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5 Myths of Workers' Compensation
>>NARRATOR: When it comes to Workers' Compensation Insurance, people can be confused about the ins and outs of the system and how it works.
>>MATT MARROW: The most misconception in Workers' Compensation, in the Construction industry, is that the requirement for one employee means that they must have one W-2 IRS recognized employee in order to be required to carry Workers' Compensation Insurance.
>>NARRATOR: Let's take a look at the five most common myths about Workers' Compensation Insurance. The first myth is that Workers' Comp is only for large companies.
>>MATT: I would say the Workers' Compensation Insurance and the system that we have in Missouri is more for the protection of smaller employers than it is for large employers. Now, it protects both but the people that I work with, whether you're talking about a home builder or a remodeling contractor or somebody who is a subcontractor or trade that maybe has two or three or four or ten employees, those are the types of operations that can be shut down if they find themselves on the wrong end of a liability lawsuit and the Workers' Compensation system, as painful and difficult as it might be to come up with the dollars to cover a premium on a month-to-month basis, it's a standard of professionalism and, more importantly, for the long term for that particular business, is they're not one accident away from shutting their doors.
>>NARRATOR: The second myth is that Workers' Comp is only for full-time employees.
>>MATT: Not only it doesn't matter if they're full-time or part-time, it also doesn't matter if they get paid at all and, therefore, if you're in construction and the threshold is one of these employees, what we tell people is unless you build a house and drive every single nail in it yourself, you have an employee.
>>NARRATOR: The third myth is that family members do not count and are not covered.
>>MATT: If they're a volunteer or family member or a subcontractor, that is a complete 1099 arrangement in terms of how you recognize them for tax purposes, still is recognized under Missouri Compensation Law as an employee.
>>NARRATOR: The fourth myth is that if three of your five employees work in another state, they do not have to be covered.
>>PETER LYSKOWSKI: It's not where your employees are located; it's the number of the employees and this particularly happens, of course, in Kansas City and Saint Louis where we have employers that have employees who are maybe located just across the state line, so we want to make sure that employers know that all of your employees are included in the count.
>>NARRATOR: The fifth myth is my employees are independent contractors. We do not need to cover them.
>>MATT: We go right to the statute. We go right to the Workers' Comp Statute and we show them where you can read so far and it says one employee if you're in construction and we say don't stop reading and we go just a little bit further where it actually defines what employee means in the State of Missouri under Workers' Comp Law and that definition of employee includes not only W-2 employees but it also includes volunteers, family members and subcontractors. You may not be paying payroll tax. You may not be required by the IRS to report that employee but under Workers' Compensation Law, you are.
>>NARRATOR: We hope this short video has helped shed some light on the subject of Workers' Compensation Law and how it can affect your business.