If you have employees, yes. Some states require it as part of your license, so even if you are a sole proprietor, you may be required to have a policy and exempt yourself, sometimes for as little as $50 a year. Check here to see what is required in your state.
What if I use subcontractors, not employees?
This is a common argument among painters, and even other trades. Some believe that if they classify a worker as a Subcontractor, they are not required to pay Workers Comp, as well as Unemployment Insurance, State and Federal taxes. The IRS has some guidelines to define the roles, but we all know this is a widely abused practice. Many unethical contractors will pay their help cash or check and issue a 1099, at the end of the year, the “employee” may be surprised that they now have to pay taxes on that income!
What if I choose not to have Workers Compensation Insurance?
If an employee is injured on the job site, and you do not have coverage, you may have to pay for the medical bills out of your pocket, and your customer may be forced to pay some of the costs. There have been cases on this that have gone to the Supreme Court. Do you really want to risk that?
Where can I learn more?
This month’s issue of American Painting Contractor is a great place to start, here is an excellent overview on Understanding Costs and what is covered. You can also find more on your state’s guidelines here.
What if I get Audited by Workers Compensation?
This week we will have a guest post by Elaine Yue, a Worker’s Compensation Auditor, she will explain how to prepare for an Audit and be available for any questions.
So be sure to subscribe to Blogging Painters and check back to learn more!