[CLC-Discussion] Employee Leasing Worker's Comp. Coverage

Tue Mar 11 14:40:39 PDT 2014

What about the option of requiring the subcontractor to pick up the w/c coverage?  Wouldn’t that satisfy the GC’s statutory obligation to provide w/c coverage for all statutory employees and protect the GC from w/c claims by the uncovered leasing company employee and provide vertical immunity.

The sub brings the problem to the project by using the leasing company, so it only seems fair that the sub should bear the expense.

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From: Rafael A. Perez [mailto:rperez at mcper.com]
Sent: Tuesday, March 11, 2014 5:19 PM
To: Sakwa, Stuart H.; clc-discussion at lists.flabarrpptl.org
Subject: Re: [CLC-Discussion] Employee Leasing Worker's Comp. Coverage

Employee leasing companies only cover those employees that are on the weekly payroll reports.  Undocumented employees, day laborers and uninsured sub-contractors are specifically excluded from the coverage.  There are several ways to avoid this uninsured exposure:

  1.  Have the employee leasing company “carve out” the workers compensation exposure, then obtain a standard workers compensation policy in the open marketplace.  The standalone workers compensation polices can be purchased on a reporting form basis and are usually many times less expensive than what the employee leasing company is charging;
  2.  Have the employee leasing company endorse a “minimum earned workers compensation policy.”  Most employee leasing companies have this capability.   However, the minimum premium is usually around $10,000; or
  3.  Have the GC refrain from day labor and enforce a stringent workers compensation certificate program to mitigate the uninsured exposure (most difficult option).

Rafael A. Pérez | Attorney
Board Certified Construction Attorney

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From: clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org> [mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of Sakwa, Stuart H.
Sent: Tuesday, March 11, 2014 11:09 AM
To: clc-discussion at lists.flabarrpptl.org<mailto:clc-discussion at lists.flabarrpptl.org>
Subject: [CLC-Discussion] Employee Leasing Worker's Comp. Coverage

I have a General Contractor client that is having repeated problems with Subcontractors who provide Worker’s Comp. Cert. of Ins. from an Employee Leasing company that specifies some individuals who are covered under the WC policy, but then the Subcontractor sends out other employees who are not on the list.   The problem is becoming more prevalent as more Subcontractors use these leasing companies.

Any suggestions on how the General Contractor can address the issue on an global basis, rather than having his superintendents do daily checks of the subcontractor work force.

Stuart H Sakwa
Attorney at Law
Board Certified in Construction Law

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