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Workers’ comp law worries isurance agent, contractos

by Tonya Bina
Sky-Hi Daily News

Paperwork required of construction workers and contractors is on the rise.

First there was the local contractor licensing requirement locally, and now there is a state bill requiring workers’ compensation in the construction industry.

The law has at least one insurance agent in Granby raising an eyebrow.

House Bill 07-1366, which went into effect Oct.1, mandates that workers on a job site, with only limited exceptions, show proof of workers’ compensation to the state Division of Workers’ Compensation.

Kirk Arnold, owner of M

iddle Park Agency, is concerned about the bill’s lack of specifics as it enters the complex web of workers’ insurance.

“It’s not quite clear enough for most consumers to understand,” he said.

“Only a certain amount of people know how it works.”

Arnold thinks the bill was passed “under the radar” and he is worried about those who may not know about the requirement but will be required to pay fines because of being out of compliance.

“Penalties may be incurred if one doesn’t file under the statute,” Arnold said.

Fines for not having workers’ compensation in accordance with the new law start at $250 per day for the first offense, then $500 per day for a second or subsequent offense.

The Division of Workers’ Compensation does have a unit out trying to find people, according to the division’s director Bob Summers.

“If we find them, we will fine them,” he said in telephone interview.

A last resort is a cease and desist order that could shut a business down.

The act is intended to weed out “unscrupulous contractors out there who don’t have insurance and don’t supply it for their employees,” said state Rep. John Soper of Adams County, who introduced the bill in three consecutive years. It was twice vetoed by former Gov. Bill Owens.

If a contractor has employees, he or she is mandated to have workers’ comp insurance and cannot be exempted from the law.

Soper, who has past experience as a construction worker, in construction management and with workers’ compensation, said he ran the bill because “people are getting hurt on the job and are not being taken care of immediately, or are taken to the hospital without any type of insurance or Medicaid and the state ends up paying for it,” he said.

People who have workers’ comp insurance generally have access to information and training regarding safe work environments and practices, he said, thereby making their “jobs safer, resulting in less people getting hurt.

“There are unscrupulous contractors out there who don’t have insurance or don’t supply it for employees,” he said.

The bill may also help “level the playing field” in the bidding arena, Summers pointed out.

With an across-the-board mandate, it’s believed that the industry will allow contractors to carry the expense of proper coverage without the fear of being out-bidded by those who don’t.

During the crafting of the bill, Soper said there was debate about how the policy would be enforced.

“It’s my feeling that the contractor that didn’t win the bid, who finds out that the guy who won the bid didn’t have insurance, will let the Division of Workers’ Comp know. It’s self-policing by the people being exploited,” he said.

The state mandate is most glaring in the realm of the independent contractor, according to Summers. The independent contractor is technically exempt from the requirement, but whether a person is an independent contractor or not has been disputed in the past, he said.

“Now, all people, including independent contractors, have to have workers’ comp” in a practical sense, he said.

If true independent contractors can verify that they are such, they must “jump through the hoops,” and prove their status with the secretary of state, then file a “rejection” form with the Division of Workers’ Compensation, he said, which is burdensome to many of them.

For those who now need to be covered, Arnold has concerns that the premiums different types of contractors should be charged, all with different ranges of risk, are vague and difficult to assess for agents who are unfamiliar with the maze of workers’ comp policies.

And now that the law is in place, Summers said, there may be more demand for workers’ compensation individual policies than there has been in the past.

“The market should be responding to the law by offering those types of policies,” he said.

Summers added that consumers should consult their insurance company for price quotes and to compare with other providers. Pinnacle Insurance, the quasi-governmental agency, is also a good resource for finding out about policies.

And information about the bill is on the division’s http://www.coworkforce.com/dwc Web page. Click on “Do I need insurance?” for the list of those contractors who have been rejected from the policy, which can be helpful to the individual leading a construction project.

The site also provides a fact sheet about the legislation, and has the form needed to either be rejected for being an independent LLC, corporation or partnership or accepted.


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