I’m wondering how others handle their worker’s comp for stable employees? I am a trainer in California with one part-time employee. I had to go through State Fund to get worker’s comp for my employee and will pay approximately $3200 for the year for annual payroll of about $14000.
Would others mind sharing their costs and/or how you go about worker’s compensation? Is the amount I’m paying typical? I’ve been reading about how Professional Employer Organizations can sometimes help lower costs, but I’m not sure they even exist for equine-related businesses.
The cost, rule/regs, requirements is state by state. Some states are a lot more expensive than others. Horse related business can have very high WC costs. In some states, a lot of states in falls under high risk. Can only be obtained by, through state offered “high risk pools”.
The rate is generally based on X percent of payroll. I believe on average around 10%. Some states, insurance companies only offer a base rate that is not based on payroll. So if you have only 1-2 employees you still might have to pay the same as if you had 4 employees. This is generally true if you have to obtain WC through a high risk pool/policy
There are organizations that be can joined that help offset the costs. There is in racing. Just like there are for small business that want to offer health care. A call to your local chamber of commerce maybe able to give you some suggestions.
A part time employee can be “titled” hire as contract labor. There guidelines that can be found that spell out what makes a person, “contract labor”. In most cases it is pretty easy to follow and most part time horse labor can and does fall under the guidelines. Contract labor is not subject to WC. Just as the owner if the horse business is not covered by WC.
The above is they way it was explained to me in my state. Every state can be, is different.
It varies a lot state to state- we have stores in 2 states and had one in another plus a landscaping business. Each state is very different. For instance, in one state, if you hire contractor labor they have to provide a COI otherwise you have to pay temporary workers comp for them. We also get to go through a lot of super fun audits with workers comp. It is however a lifesaver is something happens both for the worker if there’s an accident and for the employer if someone tries to wrongfully claim an injury (we just had this happen this year)
You cannot afford NOT to pay Worker’s Comp on barn employees. The trick is how to get the coverage at a reasonable cost. I would look into horseman’s professional organizations and the state’s Farm Bureau for starters. I would also talk to other trainers in the area and see how they’re addressing the problem.
That quote does seem very high for one part timer, and even higher as a percentage of payroll.
This probably won’t fit your situation, but when I was riding, training and teaching as well as managing a small farm, we got a crazy WC quote on me because the carrier put me in the same risk category as jockeys. :eek:
The work around that the owners figured out was this - the business was already incorporated, so they made me an officer of the corporation. As an officer, I was allowed to waive my WC, and the business paid for a stand alone disability policy for me instead at a fraction of the cost.
I was fond of saying I was a corporate vice president, but that if the part time employee didn’t show up, I still mucked stalls. :lol:
I don’t think your part time employer can waive WC, but there probably is a way to get a better rate.
Unfortunately with workers comp on stables and barns - the rates are high because the claims are usually high.
Fairly certain that State Fund is your only option for comp in CA, but have your agent check with your farm insurance carrier - sometimes they can quote the comp along with the package. (depends on who you are insured with, ect).
As for a PEO - stay far away from them. If you have enough premium to qualify (standard seems to be $10,000) then they also take over your payroll, ee taxes, ect and charge a nice fee for the whole thing. I am also not aware of a PEO that will write equine.
As for your premium - it does seem high for your payroll. Have your agent double check your class code to make sure you employee is correctly classified. Also check your estimated annual payroll that the premium is based on. You are probably on an annual audit? The carrier (or agent) will used an estimated payroll and then adjust at the end of the year.
What you were quoted looks like about 23%, which is a very good rate for Stables Worker’s Compensation in CA.
For awhile, State Fund was the only choice for Stables in CA for worker’s compensation insurance. There may be a couple of other underwriters now but it varies by zip code whether they’ll cover you or not and at what exact rate.
For my CA barn, my rate initially was .32, that’s 32 cents for every dollar I paid in wages. For awhile, joining the CA Farm Bureau got me a .02 discount.
My current rate from State Fund (my only option in my zip) is .28/28 cents per dollar. I have never had a WC claim and have spent almost a quarter of a million dollars on WC insurance in the 12 years I’ve had my commercial stable.
Because I pay my employees legally, it costs me about .50 cents in WC, payroll taxes, and a small payroll service fee for every dollar my barn helpers earn. So a $12/hour ranch hand with no experience actually costs me $18/hour or $27/hour overtime.
Those figures are more like $21/31.50 because we have to pay at least $14/hour for reliable employees and our longer term employees earn more. They also all get 2 weeks paid vacation where I pay O/T for other employees to cover their chores.
I could choose to ignore the law and not pay worker’s compensation like many stables in our area but… I’m not willing to risk my security to save money on payroll. And our employees do earn every penny: horses are hard work and must be tended to in 110 degree heat and pouring cold rain… 7 days a week and holidays.
The economics of boarding stables seem simple at a glance: some hay, some shavings, a stall. But running things legally and business-like, when much of the industry does not, creates scant incentive to stay in the boarding business competing with stables whose expenses are lower because they skirt the law.
Find an experienced insurance agent familiar with equine activities who can help you explore your options- but WC insurance for horse business employees is a very big budget item that you must include in your financial planning.
Workers comp is based on the rate and payroll. The formula is the rate per $100 of payroll. Independent contractors who do not have workers comp insurance are picked up as employees in every state IF they are providing you with labor services that are related to the products or services you provide. In this specific situation, payments made to part time barn workers who are paid as independent contractors are picked up as payroll. If you pay an accountant who is an independent contractor to do your bookkeeping, that is NOT picked up as payroll since you are not providing your clients with bookkeeping services.
