Protect Again Wage Claim of Subcontractor Employees Maryland
Here's the scenario: A homeowner looking to replace his roof solicits estimates from several covering companies. The company he hires is the to the lowest degree expensive i and uses subcontractors to exercise the labor. The salesperson for that company shows him the company'southward country license and current certificates of insurance, including workers' bounty insurance. In the course of the work, a crewmember falls and is severely injured. The worker on the roof is a subcontractor and a sole proprietor without worker'southward bounty, and information technology turns out that the license and insurance certificates the roofing company showed the homeowner only comprehend the company's employees, pregnant admin staff and salespeople. The injured worker files a personal injury lawsuit against the homeowner seeking payment for medical expenses and lost wages.
No Mere Formality
Sound far-fetched? Don't kid yourself. It happens, though such suits rarely if ever are reported in the media. Information technology'southward why, when selling a chore, reputable contracting companies routinely present proof that they agree insurances in addition to their contractor's license (in states where it's required), every bit well as proof of bonding. Online review sites advise homeowners that they need to inquire for a license and proof of insurance coverage, significant for liability and workers' compensation.
For instance, a story on Angie's List quotes Oregon painting contractor Eric Hernanz, who had an employee autumn off a ladder, resulting in a cleaved elbow and an $eighteen,000 beak for treatment. Hernanz had his Oregon contractor's license and was up to date on his workers' compensation insurance, which paid the pecker. But what if he hadn't been? "My employee very well could accept sued the homeowner for medical bills and lost wages since it happened on his property," Hernanz points out. "Unlicensed contractors put their ain clients at run a risk if someone'southward injured on the chore."
But whether or not a homeowner is going to be stuck paying the bills is far from an open and shut matter. A host of factors are at play, which may be why so many contractors choose to have that risk.
Licensing and Workers' Comp
Can the homeowner be sued? According to a blogger for the Simplified Safe website, the answer is: "It depends."
Here'south what information technology depends on. First off, it depends on whether or not the contractor carries workers' bounty insurance, which would be the showtime recourse in the outcome of an injury. The worker's medical expenses—typically about 60 percent of the total payout—and back wages are paid by the insurer, in amounts averaging six figures. And the worker in turn forfeits the right to sue his employer.
If a contractor is licensed, he likely has workers' bounty, because in states that require licensing, proof of workers' comp insurance would be needed to get or maintain that license. In California, for instance, "workers' compensation insurance is required for issuance of an active license, reactivation of an inactive license, and for the maintenance of an actively renewed license, unless the licensee does not employ anyone in a mode that is subject to California workers' compensation laws," according to the website of the California Contractors Land License Lath (CSLB).
California is i of the strictest states when it comes to licensing and insurance, with tough laws. According to a story on the Law360 website, a year and a half ago the Golden State stepped up its enforcement of workers' compensation requirements by enabling CSLB Enforcement Representatives (ERs) "to issue a Notice to Appear in a California superior courtroom enforcing a licensee's obligation to secure valid and current workers' comp insurance …." Contractors belongings a license who have allowed their workers' comp insurance to expire are the clear target.
What Near Subcontractors?
And so there'southward the subcontractor part. Every state except Texas requires contractors with one or more employees to purchase workers' compensation insurance. (A list at GTM Payroll Services provides a state-by-state description of workers' comp requirements.) Sole proprietors are excepted, only if the independent contractors who install accept ane or more employees, they're certainly not excepted.
In roofing, installation with subcontractor crews is more the rule than the exception. And many subcontractors don't deport workers' compensation insurance. "Because the workers' comp premiums are and then loftier, the subs in turn subcontract out their labor," explains the website for Kovalick Covering, in Michigan. "By the fourth dimension it gets down to it, everyone on the roof is a sole proprietor with no employees. All of whom are exempt from the workers' bounty laws, and therefore have no insurance."
Unless the general contractor demands proof of current insurance from whoever is fielding those crews, the homeowner is exposed to adventure. It doesn't do the homeowner much good that the roofing company'south salespeople and admin staff are covered by workers' comp, because those employees are not on the roof. Should a roofing installer fall, the likeliest reply to the question of who's going to pay for information technology is the party with avails.
