"anyone ever been sued for not paying your workers comp?

Question

and how did it go??? did you win or lose what happened.

my husband was audited and found to owe 15000.00 they put him out of business no w/c cert no work. he thought he was getting a 750.00 cert only :0) he told them he cant work so he cant pay it and they are now sueing.... any advice helpful

Answer 1

Did your husbands subs work for different contractors or your husband exclusively?  This is where most contractors get into trouble.  If they worked for different people, they were truly subs, if they worked only for your husband, they are employees.  Sorry.  We had a big contractor get in trouble in my area for the same thing.  He got in huge trouble with the state, had to pay huge fines & almost got shut down.  Luckily, he paid off the fines quickly & was able to stay in business, much smaller but all legal as far as I know.

If one of your subs got hurt on the job you would have been responsible for his medicals & lost wages if he fell under the definition of an employee, even though he was called a sub.

The wc coverage would have applied & they would have been expected to pay, therefore, he owes the premiums.  With a $15,000 work comp premium, he must have had a huge payroll or does hazardous construction work, like roofing.

Also, you are not purchasing a certificate, you are purchasing coverage. Believe me, $15,000 is cheap compared to what could have been paid if someone fell off staging & broke their back.

Also, if his subs get their own workers comp, some states allow them to exclude themselves and if they are excluded, the policy is worthless.

Answer 2

It sounds as though you two misunderstood the policy you had.  Workers Compensation premium is based on your payroll.  Obviously you told the insurance agent when you started this policy that you had zero payroll which is obviously not the case since the audit found that your husband had enough payroll to warrant a $15,000 premium (that's A LOT of payroll by the way unless he's a roofer).  Did your agent not tell you that this policy was based on payroll and did you two not read your policy?  This information and your rate would have been on the second page of the policy.

Not paying insurance premium is the same as not paying your mortgage or your car payment, except with the car or house, they have something to take away from you when you don't pay.  The insurance company offered you a service (the risk they took on of having to pay for injuries to your husband's employees) and now they expect to get paid, the same way your husband would expect to get paid had he completed a construction project for one of his clients.

Unfortunately, contractors run into this problem all the time so you are not alone in having dealt with this.  The lawsuits NEVER go in the contractor's favor.  That is to say, I have never seen one in the ten years I have been in this business.  Hopefully, for your sake, your situation is special and you win this lawsuit.  If you were my Insured I would STRONGLY recommend you speak with the insurance company and try to set up a payment plan on this $15,000.  If you do not, you are just going to add lawyer fees to the $15,000 you owe.

Good luck to you!

P.S.  You can not have a cert without having coverage to back it up.  You do not owe money for the piece of paper they gave you, but for the promise they gave to pay for your employees injuries in exchange for the premium that you "should have" paid throughout the year.

Answer 3

If you operate a business and have employees, you are required to carry WC insurance.  Sounds like he failed to do so or failed to accurately disclose information.

Answer 4

I don't have any helpful advice.

When they did the audit, they probably asked for certificates of insurance for all your sub contractors.  If your subs weren't able to provide certificates of insurance then they basically become your "employee" and able to claim against you.  

You husband sounds like he started out correctly, by having a minimum premium work comp policy in place, even though he didn't technically have employees, the mistake was not asking for certificates from everyone who he subbed out to.  I would further guess that he had that in place because the general contractor wanted to see proof of work comp.  The mistake he made is not requiring certificates of insurance from each of his subs.  

My one suggestion is to contact every sub that worked in the time frame of the audit and ask for a certificate of insurance.  Surely some of the subs have insurance.  Then present those certificates to the auditor so they can adjust your premium.

Good lesson for all contractors to make sure they get current certificates of insurance.