Liability

Willemjm

Willem
Corporate Member
Any idea what the liability is when a 1099 contractor comes to help you with work in your own wood shop?
 

srhardwoods

Chris
Senior User
I was told by Virginia, that they have to be covered on workmans comp if they work in your shop. There are a lot of people (I know a dozen of them) who have hired people, but try to beat the system by 1099 them only to find out the hard way. 1 shop I supply cabinet parts to was doing that until that 1099 guy cut his finger off at the table saw. Then their were huge issues. Not sure if it's different in NC but I would assume it is not
 

Willemjm

Willem
Corporate Member
I was told by Virginia, that they have to be covered on workmans comp if they work in your shop. There are a lot of people (I know a dozen of them) who have hired people, but try to beat the system by 1099 them only to find out the hard way. 1 shop I supply cabinet parts to was doing that until that 1099 guy cut his finger off at the table saw. Then their were huge issues. Not sure if it's different in NC but I would assume it is not
Yep that is kind of what I was concerned about. We have guys out in the field installing with their own equipment and insurance as 1099. The one guy wants to help in the shop, but so far I only allow my partner in here.
 

patlaw

Mike
Corporate Member
At a minimum, you're responsible for your negligence that is a proximate cause of the injury. It goes up from there.
 

Oka

Board of Directors, Vice President
Casey
Staff member
Corporate Member
They must provide a cert of insurance that covers them specifically, otherwise you must have them under your insurance. Lots of contractors have workers comp, but it does not cover the owner. They are the owner so, they have no insurance. Most of the western states are caught up to this loophole, so not so common of an issue as it was before.
 
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Graywolf

Board of Directors, President
Richard
Staff member
Corporate Member
In North Carolina shell polices are not allowed. So if you hire a 1099 worker you are responsible for having them give proof of insurance. The way that it is done is they have the insurance company underwriting their policy send you a copy of their proof of insurance. You hold those copies in your records so when you do your annual audit you provide copies of their proof of insurance to you insurance company. With all that said you are responsible for safety in your shop and holding them to those standards. I would read and hold yourself to the OSHA standards needed for you shop. You can get that info from your insurance company they can also answer any questions about any additional liability insurance needed for your situation. Me I have worker comp and I have to cover myself, I also carry a hefty liability policy and commercial insurance on my vehicle and trailer.
 

Willemjm

Willem
Corporate Member
In North Carolina shell polices are not allowed. So if you hire a 1099 worker you are responsible for having them give proof of insurance. The way that it is done is they have the insurance company underwriting their policy send you a copy of their proof of insurance. You hold those copies in your records so when you do your annual audit you provide copies of their proof of insurance to you insurance company. With all that said you are responsible for safety in your shop and holding them to those standards. I would read and hold yourself to the OSHA standards needed for you shop. You can get that info from your insurance company they can also answer any questions about any additional liability insurance needed for your situation. Me I have worker comp and I have to cover myself, I also carry a hefty liability policy and commercial insurance on my vehicle and trailer.
Richard, I am set up pretty much the same way, but do not carry workers comp as I do not have employees. My 1099 contractors work with their own equipment on GC projects and are all insured, so I have their W9’s and insurance certificates on file.

Why do you need workers comp?

BTW, my shop will need quite a bit of work to make OSHA happy, so I am careful who goes in there. No guard on the table saw, spray without a proper spray booth, about 4,000bf of lumber inside plus plywood, so the space and isles for walking is pretty tight.
 

Graywolf

Board of Directors, President
Richard
Staff member
Corporate Member
Do you receive a 1099 from any of your customers. If you do and you are a producer then by state law you are supposed to have workers comp to cover yourself. You may want to speak with a business insurance professional about your situation.
 

tri4sale

Daniel
Corporate Member
As the lawyers like to say "Sue Everyone" when it comes to liability :)

If he's working in your shop (and even when not), be careful because he may not truly be a 1099 employee anymore, be careful on that regards.

As for workers comp: An employer is not relieved of its liability under the Act by calling its employees "independent contractors." Even if the employer refers to its workers as independent contractors and issues a Form 1099 for tax purposes, the Industrial Commission may still find that the workers were in fact employees based upon its analysis of several factors, including but not limited to the degree of control exercised by the employer over the details of the work. If you subcontract work to a subcontractor who does not have workers’ compensation insurance, you may be liable for the work-related injuries of the subcontractor’s employees, regardless of the number of employees you or the subcontractor employs. (
As for any other injury, your shop, you're liable. I'd make sure your GL policy will cover any injuries that occur. Pay close attention to the medical payment portion of GL policy that it's enough to cover a trip to the ER.
 

charlessenf

Charles
Senior User
I was told by Virginia, . . . different in NC but I would assume it is not
3-Read your Contract
2-Read the Statutes
1- Ask the IRS

Assumptions, unlike contemporaneous notations on napkins, don't hold up in court.

Also, don't visit a tax accountancy blog for advice on cutting dovetail joints.

And, encourage all the kids you can to take Business Law in college and memorize the basic principles at least.
 

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