The issue of responsibility has been fought out in the courts, only at that place is still no clarity. The California Country Supreme Court handed down a major decision on this effect in "Fernandez vs. Lawson" in 2003. In that instance an injured worker employed past a contractor who lied to a homeowner about having both a license and workers' comp sued that homeowner. A court initially constitute the homeowner liable, but the Land Supreme Court "reversed the decision, merely only because the worker had worked on site less than 53 hours. Chaser Peter N. Brewer notes that it is the responsibility of the possessor of a business or residence to determine that the contractor is licensed and carries adequate insurance."
My Insurance Volition Cover It
What the typical homeowner wants to know on signing a contract is how much is it, and when tin you outset? Nearly are not aware that they may be legally responsible for costs associated with an injured subcontractor, and even those who exercise know don't always properly investigate their liability. They tin ask the roofer, and he can show his license and proof of insurance. But would the homeowner know to ask about whether or not subcontractor crews are fully insured?
For on-the-ball roofing companies, the upshot of who's legally responsible in the event of an onsite injury can be an opportunity to brainwash, and to position themselves as knowledgeable, honest, and forthright., And information technology can assist them explicate price differences when compared with their competitors. 1 reason so many contractors go unlicensed and fail to purchase workers' compensation insurance is the sky-high cost of that insurance. In Florida, for case, workers' comp costs $8,528 per yr for a $xl,000 roofing employee. Non conveying workers' comp enables subs to reduce their labor costs and submit more than competitive, depression-ball bids.
Homeowners may even be aware that that super-low cost for a re-roof means that no one pounding nails is actually covered by workers' comp. And they may not care or may be willing to take the take chances to save a few one thousand dollars on their re-shingling task. They may too have refuge in the idea that "my homeowners insurance will embrace it" should an accident or injury occur.
Are they correct? Again, maybe, maybe not. "In some instances, a homeowners insurance policy may protect against personal injury liability," notes attorney Daniel Taylor in an article at FindLaw.com. But few homeowners know what their homeowners insurance really covers. They probably wouldn't know, without examining the policy, whether or not liability has been extended to embrace personal injury.
On the other manus, attorney David Goguen, writing on personalinjurylawyer.com, notes that "in some cases, a homeowner may exist held liable for injuries suffered by contractors and other workers who are on the belongings to perform renovations, repairs, and other kinds of piece of work. But homeowner liability in these situations is not automated."
What comes into play in determining if the homeowner could be liable, the article points out, is how much command the homeowner has over the contractor and the chore, the specifics in the homeowner's insurance policy, and whether or not "the injured worker is eligible to file a workers' compensation claim."
Minimize Customer Exposure
For some homeowners thinking nigh ownership a chore from your company, the thought that there are certain circumstances in which they could exist held legally responsible and sued for medical treatment and lost wages is a scary one. That's what makes proof of insurance a card y'all tin play when behest against low-brawl contractors whom you suspect of being unlicensed and uninsured or of using subs who are uninsured.
Georgia covering, siding, and window contractor Exovations advises homeowners interviewing contractors for a job to ask for the proper name and number of the visitor's insurance amanuensis, then follow upward with a call. At Minor Business Chronicle, attorney Van Thompson similarly suggests to homeowners that "with the contractor'south permission, you can phone call the insurance visitor to verify that the policy isn't a forgery and is upwards to appointment. Use that opportunity to ask any questions you might take almost the contractor'due south coverage."
That coverage may be on the up-and-up, but what about the subs he's using to install? Since in many cases that's where the chance is, shouldn't the homeowner see their proof of insurance as well? The best solution is to accept that proof right where you need it: in the subcontractor agreement. And if you install with subs and use the aforementioned independent contractors yr after year, "make it a addiction to ask for current certificates of insurance," advises an article at Contractorsinsurance.biz. "Make sure you lot are named every bit an additional insured. Also check that his limits of liability match yours."
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Source: https://crenshawlumber.com/blog/55386/who-is-liable-for-injured-subcontractors
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