SUMMER 2015 | MARINE TECHNICIANTODAY
9
M
ost of us are familiar with our
own state’s requirement to
carry Workers Compensation
Insurance. The AMTECH forums have
touched upon these issues from time to
time. As self-employed individuals, many
AMTECH members often don’t have to deal
with the state requirement to carry Workers
Comp coverage as they may not have
employees beyond themselves, or many
states don’t require coverage until you hit
a certain number of employees. Each state
is different, so you need to check your own
state’s requirements.
Then along comes an issue that many of you
may have faced. You get to the local marina
or boatyard and they stop you at the office
and say, “Before you begin any work, let’s
see some proof of insurance.” This usually
boils down to you having to provide them
with a Certificate of Insurance stating that
you have liability insurance for any injury
or damage you cause while you are on
their premises and proof of Workers Comp
insurance in case you or your employees
get hurt. You kindly inform them that you
have no employees and as a sole proprietor
(in your state) you are not required to carry
Workers Comp insurance. The response
is usually, “Too bad. No Work Comp, no
work.” There is usually no way out of this
Catch-22. You either go buy a policy (one
that may potentially never pay a claim), or
you just pass on the job and move on.
But let’s say you decide it is time to bite the
bullet and get yourself some Workers Comp
insurance. If you are incorporated, in many
states you can buy coverage on yourself as
an employee of the corporation. In several
states you can also voluntarily purchase
coverage on yourself as a sole proprietor. In
both cases your premium is usually subject
to a minimum or maximum payroll or on
a state set fixed payroll that applies to an
officer or sole proprietor.
Besides payroll, the other variable for
pricing your policy is the classification of
your operations. Every type of employee is
assigned to a “classification,” which has its
own rate. To properly classify an employee,
you need to know what that employee is
doing as part of their daily work. If they
(or you) are performing outboard engine
repair then a few classifications might
apply, and that can also vary by state. The
classification codes for Work Comp are
fairly consistent and are usually a four digit
numerical code. Here are a few examples:
8380
–
Auto repair/service
6824
–
Boat Building & Repair
6834
–
Boat Building & Repair
6836
–
Marina & Drivers
3632
–
Machine shop
So which classification do you or your
employees belong in? It all depends. Not
only is each state rate different, but each
state may interpret the classifications
differently. For example, if you store boats
as well as repair them, that may be enough
(in some states) to move you from class
6834 to 6836. Every little detail of your
operation might matter and should be
discussed with an insurance agent who has
experience, especially in marine insurance.
In addition, be aware that you may also
be required to comply with the laws (and
benefits) of the state that their employees
are performing work in. In some cases
that will require you to amend your policy
to include those states or, if necessary, to
purchase a separate policy within the state
you are working in. If your business borders
other states, you should be aware of the
Worker’s Compensation requirements in
those other states if you or your employees
perform work there.
Longshore and Harbor Workers Act (LSHWA)
In addition to state Workers Comp coverage,
your employees may also be entitled to
receive payment of benefits, including
compensation, under the Longshore &
Harbor Workers’ Compensation Act. In some
states, employees might be able to collect
under both the State (WC) and Federal
(Longshore) acts.
In order to qualify for Longshore benefits,
an employee must pass two tests:
1. Status: A person engaged in “maritime
employment” who is not otherwise excluded
2. Situs: The employee’s injury or death must
have occurred on navigable waters of the US
To be considered a maritime employee,
both these tests, status and situs, must be
met. If they pass just one test but do not
pass the other test then the employee is
not eligible for Federal Act coverage. But
note that under the Federal Act that “situs”
includes any adjoining pier, wharf, dry dock,
terminal, building way, marine railway or
other adjoining area customarily used by an
employer in loading, unloading, repairing,
dismantling or building a vessel.
On the “status” test, there is one exception
By James Kay, CIC, CRM
Worker’s Compensation and the
Longshore & Harbor Workers Act.
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