This article Reprinted from Western Roofing magazine, January/February 2007, Volume 30, number 1

 

 

Workers’ Comp

Another California Law Goes on the Books to Fix Workers’ Comp

 

It’s an old joke. A guy with a broken leg goes to see a doctor. The doctor takes x-rays and says, “Yes, your leg is broken, but don’t despair, I can fix it for $400.” The patient says, “But doc, I don’t have $400.” To which the doctor replies, “Well then, I can touch-up the x-rays for $50.” Problem solved, right? Of course not, but by touching up the x-rays, the appearance of the problem has gone away.

                  Unfortunately, many of our legislators operate on the same principle, getting rid of the indicators of the problem rather than the problem itself. A recent example is California Assembly Bill 881 (Emmerson). This Bill effectively requires all roofing contractors to have employees if they have a C-39 Roofing Classification Specialty Contractor’s License. This, in turn would require California roofing contractors to obtain workers’ compensation insurance to cover their employees.

                  According to the author of this bill, of the 5,900 licensed roofing contractors in California, 3,000 of them do not have any employees and therefore do not have workers’ compensation insurance (his figures, not mine). Instead, sponsors of the bill claim, these 3,000 contractors show their “employees” as independent contractors, known as the “1099 Labor Force,” thus avoiding those annoying workers’ comp premiums. The Bill went into effect January 1, 2007.

                  On the surface this bill looks good to the public, although it ignores the fact that there are some one-man roofing operations that concentrate on small jobs. The Bill’s objective is to level the playing field by requiring all roofing contractors to obey the law and report their full payroll. Now, the Bill’s sponsors claim, an honest contractor can bid for a job toe-to-toe with a contractor who was trying to circumvent the system.

                  In all likelihood, what will probably happen is that about half of those using a 1099 Labor Force will probably continue to do business, drop their license, and disappear completely from the radar, further adding to the state’s underground economy.

                  The real problem is that California roofing contractors pay one of the highest workers’ compensation rates in the nation, so there is a huge incentive to cheat the system. This fact was noted by the author of the bill as one of the reasons his legislation was needed.

                  The reason California roofing contractors pay so much more for workers’ comp than the neighboring states is due to rampant fraud and abuse, fueled by liberal interpretation of the law by the courts, attorneys, and bureaucratic bungling. The solution is a complete overhaul of the workers’ comp system in California, from the way the system is administered to what constitutes an injury, to the dollar amount, and length of time of the payout schedule.

                  Or we could just touch up the x-rays and pretend the problem is solved.

 

 

Marc Dodson

editor & publisher