Legal Question about Workers Compensation Insurance in California?

What is the best way to avoid paying Workers Comp insurance?
Yes, I understand not having employees is one way!
We have a Housecleaning Company, and I require all my maids to get a business license, and I pay their "company" hence, them.
If they provide me with a business license, and I "Contract" with them to clean homes I have, is this a viable way around the "problem"?

I pay them via 1099, and assume this is the best way to avoid the extreme expense of paying this outrageous insurance.

Any other ways, and are there any flaws in my way of setting up my company?

Looking for any and all ideas to get around this waste of money..

My business would be in California... the most business-adverse state in the Union.

redvelvetflames4ever

I love California law because it certainly is a pro-employee state, but the answer is simple. First lets begin with there is no such thing as as a 1099 employee. Either he/she is an independent contractor or they independent consultant. In order for you to avoid paying WC insurance the employees must meet all of the below criteria per California law.

Stating the following items in an agreement help with independent contractor status:

The worker is responsible for his/her own taxes etc.

The worker will not be receiving benefits.

All you are interested in are the results, and you have no say in the method, manner or means of performance.

The worker will submit invoices on his/her letterhead (there own company.)

The worker has provided a copy of his/her own business card (there own company.)

The worker will work at home or, alternatively, will pay rent for use of the businessâ€™s office and equipment.

The worker is free to work on projects for others.

The term of the agreement is for a fixed period (rather than being open-ended).

Providing benefits to the worker is a strong indication of an employee relationship.

It is very dangerous to change current or former employees to independent contractor status.

With a full-time worker, the longer the relationship continues the more likely the government is to consider the worker to be an employee.

Microsoft and some other companies use one year.

Others use the 1,000 hours (six months) that is the maximum period ERISA allows before employees begin receiving benefits.

Based on what you plan on doing it sounds as if you will be found liable to pay WC on these employees if heaven forbid there was an injury or accident. More importantly, as the previous poster wrote RWA they would at a minimum be required to carry this insurance especially since they will be in others homes and/or offices. Although he is 100% correct the problem is I am certain you will be dictating to them how to perform there job and I will assume you plan on scheduling them? These actions alone.. Even if just the first one will automatically make them employees.

rwa000

the big flaw is if they get hurt they can sue you directly instead of work-mans comp, all sub contractors must have liability insurance and work-mans comp

Enter Your Message or Comment

User Name:
User Email:
Post a comment: