Page 20 - Mississippi 811 Magazine 2021 Issue 4

Avoiding Workers Comp Pitfalls
By Virginia Reames The Policy Center
Whenever one of the major utilities opens a job, countless contractors apply. One of the bigger requirements is insurance – including Workers Comp.
Time and again a contractor will say
“I don’t have to have it. I don’t have enough employees”. Well, they find out quick enough that if they want a shot
at that contract, they DO have to have it! That law doesn’t say “You are exempt from liability because you don’t have enough employees”. It simply says you won’t violate the law if you don’t have it. You are still liable if an employee gets hurt working for you – whether you have 1 or 101 employees. That contract wants to see Workers Comp regardless of if it’s you and only you!
Why??
Because the General Contractor will have to pay for your Workers Comp if
you can’t provide him with a certificate showing you have Workers Comp in place during the period you worked for him! Simple economics – never mind the Big Deal if someone gets hurt and sues. The GC will have to pay to cover every sub even if no one gets hurt.
Let’s say you get that Workers Comp; you get the contract and you hire a
few workers. Then you have to sub out a section of the job to someone else. Did you get a certificate from the sub saying he has Workers Comp coverage in place? Then you are going to have to pay for his Workers Comp when your policy is audited at the end of the policy year!
Each year, every Workers Comp carrier in the country conducts an audit.
You must provide their auditor with copies of your 940s and 941s. They go over them and compare the premium you paid – based on the payrolls you estimated when you wrote the policy – against what you actually paid workers
Photo provided by David Dow
during the policy year. If you paid out more than you estimated, you will get a bill; if you paid out less than estimated, you will get a refund. Happens every year.
If you fail to comply with the request for audit information, your Workers Comp will get cancelled and you can’t get it anywhere else until you have completed that year’s audit.
The National Council on Compensation Insurance (NCCI) keeps up with all these details, and every company doing business in this country checks with NCCI before issuing a new Workers Comp policy. There simply is no way around compliance – and you must have Workers Comp insurance if you want a shot at the bigger jobs!
Let’s say you get all your insurance and bonding, put in a bid, and you get the contract. It starts out being just in your home state, and things are fine for a year or so. You are doing a great
18 • Mississippi 811 2021, Issue 4