Is there an actual workers compensation WAIVER form?

Question

On episode 442, Bryce Stewart discussed how anyone hiring a non insured worker (ex: shoveling a driveway, handyman work, etc) should have them sign a workers comp waiver form in the unfortunate event that they get injured working on your property.

I've asked my insurance guy and he has never heard of it. Has anyone used this form before?

Stuart Udis · Answer

@Dito Calderon I'm not following. Going back to John's post and example, someone hired to shovel the driveway or complete handyman work seems like an independent contractor relationship, not an employee relationship. You will want your vendor agreement to confirm their status as an independent contractor but workers comp insurance policies apply to companies that have employees and I believe is required in all states besides TX (don't quote me on that). Also more times than not a handyman is a sole proprietor, so they wouldn't carry workers comp coverage. Perhaps more common for a snow removal vendor as its usually a seasonal service paired with landscaping where employee relationships are more likely to exist.

If the person performing snow removal services is an employee of the snow removal company then that company should maintain workers comp insurance. It is good practice to confirm vendors who have employees maintain workers comp coverage. However they should also have commercial general liability and professional liability coverage.

I wouldn't advise hiring a vendor who doesn't have  adequate insurance coverage. Not to mention, have fun explaining to your insurance carrier in the event of a claim that you knowingly hired vendors who were breaking the law and were uninsured.....but its ok because they signed a waiver. You are asking for your carrier to deny coverage. To me sounds like something an amateur would do who is trying to save a few dollars hiring the cheapest vendor option out there.

Michael Norris · Answer

I've never heard of a Work Comp waiver - it's possible it exists in some states.

If you have a person who would normally be defined as your employee for Work Comp purposes and they get seriously maimed on your project site I'm betting that waiver isn't worth the paper it's printed on. You the "rich big shot investor" will get branded as taking advantage of the poor guy who's now blind or missing an arm and can't feed his family.

Anything related to Work Comp is VERY state specific and as an insurance agent who is also a fix and flipper I'll say this - unless you outsource 100% of your rehab to a GC and your contracts specifically state how the GC is responsible for work comp matters you may not need it. (BUT - you need to verify the GC is actually compliant with that contract requirements and didn't hire some Joe Bob day labor guys).

The GC's failure to comply with having Work Comp very possibly will NOT get you out of a Work Comp related lawsuit.

For most of us - the GC that will 100% meet all the requirements including Work Comp certificates covering every person on the job site throughout the entire scope of the project is often too expensive to make a project work.

A couple common examples where you the investor are now an employer...

If you hire Joe Bob the day laborer and pay by the hour - your state would probably classify them as your employee.

Something as simple as you providing the materials for the work and/or the tools can classify a person as your employee (state specific). Did that guy you hired borrow your ladder, hammer, staple gun, etc...you just provided tools for them to work. Did you buy the paint for the painter who is doing side work from his regular gig... probably your employee now as far as the state is concerned.

There are IRS tests determining who is a 1099 vs W2 and then you have your state specific Department of Workers Comp that will have their own definitions of who is an employee and when you would be required to carry Work Comp insurance.

To complicate matters there are a few states where the State itself maintains a monopoly on providing Work Comp insurance and the state is the only place to buy work comp (my state is one of those so I can't even sell myself work comp insurance if I wanted to).

Here is an article on the three different methodologies the IRS may use to classify someone as W2 vs 1099.

https://www.everee.com/blog/irs-independent-contractor-test/

If you are really in doubt call your state's work comp office and ask who they define as an employee.

Stuart Udis · Answer

@Dito Calderon You are definitely thinking through this the correct way. When there is a GC involved, most owners believe their responsibilities stop there because that's where the contractual relationship exists. However there is the potential for downstream liability in the event the GC does not properly paper contracts with sub contractors and those same down stream subcontractors aren't insured. As for the insurance certificates- make sure you are actually being added as additional insured and not merely a certificate holders. When you receive the certificate of insurance they will look the same, but a certificate holder status merely means you will be notified if the insurance coverage were to lapse. Meanwhile the additional insured status actually adds you to their policy. Request the endorsement, this will confirm you were actually added as additional insured. Also, make sure you have builders risk coverage on the premises while the work is being completed. It seems there is a project manager working alongside of the GC? It's in your best interest to collect an insurance certificate from this individual as well. For GC and Project manager, CGL and Professional Liability are recommended (and workers comp if they have employees).

Dito Calderon · Answer

Thanks for the reply and explanation! Super helpful to understand a topic I am just getting read up on.

We are working with a designer and project manager out of state to setup a STR for a property we just bought.  Major work will be done by licensed GCs where we will be "additional insured".  Some of the other work will be done by handymen or other people.  Work such as building furniture, hanging tvs and pictures, replacing fixtures, etc.  They do not have WC and I am getting clarity on whether they have liability. If not, I will push them to get that. I assume that even though there are a few steps of contract relationship (me to designer to them and maybe to a sub beyond that), that I still would own liability in any sort of event.

Thanks for helping me learn - we definitely want to protect downside risk.

Dito Calderon · Answer

@John Fider - Did you ever receive anything in response to this? Would love to see an example form or anything that you found. Thanks!

Is there an actual workers compensation WAIVER form?

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