How Hiring Cheap Labor Can Be Bad

[Jeremy Tillotson]

Alright I am probably going to get a lot of people mad at me here. I have been reading alot of post about hiring a guy to do something "cheap". Which in general the "Cheapest is Rarely The Least Expensive" Imagine paying to do something twice. Hiring a day labor can frequently be considered having am employee. Do you have workers comp? If not in most states you have broken the law and made yourself a wide open target. Chances are that if you are trying to save a few bucks you dont have workers comp. Here is a few articles on the subject.

http://fairfax-loudoun.legalexaminer.com/workplace...

http://www.brewerfirm.com/articles/article-OSHArul...

So now that you are scared, if you read the article how can you protect yourself. First I believe every business should have a small workers comp policy. Even if you take it on yourself you then have one, and forbid you should get hurt have some coverage. Secondly hiring licensed insured contractors. AND MOST IMPORTANT be named as additional insured on their policy, this stops their insurance company for suing you for negligence. This will not get you the cheapest price there is, but will protect you and your investments. 

I know a situation where a worker that was employed for 3 hours was hurt and it cost over $180,000. The guy didn't have it. He closed his company thinking liability was on the company. He was deemed negligent for not having workers comp and was personally sued, therefore costing him everything and forcing him into bankruptcy. 

Hiring a day worker is like taking a quit claim deed with no title search or insurance. 

I am not saying that you should negotiate with your contractor, nor I am saying you have to go broke on one, but understand what this can cost you. Once you know what workers comp insurance cost, you may reconsider what a fair wage for a contractor is. 

I am not a lawyer, nor insurance agent, and am not giving legal advice.