my agent contacted the insurance comapany, and confirmed back to me last week that I have WC coverage for my home, but not for the rentals.
I also learned in the course of the accident in the business, that although state law “prohibits” suing the employer with WC claims, lawyers will go ahead and sue “everyone else but the employer”.
Indeed, the one employee who was the most seriously injured, and under WC did come back and sued my landlord for “negligient management” of the property. And because my company assumed maintnenace responsibilities under the NNN lease, my company was pulled in anyway, despite the ban against suing the employer.
So the GAP I see in the strategy of relying “heavily” on LLC"s to protect against risk lies in someome suing under WC grounds, where:
- I am not covered under my"general liability" insurance.
- State law allows suits against owners of companies.
In fact, for these legal reasons, I can see someone seriously hurt suing on WC grounds, especially if the property is held in an LLC.
My main concern is the few people I used, especially roof repairs, are often not well equipped, thus using tools and ladders which I provide, strenghthening the argumanet they are employess. In fact, I provide the ladder, roof tar, amd the trowels.
So far, I have not had any handyman sign forms saying they’re strictly independent contractors. But if this is another good approach, I’ll check with a local attorney and have something prepared.
In fact, if I can work soemthing out where I can legally pin these people down as “independent contractors”, it seems simpler amd cheaper than going the WC route.