The impetus of this article is simple – we are asked multiple times a day by well-intentioned investors... More...
Worker’s Compensation insurance is one of the last types of coverage most investors or property owners with employees or staff ever think of - but it can be as important to your investing or property management business as property and liability insurance.
In most states, if an employee (even part -time) is injured either at the workplace or while performing duties of his or her (such as inspecting property, meeting with tenants, or performing remodeling tasks), it is you, the legal employer, who is 100% responsible for all of that individual’s medical bills relating to the injury, for the rest of that individual’s natural life, whether it’s 30 days or 30 years. IT DOES NOT MATTER WHETHER OR NOT THE EMPLOYEE IS CLASSIFIED AS A “1099″ OR “W-2″ EMPLOYEE.
Many full-time investors have one or two staff that either work in an administrative role or which are full-time repair and remodeling personnel responsible for rehabbing or maintaining property. The common misconception is that as long as these employees are classified as ”1099 Independent Contractors”, the investor/employee is relieved of all responsibility and liability for injury because these people are not actual ‘employees’. THIS IS NOT NECESSARILY TRUE. You see, the ’1099′ designation really has nothing to do with employment status as viewed by the Department of Labor, it is more of a TAX-RELATED issue dealing with who pays the employee’s payroll taxes and it is used as a way to avoid employer taxes such as unemployment and FICA taxes. According to the Department of Labor (and many state laws), if 80% or more of that individual’s primary income is derived from working for you and performing tasks on your behalf – he or she can be considered an employee. A true ‘independent contractor’ works ‘independently’ and derives his or her income from a variety of sources or customers instead of the majority of income coming from just one ‘customer’ (ie: you).
If one of your employees is injured on the job and you do not have worker’s compensation coverage, you are 100% responsible for all of the associated medical bills relating to that injury, including follow-up surgeries or therapy occurring years into the future but still related to the original injury. In addition, you are open to lawsuit and litigation and you can be held fully liable for the injured employee’s legal costs as well the employee’s ‘future lost earnings’ caused due to the injury, illness, or disability. This doesn’t even take into account punitive damages, settlement costs, and other costs that you may incur. Many successful and established business have literally gone bankrupt and ceased operations from financial stress due to not having worker’s compensation coverage.
By purchasing worker’s compensation insurance, you (the employer) are protecting yourself from these worries. You are fully relieved of all financial responsibility for medical bills, future lost earnings, and other costs. Worker’s compensation takes care of these for you. In addition, the employee cannot come back and sue you or your business later on as they are legally forbidden to do so (except in cases of severe gross or intentional negligence on the part of the employer).
If you have employees or staff, or if you would like to learn more about worker’s compensation insurance, contact us at (512) 501-4010 or (800) 299-8994 and we will be happy to discuss this with you. We have over 20 worker’s compensation companies to quote through and we have the ability to insurance any employment risk that you may have.