Orlando, FL, Nov. 26--During 20 years in business for himself, Orlando tradesman Bill Miller has earned a decent living, mostly by doing repairs and other small drywall work, the kind of jobs that big contractors sneer at, according to the Orlando Sentinel.
A new law designed to squeeze fraud out of Florida's workers' compensation system--in addition to skyrocketing insurance rates is making it tougher and more expensive for Miller and thousands of other tradespeople across the state to continue working as independent business owners.
Miller, who does business as Bill Miller Drywall Repair, and other sole proprietors have long been exempt from a state law requiring that those in the building trades be covered by workers' compensation insurance.
Under the law that goes into effect on Jan. 1, however, Florida craftspeople will lose their exemptions unless they incorporate their businesses or create limited liability companies.
In either case, an exemption goes to no more than three officers of the company, each of whom has to be at least a ten percent owner. That's a manageable, if annoying and seemingly needless, expense. State officials say you can incorporate by yourself online for $150.
Miller said he did not want to take any chances, so he spent a little more than $800 to have a lawyer do it for him. Forming a limited liability company is even easier.
The real problem for Miller and some others is that the state is aiming to close the loopholes on the workers' compensation system in two other ways: It is trying to eliminate the time-honored practice of paying helpers as subcontractors instead of as hourly employees, and thus avoiding workers' compensation requirements. Miller said he would have to put up $5,000 a year in insurance premiums just to be able to hire a helper during busy periods.
Costliest of all, however, is that even Miller and others who are technically exempt from carrying workers' comp insurance may effectively be pressured into buying coverage. This is already beginning, Miller said, because some nervous general contractors who feel the state breathing down their necks are now insisting that everybody on a job have workers' compensation insurance--exempt or not.
"Last year, I couldn't get on a job because I was exempt--a little $10,000 job," Miller said. "I've got several contractors who you can't work for them."
Miller said he makes $50,000 to $60,000 in a good year. If he were to pay for workers' compensation insurance for himself, it would cost him $17,000 a year, on top of his costs for the occasional helper. That's a rate of 31 percent on an average $55,000 in earnings, based on the type of work he does.
"That's a hell of a premium," Miller said. "I could buy a new truck every year for that.
"Where do they come up with these prices? It's cheaper for me to put my kids through college than to get comp."
And it's not as if he has abused the system. "In 20 years, I've never been hurt on the job," Miller said.
Doreen Wiza, a customer-service rep at Hunter Insurance Agency Inc. in Orlando, where Miller does his insurance business, confirmed his rate but said trades workers pay different rates based on the predicted risk of their work. A carpet installer, for instance, would pay 11.17 percent, Wiza said. So, a carpet layer making $25,000 a year would have to pay $2,792.50 in premiums. In the higher-risk roofing category, however, the rate would be 46.17 percent--equivalent to almost half a worker's earnings, Wiza said. So, a roofer who earned $40,000 a year would be liable for $18,468 in workers' compensation premiums.
