Work Comp IL
Question for the group
We are an IL company, a feedmill and commdotity business, as well as carrier. As an illinois business with employees, we are required to carry work comp on our employees and drivers. The premium we pay for work comp, is a % of payroll. The base % is set by the state, then the insurance company can make adjustments based on loss history and job risk classification
Our insurance provder(same company provides coverage for our trucks/trailers/milling operations/work comp) completes an annual "work comp audit" where we report to them payrolls, as well as wages paid to independent contractors for them to base work comp premiums off of.
My understanding of the rules, is that, if we hire an independent contractor (as an IL company) we must either verify they have work comp coverage (COI) or get them to fill out an "opt out" form, or otherwise pay work comp premium on the independent contractors pay.
In the past, we have used primarily 2 local trucking contractors to support our commodity movements. They worked for us daily, and carried work comp, so it wasnt an issue. Things evolve and change, and now we are using the load board to move some loads. So its more frequently using a carrier only occasionally or often just 1 and done.
As we completed our annual "work comp audit", there has been an uptic in work being completed by our "outside of the usual" carriers. The auditor asks us to provide proof of work comp or "opt out forms" for these independant contractors providing us these freight services. Some we have, some we dont... so they say we have to pay work comp premium on those we dont have documentation for. Not the end of the world for this audit period, its not a huge number... however we want to implement better procedure moving forward.
So now as we hire indpendant carriers to haul loads, we get their COI as normal... if no work comp coverage we ask them to complete the "opt out" for us to turn in at our next annual work comp audit to excuse us from paying premium.
A curveball came today, when a broker wanted to haul a load for us. Because their trucks arent employees, the broker isnt required to carry work comp. Then it turns into a big pain in the rear trying to get the broker to connect us with the carrier to get the opt out or proof of coverage... which is just way more work than it needs to be.
Is this just an IL thing ? Accounting wise, it would be easy for us to re categorize the wages paid for freight services from indpenedent contractors to keep it out of the work comp audit... however our insurance agent advises caution on that... basically saying that might be fine and well for avoiding paying additional premiums but in the case of an accident we could be exposed to liability.
A big headache. Can anybody advise ?