Whether or not the owner/officer is included on workers compensation is dependent on the state and the legal structure of the business (corp, llc, etc) and owners/officers can opt out if the state law says they are covered.
CA is a liberal state and has generous workers compensation laws therefore workers compensation insurance is expensive.
Yes, WC is insanely expensive. I have to disagree with @gumtree about going the independent contractor route. This is very likely to get you into trouble. Many people used to do this and get away with it, but the IRS is cracking down. Most barn workers are clearly employees.
The most responsible course to take is to obviously shop around, but to make sure that you have the correct coverage and to adjust your prices with your costs taken into account. FWIW, if your WC is based on payroll (IME that’s usually how it is done), you can reduce your payroll by giving part of the composition as on site housing.
We’re in GA and I boarded at a barn for 25 years. While I never worked there, many Barn Managers/Workers came and went, plus we had a lot of volunteers. Everyone was considered contract help. The Barn Owner was paid for stall rental, shavings, water, electricity, etc. The Barn Manager was paid everything else and paid the employees based on # of horses taken out/brought in, stalls cleaned, etc. There was no worker’s comp insurance.
Yeah… what @clanter said. Unless they were going around mucking stalls and doing turnout for multiple barns (think ‘farm sitter’ rather than daily help) then I would not want to be the barn manager when that business gets audited.
(Although I did think there were some alternate rules / exemptions for agriculture? Maybe that’s just on the ‘child labor’ front where family members can be put to work but you can’t hire other kids.)
A part time employee can be “titled” hire as contract labor. There are guidelines that can be found that spell out what makes a person, “contract labor”. In most cases it is pretty easy to follow and most part time horse labor can and does fall under the guidelines.
The key word is “guidelines”
When dealing with government, state bureaucrats it is important to have things, paperwork, supporting documentation etc to back up how one operates their business within the spirit of the law. Government auditors have “boxes to check”. As long as you have properly documented things, have supporting documentation to make a case when something maybe be vague and or not something the auditor usually encounters and allows them to check the box on their list. They will move on to the next question, issue. It basically comes down to how you “classify” things.
This is the link to the IRS rules and regs for independent contractor, contract labor. As is typical of government rules and regs. It is a bit vague. So I paid for advise from a tax lawyer, account to explain things more clearly and exactly how to go about documenting “contract labor”. This is VERY important. But it is not that hard to do. And I stand by my statement because I paid for proper advise and procedure. I didn’t use an internet discussion forum for my advise.
It is not for me to go into exact details. Everybody’s horse business is not equal. ALL of my comments, “advise” is based on my business. It was not a “hobby” business. A large farm by most people’s standards. I had over $2 million invested in land, infrastructure, horses, etc. How we go about things in the real world of horse farms of this size and scope. The it day to day running of it, training, breeding, raising, fixing stuff etc. Can and usually is a lot different than those who run a hobby, sideline horse business on a much smaller scale.
A simple example of contract labor. Riders I need to get on horses. All I tell them is I have X horse that need to be ridden. I ask them what they will charge to get on X number horses and what days and times they can do this. They tell me what they will charge, they tell me what days and hours they can do the work. Write up a simple contract that states this and file it.
I have X number of stalls that need to be cleaned. What will you charge to do X stalls and what days and hours can they do this service. Write up a simple contract and file it. They are not paid by the hour they are paid by the job. 10 stalls, for X amount on X days.
The same for mowing, weed eating etc. I kid stops by and says I will mow and weed eat once a week on this day for this much money.
These people are NOT paid by the hour. They are paid by the job. Be it once a week, 7 days a week or once a month. Doesn’t matter. Most companies offices are cleaned by a independent contractor cleaning service. 5-7 days a week. Cleaning stalls is no different. A “hourly” person may take 30 minutes to do a stall. An good independent stall mucker will do the same if not better in a lot less time.
The above are just simple basic examples. A business owner should do what I did, pay for advise. I was audited, a general audit as the IRS put it. Horses businesses are a bit of a red flag with the IRS. I had my paperwork and supporting documents in order when questioned about my “contract labor”. Showed them my documentation and it was not questioned. Moved on to the next “box” to check.
“(rakes/forks/tractor/wheelbarrow/muck baskets)” This not the “acid” test. Setting their own hours and pay is. As explained to me by someone I PAID and was licensed to give expert advise. The IRS likes to see a business use “expert” advisers. They don’t put a lot of stock in “internet advise”, lol.
There were “barn wheelbarrows, rakes, etc.”, those that people left when they left the barn. We made it know that we didn’t want our stuff used. We also had college students. It’s basically what @gumtree says, they were paid on a job basis, $5 to clean stalls, $1 to take horses out and $1 to bring horses in, so many $ to throw feed and hay if you weren’t there, etc. BTW, if you weren’t there to bring your horse in, it got left out, even if it ran the fence and got hot. Hopefully, you had an observant friend there. We had 50 horses there.
I’m sure plenty of barns get away with paying people as contractors, and not paying for worker’s comp for them.
And I’m sure that by jumping through the right hoops in the right order, such as having them sign ‘contracts’, that it can even be ‘officially’ legal. (At least, until someone looks closely or challenges it.)
Let’s face it… these are not high paying jobs. How many of the people are going to know that they should be covered by insurance for on the job injuries. Will they ‘make trouble’? Or will they just not mention an injury so that they don’t lose their job.
