January 8, 2008

New Hampshire Backpedals on Contractors

Back in December we blogged a legislative remedy that backfired in New Hampshire: House Bill 471 eliminated the exemption for corporate officers and directors from workers comp coverage. Given the state's extremely high costs for comp, this created an immediate outcry. We compared it to the weather on top of Mount Washington, which at the time was minus 13 degrees with the wind howling at 93 miles per hour.

Well, today things look a lot milder. Mount Washington is enjoying relatively mild weather (38 degrees, with a modest wind of 42 mph). And the newly reconvened legislature has already amended House Bill 471 by restoring the exemption for corporate officers and directors.

Governor Lynch jumped on the bandwagon: "I will sign this law as soon as possible and I applaud the bipartisan leadership of the House and Senate for listening to the concerns of small business..."

Lasting Solutions
As we mentioned in our previous blog, New Hampshire still has a very big problem, driven by its disproportionately high rates for comp coverage in the construction trades. The legislature would do well to figure out why these rates are among the highest in the country. It's fine to exempt business owners from coverage, but that does not address the burdensome costs faced by contractors with employees. These folks are being hammered by costs that are twice as high as their competitors in neighboring states. By allowing business owners to opt out of the system, New Hampshire has bought itself a little time. But just as the mild conditions on Mt. Washington are soon to end, they had best start focusing on long-term solutions that bring rates into alignment with other states. Anything less would be like climbing Mt. Washington in January with nothing more than a backpack and an extra layer of clothes. A very bad idea indeed!

| 1 Comment

1 Comment

The construction trades problems are similiar to the "independent contractor" issues which arise in workers compensation.
There are individuals who work, by themselves, with the knowledge and experience of their trade. They "sell" these sevices to various clients/customers.
One problem arises when these "sole proprietors" hire a helper, to assist in the performance of job duties. NOW, that sole proprietor has become an "employer", likely, without work comp insurance. If working on a larger project, the "sole proprietor" may be employed as a sub-contractor by the General Contractor. If The sub-contractor does not have WC insurance, then the General Contractor can be liable for WC benfits, payable to the injured helper of our "sole proprietor". So one resolution is that the General Contractors must assure that all of their "subs" have proper insurance.

We sometimes address questions about the employer, who alleges that they have NO employees, they only have independent contractors working through their office. This typically results in another sitiuation where there is a lack of WC insurance, as the "employer" has no employees and the "Independent Contractors", likewise, do not have individual insurance. If these individuals are working on the project of the General Contractor, once again, the GC can have liability for work comp benefits of the "helpers". One solution to reduce these type of concerns is to require proof of insurance at the time of hire AND to contact the insurer, to confirm that coverage is in effect.

There may be no easy solution to the problem of the construction trade person, working without insurance, if they continue to obtain jobs, via lower bids as they do not have the "expense" of WC insurance as business overhead. Those who hire the uninsured perpetuate this problem.


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This page contains a single entry by Jon Coppelman published on January 8, 2008 4:54 PM.

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