Workers’ compensation premiums are determined based on several factors. Employees pay different premiums for coverage depending on the number of employees as well as the type of work performed. As mentioned in previous articles, a construction company will pay higher insurance rates for workers’ compensation than that of a small business employing a handful of office workers.
What if every business had to include independent contractors or third parties in their list of “employees” to be covered by workers’ comp? For example, should a small business owner be required to list the UPS delivery driver or independent computer technician on the “list” of employees to be covered? If every business were required to include “every” person with whom they did business, insurance premiums would sky rocket.
This is exactly what New York’s horsemen in the harness industry have been dealing with for years. For years owners and trainers in the industry have paid workers’ compensation premiums for independent contractors and service providers that cannot legally be listed as employees (and rightly so). Despite being charged for these individuals, no real coverage is available as these individuals are not in fact employees. So who exactly benefits from increased insurance premiums for coverage that can never be collected on? It would seem the insurance companies are the only party that stands to benefit from this practice.
As a result, Bill #A8287 which was introduced in the NYS Legislature would change the way insurance companies designate “employees” and in turn reduce the amount of workers’ compensation insurance premiums paid by members of the harness industry. This would be an obvious relief for members of that industry as well as the independent contractors and service providers who may or may not see the trickle down affect of reduced capital as a result of paying high insurance premiums.
Should insurance companies have the right to designate who qualifies as an “employee” despite the fact that those same individuals would be denied benefits if filing a workers’ compensation claim?