It’s an obvious fact: Adding more permanent employees to your payroll increases your workers’ compensation costs and exposure. It’s logical based on the fact you’ll need to pay for additional premiums and you’ll have more employees on the job-site who can get injured which could adversely affect your premium rates.
By running a lean permanent workforce and supplementing your core employee base with contract craftsmen to meet rising workloads, you minimize workers’ compensation costs and additional exposure that could result in increased premium rates. “Tradesmen International, as do other reputable staffing services, covers our craft employees under our corporate insurance program,” said Lori Lucius, Tradesmen International’s Director of Risk Management. “This mitigates additional workers’ comp premiums our contractor clients would normally have to pay if they opted to increase their permanent workforce to meet short-term manpower requirement spikes.
“Also important to note, a claim filed by a contract employee is generally the sole responsibility of the staffing service,” said Lori. “And any claim that is the sole responsibility of the staffing service should not affect a contractor’s specific Experience Modification Rate (EMR). Essentially, this allows the contractor’s specific EMR to perform better which results in being more competitive when bidding for additional work.”
Minimize Out-of-Pocket Expenses
When you partner with a staffing service, you can save money and be more competitive due to the following four key factors:
- Insurance Premiums: While it varies from state to state, contractors are required to cover all workers’ comp costs for your full-time employees. While carriers looks at many variables to determine your workers’ compensation premium rates, i.e., class code, payroll hours, etc., the injuries sustained by full-time employees – and adding to your company specific payroll base – can and will highly impact the underwriting results of your company. Ultimately, this will increase the rate your company is paying for workers’ compensation and could potentially increase your EMR rate.
- Medical Costs: Any medical costs incurred by contract craftsmen, including hospital visits and medical procedures, are covered under the staffing service’s insurance.
- Lost-Time Costs: Staffing services cover any temporary total disability benefits (TTD) if one of their employees is injured.
- Time Investment: In the event of an injury, reputable staffing companies, like Tradesmen International, have procedures in place to ensure their injured employee seeks the proper care and is taken care of quickly and appropriately. Staffing companies are also equipped to quickly dispatch a replacement skilled craftsmen, which enables your field management to maintain focus on managing the project while also having the right number of workers to keep your project on time and on budget.
By supplementing your workforce with contract craftsmen, you can minimize the costs related to placing short-term employees on your full-time payroll.
Protect Your EMR
Since staffing services take on all responsibility for their craftsmen’s workers’ compensation claims, your EMR won’t go up if one of their people is injured – effectively letting you add more workers to your project without risking your EMR or your “safety rating.”
And with the increasing weight placed on a contractor’s EMR, reducing workers’ compensation exposure has become more important than ever. Where the EMR was previously used mainly to calculate insurance premiums, today more and more state, federal and even private construction contracts include an EMR requirement as a pre-requisite to bid. That means a high EMR can eliminate you from even submitting a bid (in addition to raising your insurance costs).
States like California, Tennessee, Kentucky, Connecticut, Maine and Missouri have included EMR requirements as a pre-qualifier to bid on recent contracts. Plus, while the Federal Acquisition Regulation (FAR) does not mention the EMR specifically, it does state that, “To be determined responsible, a prospective contractor must… have the necessary organization, experience, accounting and operational controls and technical skills… including as appropriate… quality assurance measures and safety programs applicable to materials to be produced or services to be performed by the prospective contractor and subcontractors” (FAR 9.104-1, General Standards).
While there’s no way around assuming the risk on your permanent employees, Tradesmen International can relieve this burden for your short-term workforce.